QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which
registered
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Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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Page
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Part I. Financial Information
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Item 1. Financial Statements
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1
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2
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3
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4
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5
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17
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20
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20
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Part II. Other Information
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21
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22
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22
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22
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22
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22
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23
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24
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June 30,
2022
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December 31,
2021
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(Unaudited)
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ASSETS
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Current Assets
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Cash
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$
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$
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Prepaid expenses
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Total Current Assets
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Marketable securities held in Trust Account
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TOTAL ASSETS
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$
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$
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Accounts payable and accrued expenses
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Income taxes payable
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Total Current Liabilities
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Deferred underwriting fee payable
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Warrant liabilities – Private Warrants
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Warrant liabilities – Public Warrants
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Total Liabilities
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Commitments and Contingencies (See Note 6)
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Class A common stock subject to possible redemption,
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Stockholders’ Deficit
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Preferred Stock, $
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Class A common stock, $
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Class B common stock, $
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Additional paid-in capital
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Accumulated deficit
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(
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)
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(
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)
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Total Stockholders’ Deficit
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(
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)
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(
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)
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$
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$
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Three Months Ended
June 30,
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Six Months Ended June 30,
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|||||||||||||||
2022
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2021 |
2022
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2021 | |||||||||||||
Operating and formation costs
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$
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$ |
$
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$ | ||||||||||
Loss from operations
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(
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)
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( |
) |
(
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)
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( |
) | ||||||||
Other income (expense):
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||||||||||||||||
Interest earned on investments held in Trust Account
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||||||||||||||
Change in fair value of warrants liabilities
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(
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)
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( |
) |
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Other income (expense), net
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( |
) |
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(Loss) Income before provision for income taxes | ( |
) | ( |
) | ||||||||||||
Provision for income taxes | ( |
) | ( |
) | ||||||||||||
Net (loss) income
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$
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(
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)
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$ | ( |
) |
$
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$ | |||||||
Weighted average shares outstanding, Class A common stock
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Basic and diluted net (loss) income per share, Class A common stock
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$
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(
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)
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$ | ( |
) |
$
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$ | |||||||
Weighted average shares outstanding, Class B common stock
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Basic and diluted net (loss) income per share, Class B common stock
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$
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(
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)
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$ | ( |
) |
$
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$ |
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Additional
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Total
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Class B Common Stock
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Paid-in
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Accumulated
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Stockholders’
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||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Deficit
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|||||||||||||||
Balance - January 1, 2022
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$
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$
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$
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(
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)
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$
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(
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)
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Net income
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—
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Balance – March 31, 2022 (unaudited)
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(
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)
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$
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(
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)
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Net loss
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—
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(
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)
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(
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)
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Balance – June 30, 2022 (unaudited)
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$ |
$
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$
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(
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)
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$
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(
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)
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Additional
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Total
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Class B Common Stock
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Paid-in
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Accumulated
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Stockholders’
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||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Deficit
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Balance - January 1, 2021
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$
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$ | $ | ( |
) | $ | ( |
) | ||||||||||
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Net income
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— |
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Balance – March 31, 2021 (unaudited)
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$ | $ |
$
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(
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)
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$
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(
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)
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Net loss
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— |
(
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)
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(
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)
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Balance – June 30, 2021 (unaudited)
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$ | $ | $ | ( |
) |
$
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(
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)
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For the Six Months Ended
June 30,
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2022
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2021
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Cash Flows from Operating Activities:
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Net income
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$
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$
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Adjustments to reconcile net income to net cash used in operating activities:
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Interest earned on marketable securities held in Trust Account
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(
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)
