East Resources Acquisition Co [ERES] Filings

10-Q 1 eresu-10q_20220930.htm 10-Q eresu-10q_20220930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-39403

East Resources Acquisition Company

(Exact name of registrant as specified in its charter)

Delaware

85-1210472

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

7777 NW Beacon Square Boulevard

Boca Raton, Florida 33487

(Address of Principal Executive Offices, Zip Code)

(561) 826-3620

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of Class A common stock and one-half of one warrant	ERESU	The NASDAQ Stock Market LLC
Class A common stock, par value $0.0001 per share	ERES	The NASDAQ Stock Market LLC
Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share	ERESW	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐	Large accelerated filer	☐	Accelerated filer

☒	Non-accelerated filer	☒	Smaller reporting company

		☒	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No ☐

As of November 21, 2022, there were 9,718,972 shares of Class A common stock, $0.0001 par value, and 8,625,000 shares of Class B common stock, $0.0001 par value, issued and outstanding.

EAST RESOURCES ACQUISITION COMPANY

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

		Page
PART 1 – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	1

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)	2

	Condensed Consolidated Statements of Changes in Stockholders' Deficit for the three and nine months ended September 30, 2022 and 2021 (unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	4

	Notes to Condensed Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26

Item 4.	Control and Procedures	26

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

SIGNATURES		29

EAST RESOURCES ACQUISITION COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of September 30,			December 31,
	2022			2021
	（Unaudited）
ASSETS
Current assets
Cash	$	1,674,864		$	853,130
Prepaid expenses		308,273			91,625
Total Current Assets		1,983,137			944,755

Cash and marketable securities held in Trust Account		98,260,526			345,048,888
Total Assets	$	100,243,663		$	345,993,643

LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accrued expenses	$	7,940,400		$	144,254
Income taxes payable		64,771		$	—
Note payable to related party		4,924,356			1,500,000
Total Current Liabilities		12,929,527			1,644,254

Deferred underwriting fee payable		12,075,000			12,075,000
Forward purchase agreement liability		1,000,000			1,600,000
Warrant liability		3,661,000			13,911,800
Total Liabilities		29,665,527			29,231,054

Commitments and Contingencies (Note 6)

Class A common stock subject to possible redemption, $0.0001 par value; 9,718,972 and 34,500,000 shares at $10.09 and 10.00 per share at September 30, 2022 and December 31, 2021, respectively		98,058,974			345,000,000

Stockholders’ Deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding	—			—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 0 issued and outstanding (excluding 34,500,000 shares subject to possible redemption)	—			—
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 8,625,000 shares issued and outstanding		863		863
Additional paid-in capital		24,137			24,137
Accumulated deficit		(27,505,838	)		(28,262,411	)
Total Stockholders’ Deficit		(27,480,838	)		(28,237,411	)
TOTAL LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT	$	100,243,663		$	345,993,643

The accompanying notes are an integral part of the unaudited Condensed Consolidated financial statements.

EAST RESOURCES ACQUISITION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended September 30,			For the Three Months Ended September 30,			For the Nine Months Ended September 30,			For the Nine Months Ended September 30,
	2022			2021			2022			2021
Formation and operating costs	$	8,900,483		$	565,570		$	9,558,846		$	1,015,780
Loss from operations		(8,900,483	)		(565,570	)		(9,558,846	)		(1,015,780	)
Other income:
Change in fair value of warrant liability		2,092,000			10,724,115			10,250,800			13,077,615
Change in fair value of forward purchase agreement liability		120,000			600,000			600,000			2,300,000
Interest earned - bank		2,804			19			3,181			34
Interest earned on marketable securities held in Trust Account		385,604			5,211			672,439			15,518
Other income		2,600,408			11,329,345			11,526,420			15,393,167
Net income before income taxes		(6,300,075	)		10,763,775			1,967,574			14,377,387
Income tax expense		47,044			—			64,771			—
Net income (loss)	$	(6,347,119	)	$	10,763,775		$	1,902,803		$	14,377,387
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption		16,183,588			34,500,000			28,327,436			34,500,000
Basic and diluted net income (loss) per share, Class A common stock subject to possible redemption	$	(0.26	)	$	0.25		$	0.05		$	0.33
Basic and diluted weighted average shares outstanding, Non-redeemable common stock		8,625,000			8,625,000			8,625,000			8,625,000
Basic and diluted net income (loss) per share, Non-redeemable common stock	$	(0.26	)	$	0.25		$	0.05		$	0.33

The accompanying notes are an integral part of the unaudited Condensed Consolidated financial statements.

EAST RESOURCES ACQUISITION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

	For the Three and Nine Months Ended September 30, 2022
	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance – January 1, 2022		—	$	—		8,625,000	$	863	$	24,137	$	(28,262,411	)	$	(28,237,411	)

Net income		—		—		—		—		—		9,383,814			9,383,814

Balance – March 31, 2022		—		—		8,625,000		863		24,137		(18,878,597	)		(18,853,597	)

Net loss		—		—		—		—		—		(1,133,892	)		(1,133,892	)

Balance – June 30, 2022		—		—		8,625,000		863		24,137		(20,012,489	)		(19,987,489	)

Remeasurement of Class A common stock to redemption value		—		—		—		—		—		(1,146,230	)		(1,146,230	)

Net loss		—		—		—		—		—		(6,347,119	)		(6,347,119	)

Balance – September 30, 2022		—	$	—		8,625,000	$	863	$	24,137	$	(27,505,838	)	$	(27,480,838	)
0

	For the Three and Nine Months Ended September 30, 2021
	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance – January 1, 2021		—	$	—		8,625,000	$	863	$	24,137	$	(44,101,776	)	$	(44,076,776	)

Net income		—		—		—		—		—		10,788,946			10,788,946

Balance – March 31, 2021		—		—		8,625,000		863		24,137		(33,312,830	)		(33,287,830	)

Net loss		—		—		—		—		—		(7,175,334	)		(7,175,334	)

Balance – June 30, 2021		—		—		8,625,000		863		24,137		(40,488,164	)		(40,463,164	)

Net income		—		—		—		—		—		10,763,775			10,763,775

Balance – September 30, 2021		—	$	—		8,625,000	$	863	$	24,137	$	(29,724,389	)	$	(29,699,389	)

The accompanying notes are an integral part of the unaudited Condensed Consolidated financial statements.

