Business Context and Reporting Period
Climate Change Crisis Real Impact I Acquisition Corporation (CRIS), the SPAC pursuing a proposed business combination with EVgo Services, LLC, filed this Form 8-K under Item 4.02. On April 25, 2021, management and the Board determined that previously issued financial statements for specified 2020 periods should no longer be relied upon because of a required change in the accounting treatment of public and private placement warrants. The report was signed and filed on April 29, 2021.
- Affected periods: the October 2, 2020 audited IPO balance sheet and the period from August 4, 2020 inception through December 31, 2020.
Financial Impact and Key Metrics
The filing does not provide revised numerical financial statements, revenue, profit, cash flow, margin, debt, or liquidity amounts. It states that the warrant accounting correction is non-cash and non-operating.
- Previously classified equity warrants will be reclassified as derivative liabilities measured at fair value.
- Changes in warrant fair value will be recognized in earnings as non-cash income or expense each reporting period.
- The restatement will not affect cash position, operating expenses, or total operating, investing, or financing cash flows, according to the filing.
- The filing states that the terms and quantity of the warrants have not changed.
Material Changes Versus Prior Reporting
CRIS concluded that its warrants did not satisfy the equity-classification requirements under ASC Subtopic 815-40, following the SEC’s April 12, 2021 public statement regarding SPAC warrant accounting. The previously issued 2020 financial statements therefore require restatement to reflect the warrants as liabilities, with subsequent fair-value changes recorded in operating results.
CRIS intends to file an amended Form 10-K for the year ended December 31, 2020 with expanded disclosures and the restated financial statement amounts. The filing does not state when the amended Form 10-K will be submitted.
Outlook, Risks, and Unusual Items
CRIS stated that the accounting correction will not affect the proposed business combination with EVgo. The transaction remains subject to stockholder approval, regulatory approvals, redemption activity, and other closing conditions.
Forward-looking risks include uncertainty regarding projected EVgo financial information, consumer demand, general economic and capital-market conditions, customer and supplier strength, regulatory changes, litigation, COVID-19 impacts, electricity and input-cost volatility, intellectual property protection, information-system disruptions, tax and political developments, and the ability to realize the anticipated benefits of the transaction.
Investor Verification Items
- Verify the amended 2020 Form 10-K and the final restated warrant liability and fair-value adjustment amounts.
- Review the warrant terms, including exercise-price adjustment provisions and the tender-offer provision supporting liability classification.
- Confirm whether the amended filing identifies any effect on reported net income, total assets, liabilities, equity, or earnings per share.
- Monitor the proposed EVgo business combination for stockholder approval, regulatory clearance, redemption levels, and closing status.
- Review the definitive proxy statement for EVgo’s projected financial information, transaction assumptions, and risk disclosures.