| Summary of Significant Accounting Policies | Note
2 — Summary of Significant Accounting Policies Basis
of Presentation The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange
Commission. 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. NORTHERN
LIGHTS ACQUISITION CORP. NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note
2 — Summary of Significant Accounting Policies (Continued) 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 statements 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 balance sheet 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 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. Accordingly, the actual results could differ
significantly from those estimates. Cash
and Cash Equivalents The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash
equivalents are carried at cost, which approximates fair value. The Company had $ 938,805 no Trust Account Upon the closing of the Initial Public Offering
and the Private Placement, $ 117,300,000 10.00 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
to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits, if any, as income tax expense. There were no no The
provision for income taxes was deemed to be immaterial for the period from February 26, 2021 (inception) through June 30, 2021. NORTHERN
LIGHTS ACQUISITION CORP. NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note
2 — Summary of Significant Accounting Policies (Continued) Offering
Costs Associated with the Initial Public Offering Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred 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
offering costs allocated to warrants in the condensed statements of operations. Offering costs associated with the Public Shares
were charged to stockholders’ equity upon the completion of the Initial Public Offering. Class
A Common Stock Subject to Possible Redemption The
Company accounts for its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) is classified as a liability
instrument and is measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock 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 are classified as stockholders’
equity. The Company’s shares feature certain redemption rights that are considered to be outside of the Company’s control
and subject to occurrence of uncertain future events. Accordingly, at June 30, 2021, as there are 1,514,656 10,513,519 Concentration
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 Corporation coverage limit of $ 250,000 Net
Loss Per Share Net
income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock shares outstanding for
the period. The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with
the Initial Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) since
the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The
Company’s statements of operations includes a presentation of income (loss) per share for common stock shares subject to possible
redemption in a manner similar to the two-class method of income (loss) per share. Net income per share, basic and diluted, for Class
A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, if any, by the weighted average
number of Class A redeemable common stock shares outstanding. Net loss per share, basic and diluted, for Class A and Class B non-redeemable
common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock shares, by the
weighted average number of Class A and Class B non-redeemable common stock shares outstanding for the period. Non-redeemable Class A
and Class B common stock shares includes the Founder Shares and non-redeemable common stock shares as these shares do not have any redemption
features and do not participate in the income earned on the Trust Account. The
following table reflects the calculation of basic and diluted net income per common share: Schedule
of Calculation of Basic and Diluted Net Income Per Share
For the Three Months For the Period from February 26, 2021 (inception)
Ended June 30, 2021 Through June 30, 2021
Redeemable Class A common shares
Numerator: earnings allocable to redeemable Class A common shares
Interest income on investments held in Trust Account $ 17 $ 17
Unrealized loss from investments held in Trust Account (9,495 ) (9,495 )
Net loss $ (9,478 ) $ (9,478 )
Denominator: weighted average number of redeemable Class A common share 10,302,592 10,302,592
Basic and diluted net loss per redeemable Class A common share $ 0.00 $ 0.00
Non-redeemable Class A and Class B common shares
Numerator: net income (loss) minus redeemable net earnings
Net loss $ (1,743,727 ) $ (1,743,727 )
Redeemable net loss (9,478 ) (9,478 )
Non-redeemable net loss $ (1,753,205 ) $ (1,753,205 )
Denominator: weighted average number of non-redeemable Class B common shares and Class A private placement shares
Non-redeemable Class A private placement and Class B common shares, basic and diluted 2,931,887 2,916,414
Basic and diluted net loss per non-redeemable Class A private placement and Class B common share $ (0.59 ) $ (0.59 ) NORTHERN
LIGHTS ACQUISITION CORP. NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note
2 — Summary of Significant Accounting Policies (Continued) 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 accompanying condensed balance sheet, primarily due to their
short-term nature. 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. U.S. 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. Derivative
Financial Instruments The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted
for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion
of the instrument could be required within 12 months of the balance sheet date. Recently
Issued Accounting Standards In
August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt—Debt with Conversion and
Other Options(Subtopic 470- 0) 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 U.S. 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. Management
does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would
have a material effect on the Company’s financial statements. |