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(
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)
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Change in fair value of warrant liabilities
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(
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)
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(
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)
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Changes in operating assets and liabilities:
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Prepaid expenses
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Income taxes payable
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Accounts payable and accrued expenses
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Net cash used in operating activities
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(
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)
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(
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)
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Net Change in Cash
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(
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)
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(
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)
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Cash – Beginning of period
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Cash – End of period
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$
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$
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Three Months Ended June 30,
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Six Months Ended June 30,
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2022
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2021
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2022
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2021
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Class A
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Class B
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Class A
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Class B
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Class A
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Class B
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Class A
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Class B
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Basic and diluted net (loss) income per common share
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Numerator:
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Allocation of net (loss) income
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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$
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$
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$
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Denominator:
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Basic and diluted weighted average shares outstanding
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Basic and diluted net (loss) income per common share
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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$
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$
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$
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(a)
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each share of Corcentric common stock, par value $
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(b)
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each share of Corcentric Series A preferred stock, par value $
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(c)
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each share of Corcentric Preferred Stock expressly identified as receiving merger consideration in the form of cash pursuant to the terms of the
Merger Agreement (each such share of Corcentric Preferred Stock, a “Cash Consideration Share”) will be converted into the right to receive an amount of cash, without interest, equal to the product of (A) the Per Share Merger
Consideration Value (as defined in the Merger Agreement), multiplied by (B) the number of shares of Corcentric Common Stock that such shares of Corcentric Preferred Stock would be converted into if converted in accordance with
the terms of Corcentric’s certificate of incorporation immediately prior to the Effective Time (with the aggregate amount of cash payable in respect of the Cash Consideration Shares not to exceed $
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(d)
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each vested Corcentric stock option, to the extent then outstanding and unexercised, will automatically be cancelled, and the holder will be entitled to
receive in respect of such cancelled vested Corcentric stock option (i) a number of shares of North Mountain Common Stock equal to the quotient obtained by dividing (A) the result of (1) the product of (x) the number of
shares of Corcentric Common Stock subject to such vested Corcentric stock option immediately prior to the Effective Time, multiplied by (y) the excess, if any, of (a) the Per Share Merger Consideration Value, over (b) the
per share exercise price for the shares of Corcentric Common Stock subject to such vested Corcentric stock option immediately prior to the Effective Time, minus (2) the applicable withholding taxes payable in respect of such
cancelled vested Corcentric stock option, by (B)
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(e)
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each unvested Corcentric stock option, to the extent then outstanding and unexercised, will automatically be converted into an option to
acquire, on the same terms and conditions as were applicable to such unvested Corcentric stock option immediately prior to the Effective Time, including applicable vesting conditions, a number of shares of North Mountain
Common Stock determined in accordance with the terms of the Merger Agreement (after such conversion, each a “Rollover Option”), and the contingent right to receive a number of Earnout Shares following the Closing in
accordance with the terms of the Merger Agreement; and
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(f)
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each share of Corcentric restricted stock, to the extent then unvested and outstanding, will automatically be converted into the number of
shares of restricted North Mountain Common Stock, subject to the same terms and conditions as were applicable to such Corcentric restricted stock immediately prior to the Effective Time, including applicable vesting
conditions, determined in accordance with the terms of the Merger Agreement (after such conversion, the “Rollover Restricted Stock”), and the contingent right to receive a number of Earnout Shares following the Closing in
accordance with the terms of the Merger Agreement.
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• |
at a price of $
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• |
upon a minimum of
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• |
if, and only if, the closing sale price of the Company’s Class A
common stock equals or exceeds $
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Level 1: |
Quoted prices in active markets for identical assets or liabilities.
An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
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Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2
inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
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Level 3: |
Unobservable inputs based on our assessment of the assumptions that
market participants would use in pricing the asset or liability.
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Description
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Level
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June 30, 2022
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December 31, 2021
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Assets:
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Marketable securities held in Trust Account
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1
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$
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$
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Liabilities:
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Warrant Liabilities – Public Warrants
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1
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$
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Warrant Liabilities – Private Placement Warrants
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3
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$
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Input
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June 30, 2022
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December 31, 2021 | ||||||
Common Stock Price
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$
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$ | |||||
Expected term (years)
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Expected Volatility (Private Placement Warrants)
derived from Monte Carlo Simulation
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%
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% | |||||
Estimated probability of successful business
combination
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% | % | ||||||
Exercise Price
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$
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$ | |||||
Risk-free rate of interest
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%
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% |
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Private
Placement
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Fair value as of January 1, 2022
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$
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Change in fair value of warrant liabilities | ( |
) | ||
Fair value as of March 31, 2022 | ||||
Change in fair value of warrant liabilities
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Fair value as of June 30, 2022 | $ |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
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Item 4. |
Controls and Procedures
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Item 1. |
Legal Proceedings.
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Item 1A. |
Risk Factors.
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
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Item 3. |
Defaults Upon Senior Securities.
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Item 4. |
Mine Safety Disclosures.
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Item 5. |
Other Information.
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Item 6. |
Exhibits
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No.
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Description of Exhibit
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Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS*
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XBRL Instance Document
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101.SCH*
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XBRL Taxonomy Extension Schema Document
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101.CAL*
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF*
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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XBRL Taxonomy Extension Labels Linkbase Document
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Filed herewith.
