Business Context and Reporting Period
This Form 8-K is filed by Sustainable Opportunities Acquisition Corp. (SOAC), a Cayman Islands special purpose acquisition company (SPAC), on May 24, 2021. The filing addresses a material accounting restatement triggered by an SEC Staff Statement regarding warrant accounting for SPACs. Additionally, the company is in the process of a proposed business combination with DeepGreen Metals Inc., a developer of deep-sea polymetallic nodule mining technology.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, or debt figures for the current period. SOAC has not generated any operating revenues to date and will not do so until after the completion of its initial business combination. The primary financial impact disclosed is a non-cash charge resulting from the reclassification of 24,500,000 redeemable warrants (15,000,000 Public Warrants and 9,500,000 Private Placement Warrants) as derivative liabilities measured at fair value, with changes in fair value reported in earnings.
Material Changes Versus Prior Period
- Accounting Restatement: The Audit Committee concluded that previously issued financial statements for the periods ended May 8, 2020, December 31, 2020, September 30, 2020, and June 30, 2020, must be restated. These statements should no longer be relied upon.
- Warrant Classification: Warrants are now classified as derivative liabilities rather than equity, requiring fair value measurement with periodic changes impacting the statement of operations.
- Future Filing: The company will file a Form 10-K/A for the fiscal year ended December 31, 2020, to reflect these restatements.
Guidance, Outlook, and Risks
Business Combination: On March 4, 2021, SOAC entered into a Business Combination Agreement with DeepGreen Metals Inc. A preliminary proxy statement/prospectus has been filed on Form S-4. The transaction is subject to shareholder approval, regulatory approvals, and other closing conditions.
Risks and Contingencies: The filing highlights significant risks, including the potential failure to complete the business combination, regulatory hurdles regarding deep seabed mining, environmental risks, and uncertainties in mineral resource estimates. Forward-looking statements regarding future performance and the commercial feasibility of seafloor mining are subject to these uncertainties.
Investor Verification Checklist
- Verify the specific financial impact of the warrant reclassification once the Form 10-K/A is filed.
- Review the definitive proxy statement/prospectus for details on the DeepGreen Metals business combination terms and voting procedures.
- Monitor regulatory developments regarding deep seabed mining and the International Seabed Authority (ISA) exploitation regulations.
- Confirm the status of shareholder approvals required to close the proposed business combination.