OPAL Fuels Inc. current report, 26 November 2021

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SEC Form 8-K Summary

Registrant: ArcLight Clean Transition Corp. II, associated with OPAL Fuels Inc.; report date: November 26, 2021. The filing reports a determination that certain previously issued financial statements and related audit information should no longer be relied upon.

Business Context and Reporting Period

The filing concerns the accounting for Class A ordinary shares subject to redemption issued in the company’s March 25, 2021 initial public offering and the related earnings-per-share presentation. The affected reporting periods are the audited balance sheet as of March 25, 2021, and interim periods ended March 31, June 30, and September 30, 2021.

Financial Metrics and Liquidity

  • The filing does not provide revised revenue, profit, cash flow, margin, debt, or liquidity figures.
  • Management stated that the accounting changes are not expected to affect the company’s cash position or cash held in the IPO trust account.
  • The Class A ordinary shares subject to redemption are to be classified entirely as temporary equity rather than partially as permanent equity.
  • Earnings per share is to be revised to allocate income and losses pro rata between the two classes of shares.

Material Changes and Restatement

  • Management initially concluded that the changes were not qualitatively material and disclosed them as revisions in the third-quarter Form 10-Q.
  • On November 24, 2021, the audit committee concluded that the classification and earnings-per-share changes were quantitatively material and that the affected financial statements should be restated.
  • The previously issued audited balance sheet as of March 25, 2021, related interim financial statements, and other communications covering the affected periods should no longer be relied upon.
  • The audit report issued by Marcum LLP for the March 25, 2021 audited balance sheet should also no longer be relied upon.
  • The company intends to file amendments to the first-, second-, and third-quarter 2021 Form 10-Q financial statements as soon as practicable.

Controls, Outlook, and Risks

  • Management concluded that a material weakness existed in internal control over financial reporting during the affected periods.
  • The company also concluded that its disclosure controls and procedures were not effective.
  • Planned remediation includes enhanced access to accounting literature and research materials, stronger documentation, and increased communication among company personnel and third-party professionals regarding complex accounting matters.
  • The filing does not provide a revenue or earnings outlook, operating guidance, or quantified estimate of the restatement impact.

Investor Verification Checklist

  1. Verify the amended financial statements for the March 31, June 30, and September 30, 2021 periods once filed.
  2. Review the revised classification of redeemable Class A ordinary shares and the related effects on additional paid-in capital, accumulated deficit, and Class A ordinary shares.
  3. Assess the revised earnings-per-share calculations and any changes to reported per-share results.
  4. Confirm whether the company’s independent auditor provides any updated report or additional commentary.
  5. Monitor remediation disclosures regarding the identified material weakness and the effectiveness of subsequent controls.
  6. Confirm that cash held in the IPO trust account and the company’s overall cash position remain unaffected, as management stated.