PureCycle Technologies, Inc. — Form 8-K Summary
Filing date: June 8, 2021. Reporting event: Item 4.02, non-reliance on previously issued financial statements and related audit reports or interim reviews.
Business Context and Reporting Period
PureCycle completed its business combination with Roth CH Acquisition I Co. on March 17, 2021. The filing concerns the accounting treatment of 199,125 private warrants originally issued by Roth and converted into PureCycle warrants. The affected historical periods include the year ended December 31, 2020; interim periods ended June 30 and September 30, 2020; and balance sheet periods dated May 7 and May 26, 2020.
Financial Metrics and Material Accounting Impact
- The filing does not provide revenue, profit, cash flow, margin, debt, liquidity, or other operating metrics.
- Management determined that the private warrants should have been classified as liabilities rather than equity.
- The warrants should have been measured at fair value upon issuance, with subsequent fair-value changes recorded in the consolidated statements of operations.
- Offering costs attributable to the private warrants should have been expensed as incurred rather than recorded as an offset to equity.
- Previously issued financial statements for the affected periods should no longer be relied upon and are expected to be restated.
Changes Versus Prior Reporting and Outlook
The accounting conclusion followed the SEC Staff’s April 12, 2021 statement regarding the classification of certain SPAC warrants. PureCycle stated that the revised warrant accounting was already reflected in its Form 10-Q for the quarter ended March 31, 2021, filed May 19, 2021, and would not have any further impact on PureCycle’s consolidated financial statements.
The Company intends to file an amended Roth Form 10-K with expanded disclosures describing the restatement and its effects. No financial statement adjustment amounts or revised balances are provided in this filing.
Risks, Contingencies, and Unusual Items
- The amended Roth Form 10-K remained pending as of the filing date; the Company stated it was working with its auditors to file it as soon as practicable.
- Management consulted with Grant Thornton LLP and Marcum LLP regarding the accounting matter.
- The filing includes customary forward-looking statements regarding accounting impacts and future filings, subject to execution, regulatory, audit, and other risks.
- Investors are referred to the risk factors in PureCycle’s Form 10-Q filed May 19, 2021.
Key Facts for Investors to Verify
- Whether and when the amended Roth Form 10-K was filed.
- The restated warrant liability, fair-value changes, offering-cost expense, and resulting impacts on assets, liabilities, equity, and net income for each affected period.
- Whether subsequent filings contain additional adjustments or disclosures related to the private warrants.
- Whether the revised accounting affects covenant compliance, liquidity presentation, dilution expectations, or other contractual terms.