Spire Global (SPIR) admits accounting errors were bigger than initially disclosed amid investor class action lawsuit – Hagens Berman Page 1

Class Action Lawsuit against Spire Global, Inc. (SPIR):

Spire, a provider of space-based data services, announced that the accounting errors are more extensive than previously disclosed. On August 27, the company announced that it had to restate substantially all of its previously reported financial statements for 2022 and 2023 due to improperly recognized revenue for pre-space mission activities.

The disclosure marks a substantial escalation from the company’s initial announcement on August 14, when Spire announced that it would not file its Q2 2024 report on time as previously planned. The company said at the time that it was reviewing its accounting practices and procedures related to revenue recognition with respect to certain contracts in its Space as a Service business. The company further explained that “(the) reevaluation relates to the potential existence of embedded leases of identifiable assets in the contracts and the related revenue recognition for pre-space mission activities.”

Spire further said that, based on preliminary information, it believes it is in breach of the maximum debt-to-EBITDA leverage financial covenant under its financing agreement with Blue Torch Finance. The company said it is seeking waivers or amendments to the financing agreement, but could not provide assurances that it would be successful.

This news caused Spire’s share price to drop by approximately 33% on August 15, 2024.

But on August 27, 2024, Spire announced that the accounting errors were more extensive than initially disclosed. The company: (1) admitted that it had misrecognized revenue for pre-space mission activities; (2) said that its financial statements for the quarters and nine months ended September 30, 2023 and 2022, the quarters and six months ended June 30, 2023 and 2022, and the years ended December 31, 2023 and 2022 should no longer be relied upon; and (3) also said it would restate the financial statements for those affected periods.