Enzolytics Inc (ENZC)

[falon]

Which financial statements are required of a target company?

For private companies with audited financial statements, the financials are typically audited under the rules of the American Institute of Certified Public Accountants (AICPA). Although AICPA financial statements are permitted under the proxy statement and tender offer rules, the SEC has issued guidance and comment letters stating that the S-4 registration/proxy statement or tender offer materials must include two to three years of financial statements for the target company, audited in compliance with the rules of the Public Company Accounting Oversight Board (PCAOB). The Super 8-K filed after closing of the de-SPAC transaction requires three years of PCAOB compliant financials. As a result, even if the target company has audited financial statements, additional audit procedures will be required before its financial statements are ready to be filed with the SEC. Because preparation of these audited financial statements tends to be the gating item for the filing of the S-4 registration/proxy statement or tender offer materials, and thus dictates the timeline for completing the acquisition, SPACs will focus early on the target company’s financial statements and audit review or readiness.