| Significant Accounting Policies | Note
2—Significant Accounting Policies Risks
and Uncertainties On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain
of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as
a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve.
The impact of the COVID-19 outbreak on the Company’s financial position will depend on future developments, including
the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak
on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall
economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally,
the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental
measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown
of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or
affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an
initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be
dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and
the resulting market downturn. The condensed financial statements do not include any adjustments that might result from the outcome of
this uncertainty. Basis
of Presentation The
accompanying condensed financial statements are presented in conformity with accounting principles generally accepted in the United States
of America (“GAAP”) and pursuant to the rules and regulations of the SEC, and reflect all adjustments, consisting only of
normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the financial position
as of June 30, 2022 and the results of operations and cash flows for the period presented and should be read in conjunction with the
Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The financial information as of December 31, 2021 is
derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December
31, 2021. The interim results for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for
the year ending December 31, 2022 or for any future periods. 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 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. Liquidity,
Capital Resources and Going Concern As of June 30, 2022, the Company had $412,957 of
cash and cash equivalents and working capital deficit of $(1,328,144). On
September 28, 2021, the Company issued an unsecured promissory note to the Sponsor, whereby the Sponsor has agreed to loan up to $1,000,000 to
the Company for working capital needs (the “Sponsor Working Capital Loan”). The Sponsor Working Capital Loan accrues no interest
on the unpaid principal balance. The Sponsor Working Capital Loan is due on the earlier of (i) the date on which the Company consummates
its initial Business Combination and (ii) the date that the winding up of the Company is effective. As of June 30, 2022 and December
31, 2021, the Company has drawn down $650,000. Until
consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working
Capital Loans (as defined in Note 5) for identifying and evaluating prospective acquisition candidates, performing business due diligence
on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing
corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring,
negotiating and consummating the Business Combination. To complete a Business Combination, the Company
may need to raise additional capital through loans or additional investments from the Sponsor, the Company’s officers or directors
or third parties. Other than the Sponsor Working Capital Loan described above, the Company cannot provide assurance that new financing
will be available to it on commercially acceptable terms, if at all. Additionally, the Company has until January 28, 2023 to consummate
a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If the Company
does not consummate a Business Combination by such date and an extension has not been approved by the Company’s stockholders, there
will be a mandatory liquidation and subsequent dissolution of the Company. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern through one year from the date of these condensed financial statements if a Business Combination
is not consummated. These condensed financial statements do not include any adjustments relating to the recovery of the recorded assets
or classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. 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 and cash equivalents.
The Company did not have any cash equivalents as of June 30, 2022 and December 31, 2021. Marketable
Securities Held in Trust Account At
June 30, 2022, the assets held in the Trust Account were held in money market funds which invest in U.S. Treasury securities. During
the six months ended June 30, 2022 and 2021, the Company did not withdraw any of the interest income from the Trust Account to pay its
tax obligations. Fair
Value Measurements Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 820 “Fair Value
Measurements and Disclosures” (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded
disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques
consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC 820 establishes a fair
value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs
are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the
asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s
assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information
available in the circumstances. The
fair value hierarchy is categorized into three levels based on the inputs as follows: Level
1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the
ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that
are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. Level
2 – Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that
are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets and liabilities, or (iv) inputs
that are derived principally from or corroborated by market through correlation or other means. Level
3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet as of June 30, 2022 and the balance
sheet as of December 31, 2021. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses
are estimated to approximate the carrying values as of June 30, 2022 and December 31, 2021 due to the short maturities of such instruments.
