| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of
America (“GAAP”). 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. 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 a 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 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 statement(s) with another public company,
which is neither an emerging growth company nor an emerging growth company which 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 the financial
statement 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 statement. Estimates are used when accounting
for certain items such as valuation of investments held in Trust Account, derivative and warrant liabilities, and accounting for income
tax valuation allowances. 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 statement, 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 date of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of December 31, 2021 and 2020. Investments Held in Trust Account As of December 31, 2021, the
Company had $172,507,535 in investments held in the Trust Account. The assets held in the Trust Account were held in a mutual fund
that invests in U.S. Treasury securities. Class
A Common Stock Subject to Possible Redemption All
of the 17,250,000 shares of Class A common stock sold as part of the Public Units in the Public Offering contain a redemption
feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder
vote or tender offer in connection with the Initial Business Combination and in connection with certain amendments to the Company’s
amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments,
which has been codified in Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely within
the control of the Company require shares of common stock subject to redemption to be classified outside of permanent equity. Therefore,
all of the shares of Class A common stock sold in the Public Offering has been classified outside of permanent equity. 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. As of December 31, 2021, the
shares of Class A common stock reflected in the balance sheet are reconciled in the following table:
Gross proceeds $ 172,500,000
Less:
Proceeds allocated to Public Warrants (5,347,500 )
Proceeds allocated to derivative liability (84,985 )
Issuance costs allocated to Class A ordinary shares (3,896,314 )
Plus:
Remeasurement adjustment of carrying value to redemption value 9,298,579
Reclassification of derivative liability upon exercise of overallotment option 30,220
Class A ordinary shares subject to possible redemption $ 172,500,000 Note
Payable - Related Party The
Company had a note payable to Sponsor which allowed the Company to borrow up to $300,000 without interest to be used for a portion
of the expenses associated with the Public Offering. The notes payable was payable on the earlier of: (i) December 31, 2021
or (ii) the date on which the Company consummated an initial public offering of its securities. Borrowings on the note payable due
to related party was $100,000 on the date of the Public Offering. On May 17, 2021, the note payable – related party in the
amount of $100,000 was repaid using proceeds from the Public Offering and the Private Placement. Warrant
Liability The
Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair
value on the balance sheet in accordance with subtopic ASC 815-40-15, “Derivatives and Hedging - Contract’s in Entity’s
Own Equity”. The warrants will be re-evaluated for the proper accounting treatment at each reporting period and are subject to remeasurement
at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of
operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration
of the common stock warrants. At that time, the portion of the liability related to the common stock warrants will be reclassified to
additional paid-in capital. At December 31, 2021, there were 5,950,000 Warrants issued in connection with the Public Offering (the 5,750,000
public Warrants and the 200,000 Private Placement Warrants). Offering
Costs Associated with the Public Offering The
Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin 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 Public
Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction
in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred
offering costs amounting to $4,021,103 as a result of the Public Offering (consisting of underwriting commissions of $3,450,000 (2%
of the gross proceeds of the Public Offering) and other offering costs of $571,103). The Company recorded $3,896,314 of offering
costs as a reduction of temporary equity in connection with the shares of Class A common stock included in the Units. The Company immediately
expensed $124,789 of offering costs in connection with the Public Warrants and Private Placement Warrants that were classified as
liabilities. Income
Taxes Prior
to the change in ownership on May 11, 2021 as a result of the Public Offering, the Company was included in the consolidated tax return
of B. Riley Financial (the “Parent”). During this period, the Company calculated the provision for income taxes by using a
“separate return” method. Under this method the Company is assumed to file a separate return with the tax authority, thereby
reporting its taxable income or loss and paying the applicable tax to, or receiving the appropriate refund from, the Parent. The current
provision was the amount of tax payable or refundable on the basis of a hypothetical, current year, separate return. Following changes
in ownership on May 11, 2021, the Company deconsolidated from the Parent for tax purposes. Beginning May 11, 2021, the Company files separate
corporate federal and state and local income tax returns. Any
difference between the tax provision (or benefit) allocated to the Company under the separate return method and payments to be made by
(or received from) the Parent for tax expense are treated as either dividends or capital contribution. Accordingly, the amount by which
the Company’s tax liability under the separate return method exceeds the amount of tax liability ultimately settled as a result
of using incremental expenses of the Parent is periodically settled as a capital contribution from the Parent to the Company. 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 to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. As of December 31, 2021, there were no unrecognized tax benefits and no amounts accrued for interest
and penalties. 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 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. Unrecognized
Tax Benefits The
Company recognizes tax positions in its financial statements only when it is more likely than not that the position will be sustained
on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is
measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences
between positions taken in a tax return and amounts recognized in the financial statements. There were no unrecognized tax benefits as
of December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
No amounts were accrued for interest expense and penalties related to income tax matters as of December 31, 2021. The Company is subject
to income tax examinations by major taxing authorities since inception. Net
Income Per Common Share The
Company has two classes of shares, which are referred to as Class A common stock and Class B common stock (the “Founder Shares”).
