| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected through December 31, 2021. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Current Report on Form 8-K In April 2021, the Company identified an error in its accounting treatment for its Private Placement Warrants (as defined in Note 4) as presented in its audited balance sheet as of February 2, 2021 included in its Current Report on Form 8-K . The Private Placement Warrants were reflected as a component of equity as opposed to liabilities on the balance sheet. Pursuant to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 250, “Accounting Changes and Error Corrections” and Staff Accounting Bulletin 99, “Materiality”) (“SAB 99”) issued by the SEC, the Company determined the impact of the error was immaterial. The impact of the error correction is reflected in the unaudited condensed financial statements contained herein which resulted in a $160,000 increase to the derivative warrant liabilities line item and offsetting decrease to the Class A common stock subject to possible redemption mezzanine equity line item recorded as part of the activity in the nine months ended September 30, 2021. There would have been no change to total stockholders’ equity as reported . Restatement of Previously Reported Financial Statements In preparation of the Company’s 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 outstanding Public Shares in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments in ASC 480-10-S99, $ . Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with these condensed financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form 10-Qs The impact of the restatement on the financial statements for the Affected Quarterly Periods is presented below. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of March 31, 2021:
As of March 31, 2021 As Reported Adjustment As Restated
Common stock subject to possible redemption $ 53,392,741 $ 4,682,259 $ 58,075,000
Common stock 215 (47 ) 168
Additional paid-in capital 5,171,624 (4,682,212 ) 489,412
Accumulated deficit (171,831 ) — (171,831 )
Total stockholders’ equity $ 5,000,008 $ (4,682,259 ) $ 317,749
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Equity $ 58,684,111 $ — $ 58,684,111 The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of June 30, 2021:
As of June 30, 2021 As Reported Adjustment As Restated
Common stock subject to possible redemption $ 53,111,167 $ 4,963,833 $ 58,075,000
Common stock 217 (49 ) 168
Additional paid-in capital 5,453,196 (4,963,784 ) 489,412
Accumulated deficit (453,408 ) — (453,408 )
Total stockholders’ equity $ 5,000,005 $ (4,963,833 ) $ 36,172
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Equity $ 58,552,563 $ — $ 58,552,563
The tables below present the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported condensed statement of change in stockholders’ equity (deficit) for the three months ended March 31, 2021:
Three Months Ended March 31, 2021 As Reported Adjustment As Restated
Sale of Units in Initial Public Offering, Gross
Common stock, par value $0.0001 $ 575 $ (575 ) $ —
Additional paid-in $ 57,499,425 $ (57,499,425 ) $ —
Total stockholders’ equity (deficit) $ 57,500,000 $ (57,500,000 ) $ —
Offering Costs
Additional paid-in $ (1,271,838 ) $ 1,271,838 $ —
Total stockholders’ equity (deficit) $ (1,271,838 ) $ 1,271,838 $ —
Common stock Subject to Possible Redemption
Common stock, par value $0.0001 $ (529 ) $ 529 $ —
Additional paid-in $ (53,392,212 ) $ 53,392,212 $ —
Total stockholders’ equity (deficit) $ (53,392,741 ) $ 53,392,741 $ —
Accretion of Common stock to Redemption Amount
Additional paid-in $ — $ (1,846,837 ) $ (1,846,837 )
Total stockholders’ equity (deficit) $ — $ (1,846,837 ) $ (1,846,837 )
The tables below present the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported condensed statement of change in stockholders’ equity (deficit) for the three months ended June 30, 2021:
Three Months Ended June 30, 2021 As Adjustment As
Common stock Subject to Possible Redemption
Common stock, par value $0.0001 $ 2 $ (2 ) $ —
Additional paid-in $ 281,572 $ (281,572 ) $ —
Total stockholders’ equity (deficit) $ 281,574 $ (281,574 ) $ —
There was no impact to the reported amounts for total assets, total liabilities, cash flows from operating, investing or financing activities, or net income (loss). The impact of the restatement on the supplemental disclosures of noncash activities in the previously reported statements of cash flow is presented below.
