GWG: Non-reliance on Previously Published Financial Statements or Related Audit Report or Interim Review Completed (Form 8-K)
Non-reliance on previously published financial statements or related audit report or interim review completed
On August 1, 2021, the Board of Directors of the Company, in consultation with the management of the Company, determined that the audited financial statements of the Company for the year ended December 31, 2019, included in the annual report of the Company on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on March 27, 2020, and unaudited quarterly financial statements for the quarters ended March 31, 2020, on March 30, 2020. June 2020 and September 30, 2020, included in the Company’s quarterly reports on Form 10-Q filed with the SEC on May 15, 2020, August 14, 2020 and November 19, 2020, respectively, should no longer be relied on. The board’s decision was based on the resolution of the consultation process with the SEC’s Office of the Chief Accountant (“OCA”) described below.
As previously indicated, as part of the preparation of its annual report on Form 10-K for the fiscal year ended December 31, 2020, the Company voluntarily submitted two questions to the OCA on February 15, 2021. The OCA is responsible accounting and auditing matters arising in the SEC’s administration of federal securities laws, particularly with respect to determining accounting policies. In this role, the IBC consults with registrants on the application of accounting standards and financial disclosure requirements. The questions submitted by the Company to OCA were (1) whether a transaction of December 31, 2019 enabled GWG to obtain control of The Beneficent Company Group, LP (“Ben”) in a transaction which constituted a change of control of Ben by entities not under common control, and (2) whether Ben was required to consolidate any of the trusts established as part of its business of providing liquidity to holders of alternative assets (the “Plan Trusts ExAlt ”).
On July 26, 2021, the Company and OCA employees held a conference call during which OCA employees informed the Company of their conclusions on the two accounting issues that are the subject of the consultation. During that call, OCA said it would oppose a finding that Ben is not consolidating the ExAlt plan trusts. In accordance with the conclusions communicated by OCA on July 26, August 1, 2021, the Board of Directors of the Company has determined that it is necessary to restate the financial statements for the previous periods for the year ended December 31, 2019 and the statements quarterly financial statements for the first three quarters of the fiscal year ended December 31, 2020, to consolidate the ExAlt Plan trusts into Ben’s financial statements and, therefore, into the Company’s consolidated financial statements. Management is examining whether OCA’s conclusion on issue (1) will have an impact on the restated financial statements.
Based on the foregoing, the Company endeavors to complete a restatement and file amended financial statements with the SEC for the fiscal year ended December 31, 2019 and the first three quarters of 2020. In view of the resolution of the consultation with the OCA just occurred on July 26, 2021, the Company is not in a position at this stage to estimate when these restatements will be completed. Management also assesses the effect of restatements on the Company’s internal control over financial reporting and on its disclosure controls and procedures.
These restatements do not result from or result in any negative change in the operations of the Company, the underlying economy attributable to the Company or its subsidiaries, the conditions of the Company’s existing assets or its future business prospects. .
The Company has suspended the sale of its L bonds due to the failure to timely file its 2020 Form 10-K. The Company continues to make all payments required under its L obligations and its preferred shares and is working on financing options to further supplement its cash position.
Members of the management of the Company and / or the Audit Committee of the Board of Directors of the Company have discussed these matters with the Company’s current independent registered public accounting firm, Grant Thornton LLP, and its independent registered public accounting firm for the year ended December 31, 2019, Whitley Penn LLP.
Caution Regarding Forward-Looking Statements
This report contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, included in this report concerning the impact of restatements on our historical financial statements, the production schedule for the restated financial statements, the Company’s financing options to complete its cash position , the impact of factors that resulted in the restatements on future operations, future financial condition, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate”, “believe”, “estimate”, “expect”, “intend to”, “may”, “all forward-looking statements do not contain these identifying words. These forward-looking statements include, among other things, statements about our estimates regarding the impact of the consolidation of the ExAlt plan trusts on our past and future income, earnings, cash flow, financial condition and financial performance. We may not actually meet the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from expectations disclosed in any forward-looking statements we make. More information about potential factors that could affect our business and financial results is contained in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q filed with the SEC on November 19, 2020 , and our annual report on form. 10-K filed with the SEC on March 27, 2020. Additional information will also be provided in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other documents that we submit to the SEC. We do not intend, and assume no duty, to publicly post any updates or revisions to any forward-looking statements contained herein.
GWG Holdings Inc. published this content on 03 Aug 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 03 Aug 2021 10:52:12 UTC.