Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On November 12, 2021, Gaming & Hospitality Acquisition Corp. (the "Company")
filed its Form 10-Q for the quarterly period ended September 30, 2021 (the "Q3
Form 10-Q"), which included in "Note 2. Summary of Significant Accounting
Policies - Revision to Previously Issued Financial Statements" to the Company's
unaudited interim financial statements ("Note 2") a discussion of the revision
to a portion of the Company's previously issued financial statements for the
classification of its Class A common stock subject to possible redemption issued
as part of the units sold in the Company's initial public offering ("IPO") on
February 5, 2021. As described in Note 2, upon its IPO, the Company classified a
portion of the Class A common stock as permanent equity to maintain net tangible
assets greater than $5,000,000 on the basis that the Company will consummate its
initial business combination only if the Company has net tangible assets of at
least $5,000,001. The Company re-evaluated the conclusion and determined that
the Class A common stock included certain provisions that require classification
of the Class A common stock as temporary equity regardless of the minimum net
tangible assets required to complete the Company's initial business combination.
As a result, the Company corrected the error by revising all Class A common
stock subject to possible redemption as temporary equity. This resulted in an
adjustment to the initial carrying value of the Class A common stock subject to
possible redemption with the offset recorded to additional paid-in capital (to
the extent available), accumulated deficit and Class A common stock.
Also in Note 2 of the Q3 Form 10-Q, in connection with the change in
presentation for the Class A common stock subject to possible redemption, the
Company revised its earnings per share calculation to allocate income and losses
pro rata between the two classes of shares. This presentation differs from the
previously presented method of earnings per share, which was similar to the
two-class method.
The Company initially determined the changes were not qualitatively material to
the Company's previously issued financial statements and revised its previously
issued financial statements in Note 2 to its Q3 Form 10-Q. However, upon further
consideration of the material nature of the changes, the Company determined the
change in classification of the Class A common stock subject to possible
redemption and change to its presentation of earnings per share is
quantitatively material and the Company should restate its previously issued
financial statements.
On February 11, 2022, the Company and the audit committee of the Company's board
of directors (the "Audit Committee"), after discussion with Company management,
concluded that the Company's previously issued (i) audited balance sheet as of
February 5, 2021 included in the Company's Current Report on Form 8-K filed with
the U.S. Securities and Exchange Commission (the "SEC") on February 11, 2021
(the "Audited Balance Sheet"), (ii) unaudited interim financial statements
included in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2021, filed with the SEC on May 24, 2021, (iii) unaudited
interim financial statements included in the Company's Quarterly Report for the
quarterly period ended June 30, 2021, filed with the SEC on August 12, 2021 and
(iv) unaudited interim financial statements included in the Q3 Form 10-Q, filed
with the SEC on November 12, 2021 (collectively, the "Affected Periods" and
clauses (ii) through (iv) only, the "Affected Quarterly Periods") should no
longer be relied upon and that it is appropriate to restate the Company's
financial statements for all of the Affected Periods. As such, the Company
intends to restate its financial statements for all of the Affected Quarterly
Periods in Amendment No. 1 to the Company's Q3 Form 10-Q, to be filed with the
SEC (the "Q3 Form 10-Q/A") as soon as practicable. The Q3 Form 10-Q/A will
include restatements of the unaudited interim condensed financial statements for
all of the Affected Quarterly Periods. In addition, the Company intends to
restate the Audited Balance Sheet in a future filing with the SEC.
The Company does not expect any of the above changes will have any impact on its
cash position and cash held in the trust account established in connection with
the IPO.
The Company has concluded that in light of the classification error described
above, a material weakness exists in the Company's internal control over
financial reporting for accounting for complex financial instruments during the
Affected Periods and that the Company's disclosure controls and procedures were
not effective. The Company's remediation plan with respect to such material
weakness will be described in more detail in the Q3 Form 10-Q/A.
The Company and the Audit Committee have discussed the matters disclosed in this
Current Report on Form 8-K pursuant to this Item 4.02 with WithumSmith + Brown,
PC, the Company's independent registered public accounting firm.
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