Restatement of Previously Issued Financial Statements

12 Months Ended

Dec. 31, 2022

Restatement Of Previously Issued Financial Statements Abstract

Restatement of Previously Issued Financial Statements

Note 2. Restatement of Previously Issued Financial Statements

The Company had recognized a liability upon closing of their initial public offering in December 2020 for a portion of the underwriter’s commissions which was contingently payable upon closing of a future business combination, with the offsetting entry resulting in an initial discount to the securities sold in the initial public offering. On June 14, 2022, Cantor Fitzgerald & Co. irrevocably waived its rights to the deferred underwriting commissions due under the underwriting agreement. The Company recognized the waiver as an extinguishment, with a resulting non-operating gain recognized in its statements of operations reported in the Company’s Form 10-Qs for the quarterly periods ended June 30, 2022 and September 30, 2022 (the “Affected Quarterly Periods”). Upon subsequent review and analysis, management concluded that the Company should have recognized the portion allocated to Public Shares as an adjustment to the carrying value of the Class A common stock subject to possible redemption and the remaining balance as a gain from extinguishment of deferred underwriting commissions allocated to derivative warrant liabilities.

Therefore, the Company’s management and the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) concluded that the Company’s Affected Quarterly Periods should no longer be relied upon and that it is appropriate to restate them. As such, the Company will restate its financial statements in this Form 10-K. The previously presented Affected Quarterly Period should no longer be relied upon.

Impact of the Restatement

The impact of the restatement on the statements of operations, statements of changes in stockholders’ deficit and statements of cash flows for the affected period is presented below. The restatement had no impact on net cash flows from operating, investing or financing activities.

Statement of Operations:

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statements of operations for the three and six months ended June 30, 2022:

	For the Three Months Ended June 30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Total operating expenses	$	(1,120,935	)	$	-		$	(1,120,935	)
Other income (expenses):
Change in fair value of derivative warrant liabilities		2,290,750			-			2,290,750
Gain from extinguishment of deferred underwriting commissions allocated to derivative warrant liabilities		6,037,500			(5,749,511	)		287,989
Interest earned on operating account		1			-			1
Income from investments held in Trust Account		166,440			-			166,440
Income before income tax expense		7,373,756			(5,749,511	)		1,624,245
Income tax expense		6,535			-			6,535
Net income	$	7,367,221		$	(5,749,511	)	$	1,617,710
Weighted average shares outstanding of Class A common stock, basic and diluted		15,484,292			-			15,484,292
Basic and diluted net income per share, Class A common stock	$	0.37		$	(0.29	)	$	0.08
Weighted average shares outstanding of Class B common stock, basic and diluted		4,312,500			-			4,312,500
Basic and diluted net income per share, Class B common stock	$	0.37		$	(0.29	)	$	0.08

	For the Six Months Ended June 30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Total operating expenses	$	(1,554,619	)	$	-		$	(1,554,619	)
Other income (expenses):
Change in fair value of derivative warrant liabilities		5,929,000			-			5,929,000
Gain from extinguishment of deferred underwriting commissions allocated to derivative warrant liabilities		6,037,500			(5,749,511	)		287,989
Interest earned on operating account		3			-			3
Income from investments held in Trust Account		224,219			-			224,219
Income before income tax expense		10,636,103			(5,749,511	)		4,886,592
Income tax expense		6,535			-			6,535
Net income	$	10,629,568		$	(5,749,511	)	$	4,880,057
Weighted average shares outstanding of Class A common stock, basic and diluted		16,362,268			-			16,362,268
Basic and diluted net income per share, Class A common stock	$	0.51		$	(0.27	)	$	0.24
Weighted average shares outstanding of Class B common stock, basic and diluted		4,312,500			-			4,312,500
Basic and diluted net income per share, Class B common stock	$	0.51		$	(0.27	)	$	0.24

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of operations for the nine months ended September 30, 2022 (there were no adjustments for the three months ended September 30, 2022):

