RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS AS OF MARCH 22, 2021

2 Months Ended

Mar. 31, 2021

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS AS OF MARCH 22, 2021

NOTE 2A - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS AS OF MARCH 22, 2021

NOTE 2A — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS AS OF MARCH 22, 2021

The Company previously accounted for its outstanding Public Warrants (as defined in Note 4) and Private Warrants (collectively, with the Public Warrants, the “Warrants”) issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant. In addition, the warrant agreement includes a provision that in the event of a tender offer or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of stock, all holders of the Warrants would be entitled to receive cash for their Warrants (the “tender offer provision”). 

In further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the tender offer provision fails the “classified in stockholders’ equity” criteria as contemplated by ASC Section 815-40-25.

As a result of the above, the Company should have classified the Warrants as derivative liabilities in its previously issued financial statement as of March 22th, 2021. Under this accounting treatment, the Company is required to measure the fair value of the Warrants at the end of each reporting period as well as re-evaluate the treatment of the warrants and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.

Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued balance sheet as of March 22, 2021, filed by the Company on Form 8-K on March 29, 2021, should be restated in this Note 2A to correct the impact of the misapplication of the accounting for the Warrants. The restatement resulted in a $8,310,000 increase to the warrant liabilities line item and an offsetting decrease to the Class A ordinary share subject to redemption equity line item as of March 22, 2021. There is no change to total shareholders’ equity at any reported balance sheet date.

The Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported investments held in trust or cash.

The following table summarizes the effect of the restatement on each financial statement line items as of March 22, 2021.

	As
	Previously						As
	Reported			Adjustments			Restated
Balance sheet as of March 22, 2021 (audited)
Warrant Liability	$	—		$	8,310,000		$	8,310,000
Total Liabilities		4,745,900			8,310,000			13,055,900
Class A Common Stock Subject to Possible Redemption		98,782,172			(8,310,000	)		90,472,172
Class A Common Stock		139			114			253
Additional Paid-in Capital		5,000,034			428,280			5,428,314
Accumulated Deficit		(1,035	)		(428,394	)		(429,429	)

These amounts have been further restated as discussed in Note 2B below.