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NORTH MOUNTAIN MERGER CORP.
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Date: August 16, 2022
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By:
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/s/ Charles B. Bernicker
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Name:
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Charles B. Bernicker
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Title:
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Chief Executive Officer
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(Principal Executive Officer)
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Date: August 16, 2022
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By:
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/s/ Nicholas Dermatas
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Name:
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Nicholas Dermatas
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Title:
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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1. |
I have reviewed this quarterly report on Form 10-Q of North Mountain Merger Corp.;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; and
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
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d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 16, 2022
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/s/ Charles B. Bernicker
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Charles B. Bernicker
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Chief Executive Officer
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(Principal Executive Officer)
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1. |
I have reviewed this quarterly report on Form 10-Q of North Mountain Merger Corp.;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; and
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 16, 2022
|
|
/s/ Nicholas Dermatas
|
|
Nicholas Dermatas
|
|
Chief Financial Officer
|
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(Principal Financial and Accounting Officer)
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
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Dated: August 16, 2022
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/s/ Charles B. Bernicker
|
|
Charles B. Bernicker
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
|
Dated: August 16, 2022
|
|
/s/ Nicholas Dermatas
|
|
Nicholas Dermatas
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Cash Flows from Operating Activities: | ||||||
Net income | $ (167,763) | $ 5,093,731 | $ (2,369,596) | $ 2,458,268 | $ 4,925,968 | $ 88,672 |
Adjustments to reconcile net income to net cash used in operating activities: | ||||||
Interest earned on marketable securities held in Trust Account | (173,253) | (1,976) | (181,790) | (3,929) | ||
Change in fair value of warrant liabilities | (5,211,225) | (573,750) | ||||
Changes in operating assets and liabilities: | ||||||
Prepaid expenses | 65,250 | 82,747 | ||||
Income taxes payable | 8,377 | 0 | ||||
Accounts payable and accrued expenses | 126,181 | 77,002 | ||||
Net cash used in operating activities | (267,239) | (329,258) | ||||
Cash Flows from Financing Activities: | ||||||
Net Change in Cash | (267,239) | (329,258) | ||||
Cash - Beginning of period | $ 303,615 | $ 971,469 | 303,615 | 971,469 | ||
Cash - End of period | $ 36,376 | $ 642,211 | $ 36,376 | $ 642,211 |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS [Abstract] | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
North Mountain Merger Corp. (the “Company”) was
incorporated in Delaware as a blank check company on July 14, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one
or more businesses (the “Business Combination”).
Although
the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses in the financial technology segment of the broader financial services
industry. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
All activity for the period from July 14, 2020 (inception)
through June 30, 2022 relates to the Company’s formation the initial public offering (the “Initial Public Offering”), which is described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business
Combination.
On September 22, 2020, the Company consummated the Initial
Public Offering of 13,225,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold,
the “Public Shares”), which includes the full exercise by the underwriter of the over-allotment option to purchase an additional 1,725,000
Units, at $10.00 per Unit, generating gross proceeds of $132,250,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public
Offering, the Company consummated the sale of 4,145,000 warrants (each, a “Private Placement Warrant” and, collectively, the
“Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to North Mountain LLC (the
“Sponsor”), generating gross proceeds of $4,145,000, which is described in Note 4.
Transaction costs amounted to $7,385,802, consisting of $2,417,300
of underwriting fees, $4,628,750 of deferred underwriting fees and $339,752 of other offering costs.
Following the closing of the Initial Public Offering on
September 22, 2020, an amount of $132,250,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested in
U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that
holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the
distribution of the Trust Account, as described below, except that interest earned on the Trust Account can be released to the Company to fund its regulatory compliance costs and to pay its tax obligations (“permitted withdrawals”).
The Company’s management has broad discretion with respect to the specific application of the cash held outside of the
Trust Account initially funded by the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business
Combination. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the Trust Account (net of permitted withdrawals and excluding the amount of any
deferred underwriting discount) at the time of the signing an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully complete a Business Combination.
The Company will provide its Class A stockholders with the
opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The
decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares
for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per Public Share) plus a pro rata portion
of the interest earned on the funds held in the Trust Account and not previously withdrawn to fund permitted withdrawals. The per share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the
deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will not redeem Public Shares in an amount that
would cause its net tangible assets to be less than $5,000,001 (so that it does not then become subject to the Security and Exchange
Commission’s (the “SEC”) “penny stock” rules). If the Company seeks stockholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted in favor of the
Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required by law or stock exchange rule and the Company does not decide to hold a stockholder vote for business or other legal
reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business
Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem Public Shares in conjunction with a
proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares (as
defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of
whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such
stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.
