Non-reliance on a financial statement or related audit report or a completed interim review.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and the Acting Chief Accountant of the Securities and Exchange Commission (the “SEC”) jointly issued a statement regarding accounting and reporting considerations for Warrants issued by Special Purpose Acquisition Companies entitled ‘Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (‘ SPAC ‘)’ (the ‘Staff Statement’ ). More specifically, the staff statement focused on certain terms of settlement and provisions relating to certain takeover bids following a business combination, the terms of which are similar to those contained in the mandate contract. (the “Agency Agreement”), dated July 23, 2020, between East Resources Acquisition Company (the “Company”) and Continental Stock Transfer & Trust Company, a New York Company, as Agent of Attorney. Following the staff declaration, the Company reassessed the accounting treatment of (i) the 17,250,000 redeemable warrants (the “Public Warrants”) which were included in the units issued by the Company in its offer. initial public warrants (the “IPO”) and (ii) the 8,900,000 private warrants (as well as the public warrants, the “warrants”) which were included in the units issued to the limited partner of the Company in within the framework of a private placement which closed at the same time as the closing of the IPO, and determined with the warrants as derivative liabilities measured at fair value, changes in fair value at each period being recorded in the results. Although the Company has not generated any operating income to date and will not generate any operating income until the completion of its initial business combination, at the earliest, the change in the fair value of the warrants is a non-cash charge and will be reflected in the Company’s income statement.
On May 18, 2021, the management of the Company and the audit committee of the board of directors of the Company (the “audit committee”) concluded that in light of the staff statement, it was appropriate to restate the previously published audited financial statements of the company as of December 31, 2020; until July 27, 2020; for the period from May 22, 2020 (creation) to December 31, 2020 and for the period ended September 30, 2020 (the “Non-dependent financial statements”).
In view of this restatement, non-dependency financial statements should no longer be relied on. Likewise, the Company’s balance sheet as at July 27, 2020 and included in the Company’s current report on Form 8-K filed on August 31, 2020 should no longer be used. The Company will file an amendment to its annual report on Form 10-K for the year ended December 31, 2020 reflecting the reclassification of the warrants in the audited financial statements restated for the non-dependency period as soon as possible.
Going forward, unless the Company changes the terms of the warrant agreement, it expects to continue to classify warrants as liabilities, which would require the Company to bear the cost of valuing the stock market. fair value of the liabilities related to the warrants, and which could have an adverse effect on the results of operations of the Company.
The management of the Company and the Audit Committee have discussed the matters disclosed in this current report on Form 8-K in accordance with this Section 4.02 with Marcum LLP, the registered independent accounting firm of the Company.
Eastern Resource Acquisition Company published this content on July 16, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on July 16, 2021 08:42:12 PM UTC.