Earnings and losses are shared pro rata between the two classes of shares. Private and public Warrants to purchase 5,950,000 shares of
common stock at $11.50 per share were issued in connection with the IPO and exercise of overallotment. At December 31 2021, no Warrants
have been exercised. The 5,950,000 potential common shares for outstanding Warrants to purchase the Company’s stock were excluded
from diluted earnings per share for the year ended December 31, 2021, because the Warrants are contingently exercisable, and the contingencies
have not yet been met. Basic and diluted earnings per share for the period from June 19, 2020, (Inception) through December 31, 2020 gives
effect retroactively to the redeemable Class B shares that were outstanding as a result of the Initial Public Offering. The basic weighted
average Class B common shares outstanding of 4,058,219 in 2021 excludes 254,281 common shares that are included in the diluted weighted
average Class B common shares which is the impact of the 562,500 Class B common shares that were subject to forfeiture and contingently
issuable upon completion of the Initial Public Offering. In 2020, the dilutive impact of the 562,500 Class B common shares that were subject
to forfeiture and contingently issuable upon completion of the Initial Public Offering were antidilutive. 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 common stock:
For the Year For the
December 31, December 31,
2021 2020
Basic and diluted weighted average shares outstanding, class A common shares 11,229,781 n/a
Basic and diluted Net income per share, Class A common shares $ 00.1 n/a
Basic weighted average shares outstanding, Class B common shares 4,058,219 3,750,000
Basic Net income per share, Class B common shares $ 0.01 $ 0.00
Diluted weighted average shares outstanding, Class B common shares 4,312,500 3,750,000
Diluted Net income per share, Class B common shares $ 0.01 $ 0.00 n/a - not applicable as there were no Class A Common Stock outstanding
in 2020. For
the period from June 19, 2020, (Inception) through December 31, 2020, there were no shares of redeemable common stock outstanding or other
common stock equivalents outstanding. Basic and diluted earnings per share for the period from June 19, 2020, (Inception) through December
31, 2020 was $0.00 based on 4,312,500 shares outstanding which gives effect retroactively to the redeemable Class B shares that were outstanding
as a result of the Initial Public Offering. 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. The Company has not experienced losses on these accounts. Fair Value of Financial Instruments The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates
the carrying amounts represented in the balance sheet, primarily due to their short-term nature. The Company follows the guidance
in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and
non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The fair value of the Company’s
financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the
use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. The Company’s Warrants
are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed balance sheet.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within
change in fair value of warrant liabilities in the condensed statements of operations. The Public Warrants commenced separate trading
on June 28, 2021. See Note 4 for additional
information on assets and liabilities measured at fair value. Recent Accounting Pronouncements In August 2020, the FASB
issued 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 effective
for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted.
We are currently assessing the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows. |