Fair
Value Measured as of
Level 1 Level 2 Level 3 Total
Assets:
U.S. Treasury Securities held in Trust Account $ 287,885,616 $ - $ - $ 287,885,616
$ 287,885,616 $ - $ - $ 287,885,616
Liabilities:
Private stock warrant liabilities $ - $ - $ 510,000 $ 510,000
Convertible promissory note – related party - - 377,340 377,340
Public stock warrant liabilities 958,333 - - 958,333
$ 958,333 $ - $ 887,340 $ 1,845,673
Fair Value Measured as of
Level 1 Level 2 Level 3 Total
Assets:
U.S. Treasury Securities held in Trust Account $ 287,517,214 $ - $ - $ 287,517,214
$ 287,517,214 $ - $ - $ 287,517,214
Liabilities:
Private stock warrant liabilities $ - $ - $ 2,958,000 $ 2,958,000
Convertible promissory note – related party - - 480,203 480,203
Public stock warrant liabilities 5,558,333 - - 5,558,333
$ 5,558,333 $ - $ 3,438,203 $ 8,996,536 Warrants The
Warrants are accounted for as liabilities pursuant to FASB ASC Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own
Equity (“ASC 815-40”) and are measured at fair value as of each reporting period. Changes in the fair value of the Warrants
are recorded in the statement of operations each period. As
of June 30, 2022 and December 31, 2021, the estimated fair value of the Public Warrants was determined by their public trading price
and the estimated fair value of the Private Placement Warrants was determined using a Modified Black-Scholes valuation model using Level
3 inputs. Significant inputs to the valuation are as follows:
As
of As
of
Exercise
price $ 11.50 $ 11.50
Stock price 9.81 9.75
Volatility 2.40 % 13.50 %
Term 5.00 5.00
Risk-free
rate 3.01 % 1.26 %
Dividend
yield 0.00 % 0.00 % Convertible
Promissory Note – Related Party The
Company utilizes a compound option valuation model to estimate fair value of the convertible promissory note at each reporting period
with changes recognized in the statements of operations. Significant inputs to the valuation are as follows:
As of As of
Conversion price $ 1.50 $ 1.50
Private warrant price 0.10 0.58
Volatility 2.40 % 13.50 %
Term 0.58 0.85
Risk-free rate 2.56 % 0.29 %
Dividend yield 0.00 % 0.00 %
Number of steps 50 50 The
following table presents a summary of the changes in the fair value of the convertible promissory note – related party and Private
Placement Warrants, Level 3 liabilities, measured on a recurring basis as of June 30, 2022 and December 31, 2021:
Convertible promissory note and private placement warrant liabilities at December 31, 2021 $ 3,438,203
Change in fair value of convertible promissory note – related party (102,863 )
Change in fair value of warrant liabilities (2,448,000 )
Convertible promissory note and private placement warrant liabilities at June 30, 2022 $ 887,340
Convertible promissory note and private placement warrant liabilities at December 31, 2020 $ -
Issuance of private warrants 3,111,000
Proceeds received through convertible promissory note – related party 650,000
Change in fair value of convertible promissory note – related party (169,797 )
Change in fair value of warrant liabilities (153,000 )
Convertible promissory note and private placement warrant liabilities at December 31, 2021 $ 3,438,203 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. At June 30, 2022 and December 31, 2021, the
Company has not experienced losses on these accounts. 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. 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 9,583,333 Public
Warrants issued in connection with the IPO and the 5,100,000 Private Placement Warrants are recognized as derivative liabilities
in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the
instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised,
and any change in fair value is recognized in the Company’s statement of operations. The fair value of the Warrants issued in connection
with the IPO and private placement were initially measured at fair value using the Black-Scholes method for Private Placement Warrants
and a Monte Carlo simulation model for Public Warrants. Subsequent to being publicly traded, the Company uses the publicly traded warrant
price for Public Warrants and the Black-Scholes method for Private Placement Warrants to estimate fair value at each measurement date. Convertible
Promissory Note – Related Party The
Company accounts for the convertible promissory note under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25,
the election can be made at the inception of a financial instrument to account for the instrument under the fair value option under ASC
825. The Company has made such election for the convertible promissory note. Using the fair value option, the convertible promissory
note is required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in
the estimated fair value of the note are recognized as non-cash gains or losses in the statements of operations. 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 a liability instrument
and measured at fair value. Conditionally redeemable Class A common stock (including common stock shares 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) is classified as temporary equity. At all other times, shares of common stock are classified as stockholders’
equity. The Company’s common stock shares 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 June 30, 2022 and December 31, 2021, 28,750,000 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 balance sheet. At
June 30, 2022 and December 31, 2021, the Class A common stock subject to possible redemption reflected in the balance sheet is reconciled
in the following table:
Gross proceeds $ 287,500,000
Less:
Common stock issuance costs (15,978,191 )
