Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
In light of recent comment letters issued by the U.S. Securities and Exchange
Commission (the "SEC"), the management of Senior Connect Acquisition Corp. I
(the "Company") has re-evaluated the Company's application of ASC 480-10-S99-3A
to its accounting classification of the redeemable Class A common stock, par
value $0.0001 per share (the "Public Shares"), issued as part of the units sold
in the Company's initial public offering (the "IPO") on December 15, 2020.
Historically, a portion of the Public Shares was classified as permanent equity
to maintain stockholders' equity greater than $5 million on the basis that the
Company will not redeem its Public Shares in an amount that would cause its net
tangible assets to be less than $5,000,001, as described in the Company's
amended and restated certificate of incorporation (the "Charter"). Pursuant to
such re-evaluation, the Company revised this interpretation to include temporary
equity in net tangible assets. In addition, in connection with the change in
presentation for the Class A common stock subject to possible redemption, the
Company determined it should restate its earnings per share calculation to
allocate income and losses shared pro rata between the two classes of shares.
This presentation contemplates a business combination as the most likely
outcome, in which case, both classes of shares share pro rata in the income and
losses of the Company. While the Company adopted these corrections in its
original Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2021, the Company presented the corrections as a revision that did not
require the restatement of previously issued financial statements. Although the
qualitative factors that management assessed tended to support a conclusion that
the misstatements were not material, these factors were not strong enough to
overcome the significant quantitative errors in the financial statements. As
such, the Company has subsequently determined that such reclassification should
be considered a restatement rather than a revision.
Therefore, on November 29, 2021, the Company's management and the audit
committee of the Company's board of directors (the "Audit Committee"), after
consultation with Marcum LLP ("Marcum"), the Company's independent registered
public accounting firm, concluded that the Company's previously issued (i)
audited balance sheet as of December 15, 2020 included in the Company's Current
Report on Form 8-K, filed with the SEC on December 21, 2020 and previously
revised as reported in the Company's Form 10-K/A filed with the SEC on July 15,
2021, (ii) audited financial statements for the year ended December 31, 2020, as
previously restated in Amendment No. 1 to the Company's Annual Report on Form
10-K/A for the year ended December 31, 2020, filed with the SEC on July 15,
2021, (iii) 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 July 16, 2021, (iv) unaudited interim financial statements
included in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2021, filed with the SEC on August 16, 2021 and (v) Note 2 to the
unaudited interim financial statements and Item 4 of Part 1 included in the
Company's Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2021, filed with the SEC on November 12, 2021 (collectively, the "Affected
Periods"), should be restated to report all Public Shares as temporary equity
and should no longer be relied upon. As such, the Company intends to restate its
financial statements for the Affected Periods in an Amendment No. 2 to the
Company's Annual Report on Form 10-K/A for the year ended December 31, 2020, an
Amendment No. 1 to the Company's Quarterly Report on Form 10-Q/A for the
quarterly period ended March 31, 2021, an Amendment No. 1 to the Company's
Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2021 and
an Amendment No. 1 to the Company's Quarterly Report on Form 10-Q/A for the
quarterly period ended September 30, 2021, all of which are to be filed with the
SEC (collectively, the "Amendments").
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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 "Trust Account").
The Company's management has concluded that in light of the classification error
described above, a material weakness exists in the Company's internal control
over financial reporting 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 Amendments.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with
Marcum.
Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995. Certain of these forward-looking statements can
be identified by the use of words such as "believes," "expects," "intends,"
"plans," "estimates," "assumes," "may," "should," "will," "seeks," or other
similar expressions. Such statements may include, but are not limited to,
statements regarding the impact of the Company's restatement of certain
historical financial statements, the Company's cash position and cash held in
the Trust Account and any proposed remediation measures with respect to
identified material weaknesses. These statements are based on current
expectations on the date of this Current Report on Form 8-K and involve a number
of risks and uncertainties that may cause actual results to differ
significantly. The Company does not assume any obligation to update or revise
any such forward-looking statements, whether as the result of new developments
or otherwise. Readers are cautioned not to put undue reliance on forward-looking
statements.
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