The Sponsor and the Company’s officers and directors have
agreed (a) to waive their redemption rights with respect to their Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated
Certificate of Incorporation (i) that would modify the substance or timing of the Company’s obligation to redeem 100% of its Public
Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the public stockholders with
the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until September 22, 2022 to
consummate a Business Combination (the “Completion Window”). If the Company is unable to complete a Business Combination within the Completion Window, the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than
business days thereafter, redeem the Public Shares, at a per share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to make permitted withdrawals (and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely
extinguish the public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Completion Window.The Sponsor has agreed to waive its rights to liquidating
distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Completion Window. However, if the Sponsor or any of the Company’s officers, directors or any of their
affiliates acquires Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination
within the Completion Window. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Completion
Window and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share
value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account,
the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a definitive agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust
assets. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under the Company’s indemnity of the underwriter of the Initial
Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the
Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to
have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any
right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern and Managements’ Plan
At June 30, 2022, the company had $36,376
of cash within the operating bank account, a working capital deficit of $270,755, and less than twelve months to complete a business combination. No assurances can be given that the Company will complete a business combination before
September 22, 2022, the Company’s liquidation date, or through twelve months following the issuance of this report.
The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. In
connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management
believes that it will need to obtain additional capital in order to have adequate liquidity to sustain operations, which consists of pursuing a Business Combination. While the Company expects to have sufficient access to additional sources of
capital if necessary, there is no current commitment on the part of any financing source to provide additional capital and no assurances can be provided that such additional capital will ultimately be available. These conditions raise
substantial doubt about the Company’s ability to continue as a going concern for a period of time through at least one year from the date the consolidated financial statements are issued. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19
pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 10 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 interim results for the three and six months ended June
30, 2022 are not necessarily indicative of the results to be expected for period ended December 31, 2022 or for any future periods.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
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.
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 consolidated 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 condensed consolidated financial
statements in conformity with GAAP requires the Company’s 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
consolidated 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. The Company has determined that its significant accounting estimates included in these condensed consolidated financial statements is the determination of the fair value of the warrant
liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an
original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of June 30, 2022 and December 31, 2021.
Marketable Securities Held in Trust Account
At June 30, 2022 and December 31, 2021, substantially all of the assets held in
the Trust Account were held in money market funds which are invested primarily in U.S. Treasury Securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the
consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust
Account in the accompanying condensed consolidated statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Offering Costs
Offering costs consisted of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to
the Initial Public Offering. Offering costs were 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 allocated to
warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the Class A common stock issued were charged to temporary equity. Offering costs amounted to $339,752, of which $313,144 was
charged to temporary equity and $26,608 was expensed as incurred in the statements of operation upon the completion of the
Initial Public Offering. In addition, the underwriter was paid $2,417,300 at closing of the Initial Public Offering and a
deferred underwriting fee of $4,628,750 was recorded as a liability and presented on the accompanying consolidated balance
sheets.
Share-Based Compensation
The Company adopted ASC Topic 718, Compensation—Stock Compensation, guidance to account for its share-based
compensation. It defines a fair value-based method of accounting for an employee share option or similar equity instrument. The Company recognizes all forms of share-based payments, including share option grants, warrants and restricted
share grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted shares, are valued using a Black-Scholes option pricing
model. Grants of share-based payment awards issued to nonemployees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a
straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the
termination of service. Share-based compensation expenses are included in costs and operating expenses depending on the nature of the services provided in the statements of operations.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability
instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is 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, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
equity section of the Company’s condensed consolidated balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the measurement from carrying amount to redemption value. Increases or decreases in the
carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at
the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a
component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date
of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
The fair value of the private warrants was
estimated using a Modified Black-Scholes Model. The fair value of the public warrants was initially measured using the Modified Black-Scholes model, and then subsequently measured at the public trading price. The key inputs and assumptions
used for the Modified Black-Scholes model were the common stock price, expected term in years, expected volatility derived using a Monte Carlo Simulation, exercise price, and risk-free interest rate (see Note 9).
