| Summary of Significant Accounting Policies | Note 2—Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“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 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- 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 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 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 liability. Such estimates may be subject to change as more current information becomes available and 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. The Company had $386,462 in cash and no cash equivalents, outside of the funds held in the Trust Account, as of December 31, 2021. Warrant Liability The Company accounts for the Warrants in accordance with the guidance contained in ASC 815-40-15-7D re-measurement Cash Held in Trust Account At December 31, 2021, the assets held in the Trust Account were invested in money-market funds. Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit. The Class A common stock subject to possible redemption reflected on the balance sheet as December 31, 2021 are reconciled in the following table:
Gross proceeds $ 287,500,000
Less:
Deferred underwriting fees and other offering costs (15,887,831 )
Proceeds allocated to public warrants (13,129,167 )
Plus:
Total accretion of carrying value to redemption value 29,016,998
Class A common stock subject to possible redemption $ 287,500,000
Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At December 31, 2021 and December 31, 2020, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value Measurements ASC 820, Fair Value Measurement, defines fair value and requires disclosures about 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 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. As of December 31, 2021 and December 31, 2020 the carrying values of cash, accounts payable, franchise tax payable, and accrued expenses approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of marketable securities held in the Trust Account is comprised of investments in a money market fund that is primarily invested in U.S. Treasury securities. The fair value for trading securities is determined using quoted market prices in active markets. Offering Costs Offering costs consist of legal, accounting, underwriting and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Upon the completion of the Initial Public Offering in March 2021, the offering costs were allocated using the relative fair values of the Company common stock and its public and private warrants. The costs allocated to warrants were recognized in other expenses and those related to the Company’s common stock were charged against temporary equity. Net Income Per Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net per share of common stock is computed by dividing net income by the weighted average number of shares outstanding for the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering in the calculation of diluted income per share, because the exercise of the warrants is contingent upon the occurrence of future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The Class B shares will automatically convert into Class A shares at the time of the Business Combination subject to adjustment. 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 share, basic and diluted for Class A common stock is calculated by dividing the pro rata allocation of net loss to Class A shares of $5,412,932 for the year ended December 31, 2021, by the weighted average number of Class A common stock outstanding for the period. Net income per share basic and diluted for Class B common stock is calculated by dividing the pro rata allocation of net loss to shares of Class B common stock of $1,557,333 for the year ended December 31, 2021, respectively, by the weighted average number of Class B common stock outstanding for the period.
For The Year December 31, For The from December 31,
Redeemable Class A Common Stock
Numerator: Net loss allocable to Redeemable Class A Common Stock $ (5,412,932 ) $ —
Denominator: Weighted Average Share Outstanding, Redeemable Class A Common Stock
Basic and diluted weighted average shares outstanding, Redeemable Class A 24,102,740 —
Basic and diluted net earnings per share, Redeemable Class A $ (0.22 ) $ (0.00 )
Non-Redeemable
Numerator: Net loss allocable to non-redeemable
Net loss allocable to non-redeemable $ (1,557,333 ) $ (10,000 )
Denominator: Weighted Average Non-Redeemable 6,934,500 6,934,500
Basic and diluted weighted average shares outstanding, Non-Redeemable $ (0.22 ) $ (0.00 )
Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. 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 jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. 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 income tax provision consists of the following:
Year Ended Year Ended
Federal
Current $ — $ —
Deferred (265,962 ) (2,100 )
State and Local
Current $ — $ —
Deferred — —
Change in valuation allowance 265,962 2,100
Income tax provision $ — $ —
The Company’s net deferred tax assets are as follows:
Year Ended Year Ended
Deferred tax asset
Net Operating Loss Carryforward $ 265,962 $ 2,100
Total deferred tax assets 265,962 2,100
Valuation allowance (265,962 ) (2,100 )
Deferred tax asset, net of allowance $ — $ —
As of December 31, 2021, the Company had $265,962 of U.S. federal and state net operating loss carryovers available to offset future taxable income. In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of deferred tax assets and therefore established a full valuation allowance of $265,962 as of December 31, 2021. A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows
Year Ended Year Ended
Statutory federal income tax rate 21.00 % 21.00 %
State taxes, net of federal tax benefit — % — %
Change in fair value of derivative liabilities (13.23 %) — %
Transaction costs allocated to warrant issuance (3.95 %) — %
Change in valuation allowance (3.82 %) (21.00 %)
Income tax provision — % — %
The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities. Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, 470-20) 815-40) 2020-06”) 2020-06 2020-06 if-converted 2020-06 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 Company’s financial statements. |