	For the Nine Months Ended September 30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Total operating expenses	$	(3,053,747	)	$	-		$	(3,053,747	)
Other income (expenses):
Change in fair value of derivative warrant liabilities		5,929,000			-			5,929,000
Gain from extinguishment of deferred underwriting commissions allocated to derivative warrant liabilities		6,037,500			(5,749,511	)		287,989
Interest earned on operating account		4			-			4
Income from investments held in Trust Account		281,713			-			281,713
Income before income tax expense		9,194,470			(5,749,511	)		3,444,959
Income tax expense		8,022			-			8,022
Net income	$	9,186,448		$	(5,749,511	)	$	3,436,937
Weighted average shares outstanding of Class A common stock, basic and diluted		11,246,592			-			11,246,592
Basic and diluted net income per share, Class A common stock	$	0.59		$	(0.37	)	$	0.22
Weighted average shares outstanding of Class B common stock, basic and diluted		4,312,500			-			4,312,500
Basic and diluted net income per share, Class B common stock	$	0.59		$	(0.37	)	$	0.22

Statement of Changes in Stockholders’ Deficit:

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported accumulated deficit within the statement of changes in stockholders’ deficit for the six months ended June 30, 2022:

	For the Six Months Ended June 30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Balance - December 31, 2021	$	(14,309,985	)		-		$	(14,309,985	)
Net income		10,629,568			(5,749,511	)		4,880,057
Adjustment for accretion of Class A common stock subject to possible redemption amount - accumulated deficit		-			5,749,511			5,749,511
Balance - June 30, 2022 (unaudited)	$	(3,680,417	)	$	-		$	(3,680,417	)

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported accumulated deficit within the statement of changes in stockholders’ deficit for the nine months ended September 30, 2022:

	For the Nine Months Ended September  30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Balance - December 31, 2021	$	(14,309,985	)		-		$	(14,309,985	)
Net income		9,186,448			(5,749,511	)		3,436,937
Adjustment for accretion of Class A common stock subject to possible redemption amount - accumulated deficit		-			5,749,511			5,749,511
Balance - September 30, 2022 (unaudited)	$	(5,123,537	)	$	-		$	(5,123,537	)

Statement of Cash Flows:

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the six months ended June 30, 2022:

	For the Six Months Ended June 30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Net income	$	10,629,568		$	(5,749,511	)	$	4,880,057
Adjustments to reconcile net income to net cash used in operating activities:
Change in fair value of derivative warrant liabilities		(5,929,000	)		-			(5,929,000	)
Gain from extinguishment of deferred underwriting commissions allocated to derivative warrant liabilities		(6,037,500	)		5,749,511			(287,989	)
Income from investments held in Trust Account		(224,219	)		-			(224,219	)
Changes in operating assets and liabilities:
Prepaid expenses		57,723			-			57,723
Accounts payable		258,731			-			258,731
Accrued expenses		1,041,731			-			1,041,731
Due to related party		(29,311	)		-			(29,311	)
Franchise tax payable		(70,522	)		-			(70,522	)
Income tax payable		6,535			-			6,535
Net cash used in operating activities	$	(296,264	)	$	-		$	(296,264	)
Supplemental disclosure of noncash financing activities:
Extinguishment of deferred underwriting commissions allocated to Public Shares	$	-		$	5,749,511		$	5,749,511

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the nine months ended September 30, 2022:

	For the Nine Months Ended September 30, 2022 (unaudited)
	As Previously Reported			Restatement Adjustment			As Restated
Net income	$	9,186,448		$	(5,749,511	)	$	3,436,937
Adjustments to reconcile net income to net cash used in operating activities:
Change in fair value of derivative warrant liabilities		(5,929,000	)		-			(5,929,000	)
Gain from extinguishment of deferred underwriting commissions allocated to derivative warrant liabilities		(6,037,500	)		5,749,511			(287,989	)
Income from investments held in Trust Account		(281,713	)		-			(281,713	)
Changes in operating assets and liabilities:
Prepaid expenses		75,099			-			75,099
Accounts payable		1,498,738			-			1,498,738
Accrued expenses		1,227,066			-			1,227,066
Due to related party		(29,311	)		-			(29,311	)
Franchise tax payable		(20,111	)		-			(20,111	)
Income tax payable		8,022			-			8,022
Net cash used in operating activities	$	(302,262	)	$	-		$	(302,262	)
Supplemental disclosure of noncash financing activities:
Extinguishment of deferred underwriting commissions allocated to Public Shares	$	-		$	5,749,511		$	5,749,511