| Summary of Significant Accounting Policies | Note
2 — Summary of Significant Accounting Policies Basis
of Presentation The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position,
results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating
results and cash flows for the periods presented. The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial
Public Offering as filed with the SEC on August 11, 2021, as well as the Company’s Current Report on Form 8-K, as filed with the
SEC on August 16, 2021. The interim results for the period ended September 30, 2021 are not necessarily indicative of the results to
be expected for the period ending December 31, 2021 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 auditor 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 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. PONO
CAPITAL CORP NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS September
30, 2021 Note
2 — Summary of Significant Accounting Policies (Continued) 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 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 $ 396,845 no Marketable
Securities Held in Trust Account At
September 30, 2021, substantially all of the assets held in the Trust Account were held in mutual funds. 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’s management determined the United States is the Company’s
only major tax 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 as of September 30, 2021 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 is subject to income tax examinations by major taxing authorities since inception. The
provision for income taxes was deemed to be immaterial for the period from February 12, 2021 (inception) through September 30, 2021. PONO
CAPITAL CORP NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS September
30, 2021 Note
2 — Summary of Significant Accounting Policies (Continued) Class
A Common Stock Subject to Possible Redemption All
of the Class A common stock sold as part of the Units in the Initial 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 Business Combination and in connection with certain amendments to the Company’s amended and restated certificate
of incorporation. In accordance with ASC 480, conditionally redeemable Class A common stock (including shares of Class A 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) are classified as temporary equity. Ordinary liquidation events, which involve
the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although
the Company did not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its public
shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $ 5,000,001 10.15 On
September 30, 2021, 11,500,000 As
of September 30, 2021, the Class A Common Stock reflected on the balance sheet are reconciled in the following table: Schedule
of Contingently Redeemable Class A Common Stock
As of September 30, 2021
Gross Proceeds $ 115,000,000
Less:
Proceeds allocated to public warrants (9,427,125 )
Class A shares issuance costs (5,663,197 )
Plus:
Accretion of carrying value to redemption value 16,815,322
Contingently redeemable Class A Common Stock 116,725,000 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 coverage 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 loss per common share, basic and diluted, for
redeemable Class A common stock is calculated by dividing the net loss allocable to Class A common stock subject to possible redemption,
by the weighted average number of redeemable Class A common stock outstanding since original issuance. Net loss per common stock, basic
and diluted, for non-redeemable Class A and Class B common stock is calculated by dividing net loss allocable to non-redeemable common
stock, by the weighted average number of shares of non-redeemable common stock outstanding for the periods. Shares of non-redeemable
Class B common stock include the founder shares as these common shares do not have any redemption features and do not participate in
the income earned on the Trust Account. PONO
CAPITAL CORP NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS September
30, 2021 Schedule
of Anti-dilutive Basic and Diluted Earnings Per Share
Three Months Ended September 30, 2021 For The Period from February 12, 2021 (Inception) Through September 30, 2021
Redeemable Class A common stock
Non-redeemable net loss
Numerator: net loss allocable to redeemable Class A common shares (890,341 ) (678,952 )
Redeemable net loss (890,341 ) (678,952 )
Denominator: weighted average number of redeemable Class A common shares 6,043,478 2,406,926
Basic and diluted net income per redeemable Class A common share $ (0.15 ) $ (0.28 )
Non-redeemable Class A common shares
Numerator: net loss allocable to non-redeemable Class A common stock (40,547 ) (30,928 )
Denominator: weighted average number of non-redeemable Class A common shares 274,995 109,522
Basic and diluted net loss per non-redeemable Class A common shares $ (0.15 ) $ (0.28 )
Non-redeemable Class B common shares
Numerator: net loss allocable to non-redeemable Class B common stock (368,615 ) (589,847 )
Denominator: weighted average number of non-redeemable Class B common shares 2,500,000 2,088,745
Denominator: weighted average number of common shares 2,500,000 2,088,745
Basic and diluted net loss per non-redeemable Class B common shares $ (0.15 ) $ (0.28 )
Basic and diluted net income per common shares $ (0.15 ) $ (0.28 )
Non-redeemable net loss 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 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, presented as non-operating expenses in the statement of operations. Offering costs associated with
the Class A common stock were charged to stockholders’ equity upon the completion of the Initial Public Offering. Fair
Value of Financial Instruments The
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 (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. PONO
CAPITAL CORP NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS September
30, 2021 Derivative
Financial Instruments The
Company accounts for derivative financial instruments in accordance with ASC Topic 815. For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance and remeasured at each
reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative financial instruments
is evaluated at the end of each reporting period. Recent
Accounting Standards In
August 2020, the Financial Accounting Standards Board (“FASB”) 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 is currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows. 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 condensed financial
statements. |
