Item 4.02 Non-Reliance on Previously Issued Financial Statements or Related Audit
Report or Completed Interim Report.
In preparation of ESM Acquisition Corporation's (the "Company") unaudited
condensed financial statements for the quarterly period ended September 30,
2021, the Company concluded it should restate its previously issued financial
statements to classify all Class A ordinary shares subject to possible
redemption in temporary equity. In accordance with the SEC and its staff's
guidance on redeemable equity instruments in ASC 480-10-S99, redemption
provisions not solely within the control of the Company require ordinary shares
subject to redemption to be classified outside of permanent equity. The Company
had previously classified a portion of its Class A ordinary shares in permanent
equity. Although the Company did not specify a maximum redemption threshold, its
charter provides that currently, the Company will not redeem its public shares
in an amount that would cause its net tangible assets to be less than
$5,000,001. Previously, the Company did not consider redeemable shares
classified as temporary equity as part of net tangible assets. The Company
revised this interpretation to include temporary equity in net tangible assets.
As a result, the Company expects to restate its previously filed financial
statements to present all Class A ordinary shares subject to possible redemption
as temporary equity and to recognize accretion from the initial book value to
redemption value at the time of its initial public offering (the "IPO") and the
related exercise of the over-allotment option. The Company's previously filed
financial statements that contained the error were reported in the Company's
Form 8-K filed with the SEC on March 18, 2021 and the Company's Form 10-Qs for
the quarterly periods ended March 31, 2021, and June 30, 2021.
On November 15, 2021, the Company's management and the Audit Committee of the
Company's Board of Directors (the "Audit Committee") concluded that it is
appropriate to restate (i) certain items on the Company's previously issued
audited balance sheet as of March 18, 2021, which was related to the IPO and
(ii) the unaudited quarterly financial statements as of and for the periods
ended March 31, 2021, and June 30, 2021 (collectively, the "Relevant Periods").
Considering such restatement, such financial statements, as well as the relevant
portions of any communication which describes or are based on such financial
statements, should no longer be relied upon. The Company will file its Quarterly
Report on Form 10-Q and for the period ended September 30, 2021, which will
include the restated financial statements for the Relevant Periods. In addition,
the audit report of Marcum LLP, the Company independent registered public
accounting firm (the "Independent Accountants") included in the Company's Form
8-K filed with the SEC on March 18, 2021 should no longer be relied upon.
The Company's Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based upon their evaluation, the Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were not effective as of September 30, 2021,
due to the material weakness in analyzing complex financial instruments
including the proper classification of redeemable Class A ordinary shares as
temporary equity.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with the
Independent Accountants.
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