Derivative public warrant liability (5,750,000 )
Plus:
Fair value adjustment of carrying value to redemption value 21,728,191
Class A common stock subject to possible redemption $ 287,500,000 Offering
Costs The
Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A-“Expenses
of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date
that are related to the IPO and were charged to stockholders’ equity upon the completion of the IPO. Accordingly, as of June 30,
2022 and December 31, 2021, offering costs in the aggregate of $15,978,191 have been charged to stockholders’ equity (consisting
of $5,635,000 in cash underwriting fees, $9,861,250 in deferred underwriting fees and $481,941 of other offering costs). Use
of Estimates The
preparation of the condensed financial statements in conformity with U.S. 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 during
the reporting period. Actual results could differ from those estimates. Income
Taxes The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the 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. The
Financial Accounting Standards Board (“FASB”) 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. The Company recognizes
accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and
no amounts accrued for interest and penalties as of June 30, 2022 and December 31, 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. The
Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential
examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance
with federal, state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits
will materially change over the next twelve months. The effective tax rate differs from the statutory tax rate of 21% for the six
months ended June 30, 2022 and 2021, due to the valuation allowance recorded on the Company’s net operating losses and permanent
differences related to the warrant liabilities and convertible promissory note. On
March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws
are recognized in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things
(i) increasing the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2019
and 2020 to permit additional expensing of interest (ii) enacting a technical correction so that qualified improvement property can be
immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting
federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate
a refund of previously paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits. Given the Company’s
full valuation allowance position and capitalization of all costs, the CARES Act did not have an impact on the condensed financial statements. Net
income (loss) Per Common Stock Shares The
Company applies the two-class method in calculating net loss per common stock share. The contractual formula utilized to calculate the
redemption amount approximates fair value. The Class feature to redeem at fair value means that there is effectively only one class of
stock. Changes in fair value are not considered a dividend of the purposes of the numerator in the earnings per share calculation. Net
loss per common stock share is computed by dividing the pro rata net loss between the Class A common stock and the Class B common stock
by the weighted average number of common stock outstanding for each of the periods. The calculation of diluted loss per common stock
does not consider the effect of the Warrants sold in the IPO and private placement since the exercise of such Warrants is contingent
upon the occurrence of future events and the inclusion of such Warrants would be anti-dilutive. The Warrants are exercisable for 14,683,333 shares
of Class A common stock in the aggregate.
Six Months Six Months
Class A Common Stock
Numerator: Earnings allocable to Redeemable Class A Common Stock
Net income (loss) allocable to Class A Common Stock subject to possible redemption $ 4,576,868 $ (5,347,236 )
Denominator: Weighted Average Class A Common Stock
Basic and diluted weighted average shares outstanding 28,750,000 24,277,778
Basic and diluted net income (loss) per share $ 0.16 $ (0.22 )
Non-redeemable common stock
Numerator: Net Loss minus Net Earnings
Net income (loss) allocable to non-redeemable common stock $ 1,144,217 $ (1,583,063 )
Denominator: Weighted Average non-redeemable common stock
Basic and diluted weighted average shares outstanding 7,187,500 7,187,500
Basic and diluted net income (loss) per share $ 0.16 $ (0.22 )
Three Months Three Months
Class A Common Stock
Numerator: Earnings allocable to Redeemable Class A Common Stock
Net income (loss) allocable to Class A Common Stock subject to possible redemption $ 1,946,593 $ (4,453,231 )
Denominator: Weighted Average Class A Common Stock
Basic and diluted weighted average shares outstanding 28,750,000 28,750,000
Basic and diluted net income (loss) per share $ 0.07 $ (0.15 )
Non-redeemable common stock
Numerator: Net Loss minus Net Earnings
Net income (loss) allocable to non-redeemable common stock $ 486,648 $ (1,113,308 )
Denominator: Weighted Average non-redeemable common stock
Basic and diluted weighted average shares outstanding 7,187,500 7,187,500
Basic and diluted net income (loss) per share $ 0.07 $ (0.15 ) Recent
Accounting Standards In
August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models
that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces
additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.
ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible
instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2022. The adoption of ASU 2020-06 did not
have an impact on the Company’s financial statements. Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements. |
