Basis of Presentation and Summary of Significant Accounting Policies | Note 2—Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 8-K and the final prospectus filed by the Company with the SEC on February 3, 2021, and January 27, 2021, respectively. In April 2021, the Company identified an error in its accounting treatment for both its public and private warrants (the “Warrants”) as presented in its audited balance sheet as of January 28, 2021 included in its Current Report on Form 8-K. The Warrants were reflected as a component of equity as opposed to liabilities on the balance sheet. Pursuant to ASC 250, “Accounting Changes and Error Corrections,” issued by the Financial Accounting Standards Board (“FASB”) and Staff Accounting Bulletin 99, “Materiality”) (“SAB 99”) issued by the SEC, the Company determined the impact of the error was not material for restatement. The impact of the error correction is reflected in the unaudited condensed financial statements contained herein which resulted in an $9.2 million increase in the derivative warrant liabilities line item and an offsetting decrease in Class A common stock subject to possible redemption mezzanine equity line item recorded as part of the activity in the period from October 7, 2020 (inception) through September 30, 2021 as reported herein. 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 Class A common stock subject to possible redemption in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments in ASC 480-10-S99, redemption provisions not solely within the control of the Company, require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 . Effective with these condensed financial statements, the Company amended this interpretation to include all redeemable shares in temporary equity. 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 8-K filed with the SEC on February 3, 2021 (the “Post-IPO Balance Sheet”) and the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”). Therefore, the Company, in consultation with its Audit Committee, concluded that the Post-IPO Balance Sheet and the Affected Quarterly Periods should be restated to present all Class A common stock subject to possible redemption as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering. As such, the Company is reporting these restatements to those periods in this quarterly report. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company's previously restated Post-IPO balance sheet as of January 28, 2021: As Reported As January 28, 2021 - IPO Balance Sheet Restated Adjustment If Adjusted Total assets $ 347,433,973 $ — $ 347,433,973 Total liabilities $ 26,276,709 $ — $ 26,276,709 Class A common stock subject to redemption $ 316,157,260 $ 28,842,740 $ 345,000,000 Preferred stock $ — Class A common stock $ 288 $ (288) $ — Class B common stock $ 863 $ — $ 863 Additional paid-in captial $ 5,465,267 $ (5,465,267) $ — Accumulated deficit $ (466,414) $ (23,377,185) $ (23,843,599) Total stockholders’ equity (deficit) $ 5,000,004 $ (28,842,740) $ (23,842,736) Total liabilities, Class A common stock subject to redemption and stockholders’ equity (deficit) $ 347,433,973 $ — $ 347,433,973 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: March 31, 2021 As Reported Adjustment If Adjusted Total assets $ 346,593,954 $ — $ 346,593,954 Total liabilities $ 21,834,407 $ — $ 21,834,407 Class A common stock subject to redemption $ 319,759,540 $ 25,240,460 $ 345,000,000 Preferred stock $ — Class A common stock $ 252 $ (252) $ — Class B common stock $ 863 $ — $ 863 Additional paid-in captial $ 1,888,023 $ (1,888,023) $ — Accumulated deficit $ 3,110,869 $ (23,352,185) $ (20,241,316) Total stockholders’ equity (deficit) $ 5,000,007 $ (25,240,460) $ (20,240,453) Total liabilities, Class A common stock subject to redemption and stockholders’ equity (deficit) $ 346,593,954 $ — $ 346,593,954 The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of stockholders’ equity (deficit) for the three months ended March 31, 2021: Three Months Ended March 31, 2021 As Reported Adjustment If Adjusted Sale of Shares in Initial Public Offering, Gross Class A common stock, par value $0.0001 $ 3,450 $ (3,450) $ — Additional paid-in captial $ 337,234,050 $ (337,234,050) $ — Total stockholders’ equity (deficit) $ 337,237,500 $ (337,237,500) $ — Offering Costs Additional paid-in captial $ (19,114,492) $ 19,114,492 $ — Total stockholders’ equity (deficit) $ (19,114,492) $ 19,114,492 $ — Class A Common Stock Subject to Possible Redemption Class A common stock, par value $0.0001 $ (3,198) $ 3,198 $ — Additional paid-in captial $ (319,756,342) $ 319,756,342 $ — Total stockholders’ equity (deficit) $ (319,759,540) $ 319,759,540 $ — Accretion of Class A Common Stock to Redemption