Filing summary
Business context and reporting period
Entity mismatch: The supplied filing is for East Resources Acquisition Company, not Abacus Global Management, Inc. It is a SPAC formed to pursue a business combination, with a stated focus on energy businesses in North America. This unaudited Form 10-Q covers the quarter ended June 30, 2021.
Financial results and position
The company had not begun operating or generating revenue. Results principally reflect formation and public-company costs, trust-account interest, and fair-value changes in warrant and forward-purchase liabilities.
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Operating costs | $205,051 | $450,212 |
| Net income (loss) | ($7,175,334) | $3,613,612 |
| Net income (loss) per non-redeemable share | ($0.83) | $0.42 |
| Operating cash flow | Six-month cash used: $487,716 |
At June 30, 2021, cash outside the trust was $101,969, prepaid expenses were $186,042, and working capital was approximately $233,000. Trust assets were $345.0 million. Total liabilities were $40.8 million, including $27.5 million of warrant liabilities and a $12.1 million deferred underwriting fee payable. The filing reports no long-term debt. The $345.0 million of Class A shares subject to possible redemption is presented as temporary equity, not stockholders’ equity.
Changes versus comparable periods
Six-month net income of $3.6 million contrasts with a $468 net loss from inception through June 30, 2020; the comparison is not like-for-like because the company began operations in May 2020. Second-quarter 2021 net loss was $7.2 million, largely reflecting reported fair-value changes in warrant and forward-purchase liabilities. For the six months, those fair-value changes contributed $2.4 million and $1.7 million, respectively, to reported income. Trust assets rose modestly from $345.026 million at year-end 2020 to $345.036 million.
Outlook, risks, and unusual items
- The company had until July 27, 2022 to complete a business combination; otherwise, it was required to redeem public shares and liquidate, subject to the filing’s terms.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern through August 17, 2022. It may need additional financing, which the Sponsor and affiliates were not obligated to provide; a Sponsor had committed to $500,000 in working-capital loans.
- A forward-purchase agreement could provide up to $50 million at a business-combination closing, but the affiliate purchaser’s obligation is conditional, including on the transaction being acceptable to it and unanimous board approval.
- Management said COVID-19 could negatively affect the company’s financial position, operations, or target search, but the impact was not determinable.
- The filing reports a material weakness in internal control over financial reporting related to accounting for complex financial instruments and a restatement of 2020 financial statements for warrant accounting. Disclosure controls were concluded ineffective as of June 30, 2021; remediation plans were described but not assured of success.
- No operating-revenue guidance was provided. The company expected no operating revenue before a business combination.
Important facts for investors to verify
- Confirm the intended issuer: this document identifies East Resources Acquisition Company, not Abacus Global Management, Inc.
- Review the 2020 restatement, warrant accounting, material weakness, and remediation progress.
- Assess the company’s limited cash outside the trust, going-concern disclosure, and reliance on potential financing.
- Verify business-combination timing, redemption terms, deferred underwriting fees, and conditions attached to the forward-purchase commitment.