Restatement of Financial Statements

3 Months Ended

Mar. 31, 2021

Restatement of Financial Statements [Abstract]

Restatement of Financial Statements

Note 3 – Restatement of Financial Statements

Amendment No. 1

In June 2021, the Company concluded that, because of a misapplication of the accounting guidance related to its Public Warrants the Company issued in its initial public offering, the Company’s previously issued financial statements for the Affected Period should no longer be relied upon. As such, the Company is restating its financial statements for the Affected Period included in Amendment No. 1 on form 10-Q/A as filed on June 14, 2021.

As disclosed in the previously filed Form 10-Q on May 7, 2021, the Public Warrants were reflected as derivative liability as opposed to a component of equity on the balance sheet. The views expressed in the SEC Staff Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for Public Warrants issued in its initial public offering, in light of the SEC Staff’s published views. Based on this reassessment, management determined that the Public Warrants should be classified as equity.

Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued Financial Statements for the three months ended March 31, 2021 should be restated because of a misapplication in the guidance around accounting for the public warrants (the “Public Warrants”) and should no longer be relied upon. The Public Warrants were issued in connection with the Company’s Initial Public Offering.

Amendment No.2

The Company concluded it should restate its previously issued financial statements by amending Amendment No. 1 to its Quarterly Report on Form 10-Q/A, filed with the SEC on June 14, 2021, to classify all Public Shares in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480, paragraph 10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Public Shares in permanent equity, or total stockholders’ equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that, the Company will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable stock classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. Also, in connection with the change in presentation for the Public Shares, the Company also revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares share pro rata in the income and losses of the Company. As a result, the Company restated its previously filed financial statements to present all redeemable common stock as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering and in accordance with ASC 480.

Impact of the Restatement

The Company’s statement of stockholders’ equity has been restated to reflect the changes to the impacted stockholders’ equity accounts described above.

	As Previously Reported			Adjustment			As Restated
Balance - December 31, 2020 (Restated)	$	5,000,010		$	(3,651,391	)	$	1,348,619
Net loss (Restated)		(1,015,510	)		(1	)		(1,015,511	)
Change in value of common stock subject to possible redemption (Restated)		(3,651,392	)		3,651,392			—
Balance as of March 31, 2021	$	333,108		$	—		$	333,108

Note 3 – Restatement of Financial Statements – (Continued)

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 period from January 1, 2021 through March 31, 2021:

For the Period from January 1, 2021 through March 31, 2021
	As Previously Reported		Adjustment			As Restated
Supplemental Disclosure of Noncash Financing Activities:
Change in value of common stock subject to possible redemption (restated)	$	3,651,391	$	(3,651,391	)	$	—

The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per share is presented below for the period from January 1, 2021 through March 31, 2021:

	Earnings Per Share for Common Stock
	As Previously
	Reported (1)			Adjustment			As Restated
For the Three Months Ended March 31, 2021
Net loss	$	(1,015,510	)	$	(1	)	$	(1,015,511	)
Basic and Diluted weighted-average redeemable common shares outstanding		16,638,964			361,036			17,000,000
Basic and Diluted net loss per redeemable common share	$	0.00		$	(0.05	)	$	(0.05	)
Basic and Diluted weighted-average non-redeemable common shares outstanding		4,839,036			(361,036	)		4,478,000
Basic and Diluted net loss per non-redeemable common shares	$	(0.21	)	$	0.16		$	(0.05	)

(1) - The weighted average shares outstanding was calculated based on the two-class method, where the earnings per share was determined based on redeemable and non-redeemable common stock. The Company revised its earnings per share calculation to allocate losses by the weighted average shares of redeemable and non-redeemable common stock outstanding for the respective period.