Amount Additional paid-in captial $ — $ (3,524,807) $ (3,524,807) Accumulated deficit $ — $ (23,352,185) $ (23,352,185) Total stockholders’ equity (deficit) $ — $ (26,876,992) $ (26,876,992) The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the three months ended March 31, 2021: Form 10-Q: Three Months Ended March 31, 2021 As Reported Adjustment As Restated Cash Flow from Operating Activities $ (486,202) $ — $ (486,202) Cash Flows from Investing Activities $ (345,000,000) $ — $ (345,000,000) Cash Flows from Financing Activities $ 346,651,578 $ — $ 346,651,578 Supplemental Disclosure of Noncash Financing Activities: $ — Offering costs included in accrued expenses $ 95,000 $ — $ 95,000 Deferred underwriting commissions in connection with the initial public offering $ 12,075,000 $ — $ 12,075,000 Offering costs charged to additional paid in capital in connection with IPO $ 588,562 $ — $ 588,562 Initial value of Class A common stock subject to possible redemption $ 316,157,260 $ (316,157,260) $ — Change in value of Class A common stock subject to possible redemption $ 3,602,280 $ (3,602,280) $ — 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: June 30, 2021 As Reported Adjustment If Adjusted Total assets $ 345,776,201 $ — $ 345,776,201 Total liabilities $ 28,173,503 $ — $ 28,173,503 Class A common stock subject to redemption $ 312,602,690 $ 32,397,310 $ 345,000,000 Preferred stock $ — Class A common stock $ 324 $ (324) $ — Class B common stock $ 863 $ — $ 863 Additional paid-in captial $ 9,044,801 $ (9,044,801) $ — Accumulated deficit $ (4,045,980) $ (23,352,185) $ (27,398,165) Total stockholders’ equity (deficit) $ 5,000,008 $ (32,397,310) $ (27,397,302) Total liabilities, Class A common stock subject to redemption and stockholders’ equity (deficit) $ 345,776,201 $ — $ 345,776,201 The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of stockholders’ equity (deficit) for the three months ended June 30, 2021: Three Months Ended June 30, 2021 As Reported Adjustment If Adjusted Class A Common Stock Subject to Possible Redemption Class A common stock, par value $0.0001 $ 72 $ (72) $ — Additional paid-in captial $ 7,156,778 $ (7,156,778) $ — Total stockholders’ equity (deficit) $ 7,156,850 $ (7,156,850) $ — The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the six months ended June 30, 2021: Form 10-Q: Six Months Ended June 30, 2021 As Reported Adjustment As Restated Cash Flow from Operating Activities $ (1,227,944) $ — $ (1,227,944) Cash Flows from Investing Activities $ (345,000,000) $ — $ (345,000,000) Cash Flows from Financing Activities $ 346,626,578 $ — $ 346,626,578 Supplemental Disclosure of Noncash Financing Activities: $ — Offering costs included in accrued expenses $ 70,000 $ — $ 70,000 Deferred underwriting commissions in connection with the initial public offering $ 12,075,000 $ — $ 12,075,000 Offering costs charged to additional paid in capital in connection with IPO $ 588,562 $ — $ 588,562 Initial value of Class A common stock subject to possible redemption $ 316,157,260 $ (316,157,260) $ — Change in value of Class A common stock subject to possible redemption $ (3,554,570) $ 3,554,570 $ — In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company has revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for the Affected Quarterly Periods: EPS for Class A Common Stock As Reported Adjustment As Adjusted Form 10-Q (March 31, 2021): Net income 3,112,761 — 3,112,761 Weighted average shares outstanding 31,621,444 (7,471,444) 24,150,000 Basic and diluted earnings per share 0.00 (0.10) 0.10 Form 10-Q (June 30, 2021) - three months ended June 30, 2021 Net loss (7,156,849) — (7,156,849) Weighted average shares outstanding 31,968,089 2,531,911 34,500,000 Basic and diluted earnings per share 0.00 0.17 (0.17) Form 10-Q (June 30, 2021) - six months ended June 30, 2021 Net loss (4,044,088) — (4,044,088) Weighted average shares outstanding 31,826,280 (2,472,689) 29,353,591 Basic and diluted earnings per share 0.00 0.11 (0.11) EPS for Class B Common Stock As Reported Adjustment As Adjusted Form 10-Q (March 31, 2021): Net income 3,112,761 — 3,112,761 Weighted average shares outstanding - basic 10,302,489 (2,014,989) 8,287,500 Weighted average shares outstanding - diluted 10,302,489 (1,677,489) 8,625,000 Basic and diluted earnings per share 0.30 0.20 0.10 Form 10-Q (June 30, 2021) - three months ended June 30, 2021 Net loss (7,156,849) — (7,156,849) Weighted average shares outstanding 11,156,911 (2,531,911) 8,625,000 Basic and diluted earnings per share (0.64) (0.47) (0.17) Form 10-Q (June 30, 2021) - six months ended June 30, 2021 Net loss (4,044,088) — (4,044,088) Weighted average shares outstanding 10,732,060 (2,274,878) 8,457,182 Basic and diluted earnings per share (0.38) (0.27) (0.11) 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of unaudited condensed 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 unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. 