| 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 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. 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 shareholder approval of any golden parachute payments not previously
approved. KERNEL
GROUP HOLDINGS, INC. NOTES
TO FINANCIAL STATEMENTS 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 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 financial statements in conformity with GAAP requires 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 financial statements and the
reported amounts of revenues and expenses during the reporting periods. 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 financial statements, which management considered in formulating its estimate, could change in the near term due to
one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the
determination of the fair value of the warrant liabilities. Actual results could differ from those estimates. 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 Deposit Insurance Corporation coverage limit of $ 250,000 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 Investments
Held in Trust Account The
Company’s portfolio of investments held in the Trust Account 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 statements of operations. The estimated fair values of investments held in the Trust Account
are determined using available market information. KERNEL GROUP HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS Fair Value of Financial Instruments The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under the ASC Topic 820, “Fair Value Measurements”, equals or approximates
the carrying amounts represented in the balance sheets, except for warrant liabilities (see Note 9). 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 (unadjusted) 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 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 ASC 815, “Derivatives and Hedging”. 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 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. The liabilities are subject to re-measurement at each balance sheet date until exercised.
The fair value of warrants issued in connection with the Private Placement has been estimated using a modified Black-Scholes model at
each balance sheet date before December 2022 and subsequently has been measured by using the market value of the public warrants. The
fair value of the warrants issued in connection with the Initial Public Offering was initially measured using a Monte-Carlo simulation
and subsequently has been measured based on the market price at each measurement date when separately listed and traded. The determination
of the fair value of the derivative liability may be subject to change as more current information becomes available and accordingly
the actual results could differ significantly. Derivative 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 derivative warrant
liabilities are expensed as incurred, and presented as non-operating expenses in the statements of operations. Offering costs associated
with the Class A ordinary shares issued were charged against the carrying value of Class A ordinary shares 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. KERNEL
GROUP HOLDINGS, INC. NOTES
TO FINANCIAL STATEMENTS Class
A Ordinary Shares Subject to Possible Redemption The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing
Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments
and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary 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) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’
equity. The Company’s Class A ordinary 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 Initial Public Offering, the Company had 30,475,000 Under
ASC 480-10S99, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying
value of the security to equal the redemption value at the end of each reporting period. This method would view the end of the reporting
period as if it were also the redemption date for the security. 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. Net
Income per Ordinary Share 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 ordinary shares and Class B ordinary shares. Income and losses are shared pro
rata between the two classes of shares. This presentation assumes a business combination as the most likely outcome. Net income (loss)
per ordinary share is calculated by dividing the net income (loss) by the weighted average number of ordinary shares outstanding for
the respective period. The
calculation of diluted net income (loss) per ordinary share does not consider the effect of the warrants underlying the Units sold in
the Initial Public Offering and the Private Placement Warrants to purchase 23,987,500 The
Company has considered the effect of Class B ordinary shares that were excluded from weighted average number as they were contingent
on the exercise of over-allotment option by the underwriters. Since the contingency was satisfied, the Company included these shares
in the weighted average number as of the beginning of the interim period to determine the dilutive impact of these shares. KERNEL
GROUP HOLDINGS, INC. NOTES
TO FINANCIAL STATEMENTS The
table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each
class of ordinary shares: Basic and Diluted Net Income per Share of Ordinary Share
Class A Class B Class A Class B
For the Years Ended December 31,
2022 2021
Class A Class B Class A Class B
Numerator:
Allocation of net income - basic $ 12,524,823 $ 3,131,206 $ 11,977,673 $ 3,270,583
Allocation of net income - diluted $ 12,524,823 $ 3,131,206 $ 11,945,221 $ 3,303,035
Denominator:
Weighted average ordinary shares outstanding, basic 30,475,000 7,618,750 27,552,740 7,523,459
Weighted average ordinary shares outstanding, diluted 30,475,000 7,618,750 27,552,740 7,618,750
Basic net income per ordinary share $ 0.41 $ 0.41 $ 0.43 $ 0.43
Diluted net income per ordinary share $ 0.41 $ 0.41 $ 0.43 $ 0.43 Income
Taxes The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes”. ASC Topic 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 no There
is currently no taxation imposed on income by the government of the Cayman Islands. In accordance with Cayman federal income tax regulations,
income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.
The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months. Recent
Accounting Pronouncements In
June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820, “Fair Value Measurement of Equity Securities Subject to Contractual Sale
Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity
security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that
are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value.
The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within
those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made
available for issuance. The Company is still evaluating the impact of this pronouncement on the financial statements. The
Company’s management does not believe that any other recently issued, but not yet effective, accounting standards updates, if currently
adopted, would have a material effect on the Company’s financial statements. KERNEL
GROUP HOLDINGS, INC. NOTES
TO FINANCIAL STATEMENTS |
