: Virgin Galactic, DraftKings to amend financials post SEC guidance for SPACs


Virgin Galactic Holdings Inc. and DraftKings Inc., two of the biggest names to become public through “blank-check” companies in recent years, said Friday they will have to restate some of their financial results after comments earlier this month from U.S. securities regulators.

Virgin Galactic SPCE, -1.73%, citing U.S. Securities and Exchange Commission guidance regarding the accounting of warrants issued by the blank-check, or special purpose acquisition companies, said it will restate financial statements included in its 2020 annual report.

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Due to restatement, Virgin also postponed first-quarter earnings results to May 10, from an originally scheduled Tuesday report date. Virgin said that it decided on the restatement and postponement following a review of the SEC mid-April statements regarding SPACs and after consulting with its advisers.

“The restatement is due solely to the accounting treatment for the warrants of Social Capital Hedosophia Holdings Corp. that were outstanding at the time of the company’s business combination” in October 2019, Virgin said.

Virgin said it expects to file the restated financials before May 10 and estimates that it will recognize incremental non-operating, non-cash expense for each of the fiscal years 2020 and 2019. Previously reported non-GAAP financial metrics, including adjusted EBITDA and free cash flow, are unlikely to change, Virgin said.

Shares of Virgin Galactic fell 0.5% in the extended session Friday after ending the regular trading day down 1.7%.

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Similarly, DraftKings DKNG, -1.39% said that, after consulting with its board’s audit committee and executives, it has determined it needs to classify its warrants as liabilities.

That led to the need to restate some financial statements for 2020, and the company will file an amendment to its 2020 annual report reflecting that change.

The prior way of accounting, however, “did not have any effect on the company’s previously reported revenue, operating expenses, cash flows, cash or common shares outstanding,” DraftKings said.

Shares of DraftKings were flat in the extended session Friday after ending the regular trading day down 1.4%.

This article was originally published by Marketwatch.com. Read the original article here.

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