Advancing a Tech Company’s SPAC Journey and SOX Framework While Filling Key Accounting Roles
Challenge
A fast-growing cybersecurity technology solutions provider had plans to become a public company in a short timeframe by filing as a special purpose acquisition company (SPAC). The process required technical accounting and other readiness efforts to ensure the SPAC transaction occurred on schedule. Accessing the capital markets became more challenging when the company experienced turnover across several key accounting roles, including its controller, who left before a quarterly deadline and the company’s second public filing. In addition, anticipating that operations would evolve as a public company, the organization needed to set an approach for SEC regulations, including SOX compliance and controls.
The company reached its goal of becoming a public entity, having filed in an SEC-compliant and timely manner, and has maintained its publicly traded status, entrusting Riveron to supply the appropriate conclusions on the technical accounting topics at hand.
How We Helped
The company engaged Riveron to advise on technical accounting matters and mobilized the SPAC lifecycle with an S-4 filing, for which Riveron prepared the pro forma financial statements. We also provided accounting memos on 13 different technical accounting topics to determine the appropriate accounting treatment in light of the SPAC reverse merger (or “de-SPAC”). We developed the first Form 10-Q as a public company, which provided a comprehensive view of company financial performance and included the impact of the reverse recapitalization resulting from the de-SPAC.
As a result of the trust established throughout this process, the company reached out to our team as soon as turnover occurred among key company employees. Riveron served as the interim controller, providing oversight to the accounting team, ensuring that the books were closed for the quarterly filing and that the company remained on track to meet its Form 10-Q and 10-K deadlines. Our team also supported additional needs that arose, including revenue accountant, accounting manager, and SEC reporting roles.
In addition, Riveron provided ongoing technical accounting guidance and support by updating memos through year-end and assessing the impact of new accounting standards, such as ASC 842 and CECL. The team also anticipated the company’s SOX compliance needs by preparing reconciliations for the balance sheet accounts and identifying tools that will ensure the organization is compliant.
Results
The company reached its goal of becoming a public entity, having filed in an SEC-compliant and timely manner, and has maintained its publicly traded status, entrusting Riveron to supply the appropriate conclusions on the technical accounting topics at hand. The organization will also be able to become a SOX-compliant entity, working with Riveron to develop reconciliations and other control activities. By alleviating the burden of SEC reporting, technical accounting analysis, and development of reconciliations, the company’s new controller will be able to focus on operations, improving close processes, and other more strategic aspects of the role. Going forward, leadership can focus on strategic growth while relying on Riveron to produce SEC-compliant results and reporting.
By engaging interim support, the company addressed the significant strain caused by accounting employee turnover and sped up its invoicing period, which positively impacted the customers and allowed the company to collect cash in a timelier manner. In addition, the company was able to identify millions of dollars of adjustments that covered more than 40% of its inventory balance at year-end, achieved through the team’s reconciliations and analyses of balance sheet accounts. Management was also able to identify a reconciliation tool to utilize in the process of becoming SOX compliant, which will allow the company to better formalize their controls processes.