EAST RESOURCES ACQUISITION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended September 30,			For the Nine Months Ended September 30,
	2022			2021
Cash Flows from Operating Activities:
Net income	$	1,902,803		$	14,377,387
Adjustments to reconcile net income to net cash used in operating activities:
Change in fair value of warrant liability		(10,250,800	)		(13,077,615	)
Change in fair value of forward purchase agreement liability		(600,000	)		(2,300,000	)
Amortization of prepaid insurance		225,144			99,105
Interest earned on marketable securities held in Trust Account		(672,439	)		(15,518	)
Changes in operating assets and liabilities:
Prepaid expenses		(441,792	)		(4,105	)
Accrued expenses		7,796,146			24,772
Income taxes payable		64,771			—
Net cash used in operating activities		(1,976,167	)		(895,974	)

Cash Flows from Investing Activities:
Trust Account withdrawal for redemption of Class A shares		248,087,256			—
Payment to Trust Account		(962,178	)		—
Trust Account withdrawal for payment of taxes		335,723			—
Net cash provided by investing activities		247,460,801			—

Cash Flows from Financing Activities:
Proceeds from note payable - Related Party		3,424,356			1,500,000
Redepmtion of Class A common stock		(248,087,256	)		—
Net cash provided by financing activities		(244,662,900	)		1,500,000

Net Change in Cash		821,734			604,026
Cash — Beginning		853,130			589,685
Cash — Ending	$	1,674,864		$	1,193,711

Non-cash investing and financing activities:
Remeasurement of Class A common stock to redemption value	$	1,146,230		$	—

The accompanying notes are an integral part of the unaudited Condensed Consolidated financial statements.

EAST RESOURCES ACQUISITION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

East Resources Acquisition Company (the “Company”) is a blank check company incorporated in Delaware on May 22, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Each of LMA Merger Sub, LLC (“LMA Merger Sub”) and Abacus Merger Sub, LLC (“Abacus Merger Sub”) is a wholly owned subsidiary of the Company and was formed as a Delaware limited liability company on August 19, 2022.

As of September 30, 2022, the Company had not commenced any operations. All activity for the three and nine months ended September 30, 2022 relates to the Company's formation, its initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination and completing such Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. Prior to June 2022, at which time the assets in the Trust Account were liquidated to thereafter be held in cash (as described below), the Company generated non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statement for the Company’s Initial Public Offering was declared effective on July 22, 2020. On July 27, 2020, the Company consummated the Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $300,000,000, which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,000,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to East Sponsor, LLC (the “Sponsor”), generating gross proceeds of $8,000,000, which is described in Note 4.

On August 25, 2020, the underwriters exercised their over-allotment option in full, resulting in an additional 4,500,000 Units issued for total gross additional proceeds of $45,000,000. In connection with the underwriters’ exercise of their over-allotment option in full, the Company also consummated the sale of an additional 900,000 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total proceeds of $900,000. A total of $45,000,000 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $345,000,000.

Transaction costs amounted to $19,840,171, consisting of $6,900,000 of underwriting fees, $12,075,000 of deferred underwriting fees and $865,171 of other offering costs.

Following the closing of the Initial Public Offering on July 27, 2020 and the exercise of the over-allotment option on August 25, 2020, an amount of $345,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below. To mitigate the risk of us being deemed to have been operating as an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act), in June 2022, the investments in U.S. government securities or money market funds held in the Trust Account were liquidated to thereafter be held in cash until earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s stockholders as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete its initial Business Combination with one or more target businesses that together have a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting commissions held in the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company. There is no assurance that the Company will be able to successfully effect a Business Combination.

EAST RESOURCES ACQUISITION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.00 per share), calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon consummation of such Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks stockholder approval in connection with a Business Combination, the holders of the Founder Shares have agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination and to waive their redemption rights with respect to any such shares in connection with a stockholder vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination. Additionally, each public stockholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.

Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company's Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the Public Shares without the Company’s prior written consent.

The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination. The Company will have until January 27, 2023 (or such earlier time that the Company elects not to deposit additional funds into the Trust Account, as described below) to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Proposed Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).

EAST RESOURCES ACQUISITION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party for services rendered or products sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent public accountants), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account

East Resources Acquisition Co [ERES] Filings
East Resources Acquisition Co [ERESU] Filings
East Resources Acquisition Co [ERESW] Filings
10-Q	[2022-11-21]
10-Q	[2022-08-22]
10-Q	[2022-07-13]
10-K	[2022-06-22]
10-Q	[2022-02-28]
10-Q	[2021-08-17]
10-Q	[2021-07-30]
10-K	[2021-03-26]
10-Q	[2020-11-16]
10-Q	[2020-09-04]
S-1	[2020-07-02]

East Resources Acquisition Co [ERES] Filings

East Resources Acquisition Co [ERESU] Filings

East Resources Acquisition Co [ERESW] Filings