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. As of September 30, 2021, and December 31, 2020, the Company had no cash equivalents held outside the Trust Account. 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 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 are included in income 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 quoted market prices. 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 of $250,000 and investments held in the Trust Account. As of September 30, 2021 and December 31, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the condensed balance sheets. Fair Value Measurements Fair value is defined as the price that would be received for 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 consist of: ● 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. Derivative Warrant Liabilities The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480, and ASC Topic 815-15, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised. Their re-measurement to fair value is recognized in the Company’s condensed statements of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering were initially measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of September 30, 2021, the value of the Public Warrants was measured based on the listed market price of such warrants since being separately listed and traded. The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. 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 expenses in the condensed statements of operations. Offering costs associated with the Class A common stock were charged against the carrying value of the Class A common stock upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Class A Common Stock Subject to Possible Redemption The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features 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, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2021, 34,500,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheets. There was no Class A common stock issued or outstanding Effective with the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. Income Taxes The Company’s taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative expenses are generally considered start-up costs and are not currently deductible. The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited condensed financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2021, the Company had deferred tax assets of approximately $210,000, against which a full valuation allowance was applied. As of December 31, 2020, the deferred tax asset was deemed immaterial. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed 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 as of September 30, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company’s currently taxable income primarily consists of interest and dividends earned and unrealized gains on investments held in the Trust Account. No amounts were accrued for the payment of interest and penalties as of 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 Per Share of Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income per common stock is calculated by dividing the net income by the weighted average shares of common stock outstanding for the respective period. The calculation of diluted net income per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering (including exercise of the over-allotment option) and the Private Placement to purchase an aggregate of 14,558,333 shares of common stock in the calculation of diluted income per share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income per share is the same as basic net income per share for the three and nine months ended September 30, 2021. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each class of common stock: For the Three Months Ended For the Nine Months Ended September 30, 2021 September 30, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,219,653 $ 1,304,913 $ 1,989,515 $ 490,963 Allocation of net income - Diluted $ 5,219,653 $ 1,304,913 $ 1,984,382 $ 496,096 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,087,912 8,513,736 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,087,912 8,625,000 Basic net income per common stock $ 0.15 $ 0.15 $ 0.06 $ 0.06 Diluted net income per common stock $ 0.15 $ 0.15 $ 0.06 $ 0.06 Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”)”, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows. 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. |