Form 10-Q:
As Reported Adjustment As
Supplemental Disclosure of Noncash Financing Activities:
Initial value of common stock subject to possible redemption $ 53,530,010 $ (53,530,010 ) $ —
Change in value of common stock subject to possible redemption $ (137,269 ) $ 137,269 $ —
Form 10-Q:
As Reported Adjustment As
Supplemental Disclosure of Noncash Financing Activities:
Initial value of common stock subject to possible redemption $ 53,530,010 $ (53,530,010 ) $ —
Change in value of common stock subject to possible redemption $ (418,843 ) $ 418,843 $ —
In connection with the change in presentation for the common stock subject to possible redemption, the Company has restated its earnings per share calculation to allocate income and losses shared pro rata to all common stock outstanding, instead of applying the two class method. This presentation contemplates a Business Combination as the most likely outcome, in which case, stockholders of both redeemable and non-redeemable
As Adjustment As Restated
Form 10-Q (March 31, 2021) - three months ended March 31, 2021
Weighted average shares outstanding - redeemable common stock 5,299,767 (1,594,211 ) 3,705,556
Basic and diluted loss per share - redeemable common stock $ — $ (0.03 ) $ (0.03 )
Weighted average shares outstanding - non-redeemable common stock 1,646,500 (116,489 ) 1,530,011
Basic and diluted loss per share - non-redeemable common stock $ (0.10 ) $ 0.07 $ (0.03 )
Form 10-Q (June 30, 2021) - three months ended
Weighted average shares outstanding - redeemable common stock 5,286,161 463,839 5,750,000
Basic and diluted loss per share - redeemable common stock $ — $ (0.04 ) $ (0.04 )
Weighted average shares outstanding - non-redeemable common stock 7,448,340 (5,763,840 ) 1,684,500
Basic and diluted loss per share - non-redeemable common stock $ (0.04 ) $ 0.00 $ (0.04 )
Form 10-Q (June 30, 2021) - six months ended
Weighted average shares outstanding - redeemable common stock 5,291,457 (558,032 ) 4,733,425
Basic and diluted loss per share - redeemable common stock $ — $ (0.07 ) $ (0.07 )
Weighted average shares outstanding - non-redeemable common stock 6,348,141 (4,740,459 ) 1,607,682
Basic and diluted loss per share - non-redeemable common stock $ (0.07 ) $ (0.00 ) $ (0.07 )
Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000. As of September 30, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of September 30, 2021 and December 31, 2020. Investments Held in Trust Account The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in net gain from investments held in Trust Account in the accompanying unaudited condensed statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information . Fair Value Measurements Fair value is defined as the price that would be received for the sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
• Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
• Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
• Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Fair Value of Financial Instruments As of September 30, 2021 and December 31, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, franchise tax payable and notes payable to related party approximate their fair values due to the short-term nature of the instruments. Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements. Actual results could differ from those estimates. Derivative warrant liabilities The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivative and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed The 2,875,000 Public Warrants (as defined in Note 3) issued in connection with the Initial Public Offering are classified as equity. The 123,500 Private Placement Warrants (as defined in Note 4) are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the Private Placement Warrants as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC 480. Common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable common stock (including shares of common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Effective with the closing of the Initial Public Offering (including the sale of the Over-Allotment Units), the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of the common stock subject to possible redemption, which resulted in charges against additional paid-in Income Taxes The Company’s taxable income primarily consists of net gain from investments held in the Trust Account. The Company’s general and administrative expenses are generally considered start-up ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits for the nine months ended September 30, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties for the nine months ended September 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Net income (loss) per common share The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Income and losses are shared pro rata between the outstanding redeemable and non-redeemable common shares. Net income (loss) per share of common stock is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 2,998,500 shares of the Company’s common stock in the calculation of diluted net income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2021. Accretion associated with the common stock subject to possible redemption is excluded from earnings per share as the redemption value approximates fair value. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share:
For the Three Months Ended September 30, 2021 For the Nine Months Ended September 30, 2021
redeemable non-redeemable redeemable non-redeemable
Basic and diluted net income (loss) per common share:
Numerator:
Allocation of net income (loss) 58,295 17,078 (284,609) (91,594)
Denominator:
Basic and diluted weighted average common shares outstanding 5,750,000 1,684,500 5,076,007 1,633,570
Basic and diluted net income (loss) per common share $ 0.01 $ 0.01 $ (0.06) $ (0.06)
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, 470-20) 815-40): The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements . |