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the
recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived
from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of June 30, 2022 and
December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was (5.26)%
and 0.00% for the three months ended June 30, 2022 and 2021, respectively, and 0.17% and 0.00% for the six months ended June 30, 2022 and
2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three and six months ended June
30, 2022 and 2021, due to changes in fair value in warrant liability and the valuation allowance on the deferred tax assets.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial
statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2022 and
December 31, 2021. 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to
income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The
Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Income per Common Stock
Basic net income per share is computed by dividing net income by the weighted-average number of common stock outstanding
during the period. Remeasurement adjustment associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The Company has not considered the effect of the
warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 10,757,500 shares in the
calculation of diluted income per share, since the exercise price of the warrants was below the average market price for the period.
The calculation of diluted income per share does not consider the effect of the warrants issued in connection with
the (i) Initial Public Offering, and (ii) the private placement. At June 30, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and
then share in the earnings of the Company. As a result, diluted net income per common stock is the same as basic net income per common stock for the periods presented.
The following table reflects the calculation of basic and diluted net (loss) income per common stock (in dollars, except per share amounts):
Concentration of Credit Risk
Financial instruments that potentially subject the Company
to concentrations 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. The Company has not experienced losses on this account.
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 condensed consolidated balance sheets, primarily due to their short-term nature, except for warrant liabilities (see Note 9).
Recent Accounting Standards
Management does not believe that any recently issued, but
not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
|
PUBLIC OFFERING |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
PUBLIC OFFERING [Abstract] | |
PUBLIC OFFERING |
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 13,225,000 Units, which includes the full exercise by the underwriter of its option to purchase an additional 1,725,000 Units, at a purchase price of $10.00
per Unit. Each Unit consists of one share of Class A common stock and
of one warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per
share, subject to adjustment (see Note 8). |
PRIVATE PLACEMENT |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
PRIVATE PLACEMENT [Abstract] | |
PRIVATE PLACEMENT |
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public
Offering, the Sponsor purchased an aggregate of 4,145,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $4,145,000. Each Private Placement Warrant is exercisable to purchase one
share of Class A common stock at an exercise price of $11.50. The proceeds from the Private Placement Warrants were added to the
proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Completion Window, the proceeds from the sale of the Private Placement Warrants will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law), and all underlying securities will expire worthless. As of the date of the Initial Public Offering, the fair market value of the Private Placement Warrants was $1.01, which caused the Company to charge $55,000
to the Statement of Operations for the Period from July 14, 2020 (Inception) Through December 31, 2020.
|
RELATED PARTY TRANSACTIONS |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS |
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On July 14, 2020, the Sponsor purchased 3,306,250 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. The Founder Shares included an aggregate of up to 431,250
shares of Class B common stock subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment option was not exercised in full or in part so that the Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. The Founder Shares will automatically convert into Class A
common stock upon the consummation of a Business Combination on a one-for-one basis, subject to adjustments as described in Note 7.
As a result of the underwriter’s election to fully exercise the over-allotment option on the date of the Initial Public Offering, 431,250
Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (i) one year after the
completion of a Business Combination or (ii) subsequent to a Business Combination, (x) if the closing price of the Class A stock common stock equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation,
share exchange, reorganization or other similar transaction that results in all of the public stockholders having the right to exchange their Class A common stock for cash, securities or other property.
In the event that a successful business combination occurs, distributions to Board Members and other members of the Sponsor are able to be
transferred. As of June 30, 2022, no Founder Shares have been transferred and no adjustments have been made to the accompanying consolidated financial statements.
Administrative Support Agreement
The Company has agreed, commencing on
September 22, 2020, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support
services. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three months and six months ended June 30, 2022 and 2021, the Company incurred approximately $30,000 and $60,000 in fees for these
services, respectively, of which such amounts are included in accrued expenses in the accompanying consolidated balance sheets as of June 30, 2022 and December 31, 2021.
Promissory Note — Related Party
On July 14, 2020, the Company issued an unsecured
promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Sponsor agreed to loan the Company an aggregate of up to $300,000
to cover expenses related to the Initial Public Offering. The Promissory Note was non-interest bearing and payable on the earlier of December 31, 2020 or the completion of the Initial Public Offering. The outstanding balance under the
Promissory Note of $75,000 was repaid at the closing of the Initial Public Offering on September 22, 2020. No amount is outstanding as of June 30, 2022 and December 31, 2021.
Related Party Loans
In order to finance transaction costs in connection with a
Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each
Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion
of the proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
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COMMITMENTS |
6 Months Ended | ||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||
COMMITMENTS [Abstract] | |||||||||||||||||||
COMMITMENTS |
NOTE 6. COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement entered into on
September 17, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or
warrants issued upon conversion of the Working Capital Loans) are entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion into shares of Class A
common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination and rights to require
the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Sale of Units to
Related Party
Millais Limited, the indirect majority owner of the
Company’s Sponsor, purchased 1,138,500 Units sold in the Initial Public Offering at $10.00 per Unit, or $11,358,000 in the aggregate.
Underwriting Agreement
The underwriter is entitled a deferred fee of 3.5% of the gross proceeds from the Units sold in the Initial Public Offering, or $4,628,750 in the aggregate. The deferred fee will be forfeited by the underwriter solely in the event that the Company fails to complete a Business Combination, subject to
the terms of the underwriting agreement. The underwriter did not receive any underwriting discount or commissions on Units purchased by Millais Limited, the indirect majority owner of the Company’s sponsor.
Pipe Engagement Agreement
On August 26, 2021, The Company entered into a Pipe Engagement Agreement with J.P. Morgan Securities LLC, Citigroup Global Markets Inc., and William Blair & Company L.L.C. for which the
Company agrees to pay the placement agents a fee equal to 4% of the aggregate price at which the Securities are sold by the
Company. This fee is payable only upon the consummation of a business combination. The Company estimates that the placement agent fee for the proposed merger with Corcentric, see below for discussion of the merger with Corcentric, will be
approximately $2,000,000. No amounts related to the agreement have been recorded within the condensed consolidated financial
statements as of June 30, 2022.
Capital Markets Agreement
On July 28, 2021, The Company entered into a Capital Markets Agreement with Cowen and Company, LLC (Cowen) for which the Company has agreed to pay Cowen a fee of $1,500,000 to provide capital markets advisory services. This fee is payable only upon the consummation of a business combination. No amounts
related to the agreement have been recorded within the consolidated financial statements as of June 30, 2022.
Legal Engagement
Agreement
The
Company has entered into an engagement agreement with legal counsel to provide legal services in connection with the Business Combination. The fees associated with this engagement are estimated to be $3.5 million and are contingent upon a successful Business Combination. No amounts related to the engagement have been recorded within the
condensed consolidated financial statements as of June 30, 2022.
Merger Agreement
On December 9, 2021, North Mountain Merger Corp., a Delaware corporation (“North Mountain”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among North
Mountain, North Mountain Merger Sub Inc., a wholly owned subsidiary of North Mountain (“Merger Sub I”), North Mountain Merger Sub II, LLC, a wholly owned subsidiary of North Mountain (“Merger Sub II” and together with Merger Sub I, the
“Merger Subs”) and Corcentric, Inc., a Delaware corporation (“Corcentric”).
Pursuant to the terms of the Merger Agreement, a business combination between North Mountain and Corcentric will be effected through (a) the merger of Merger Sub I with and into Corcentric
(the “Initial Merger”), with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain (Corcentric, in its capacity as the surviving corporation of the Initial Merger, is sometimes referred to as the “Initial
Surviving Company”) and (b) immediately following the Initial Merger, a merger of the Initial Surviving Company with and into Merger Sub II (the “Subsequent Merger” and, together with the Initial Merger, the “Mergers”), with Merger Sub II
being the surviving entity of the Subsequent Merger (Merger Sub II, in its capacity as the surviving entity of the Subsequent Merger, is sometimes referred to herein as the “Surviving Company”). The Mergers and the other transactions
contemplated by the Merger Agreement are collectively hereafter referred to as the “Business Combination”. The consummation of the Business Combination is subject to the receipt of the requisite approval of the stockholders of each of North
Mountain and Corcentric (such approvals, the “North Mountain stockholder approval” and the “Corcentric stockholder approval,” respectively) and the fulfillment of certain other conditions.
At the effective time of the Initial Merger (the “Effective Time”):
Conditions to Closing
The consummation of the Business Combination is subject to certain conditions, including: (i) receipt of the North Mountain stockholder approval, (ii) receipt of the Corcentric stockholder
approval, (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) the absence of any governmental order, statute, rule or regulation enjoining or prohibiting
the consummation of the Business Combination, (v) the effectiveness of the Registration Statement under the Securities Act of 1933, as amended (the “Securities Act”), (vi) the completion of the redemption offer in relation to North Mountain
Common Stock in accordance with the terms of the Merger Agreement and the Proxy Statement (the “Redemption Offer”), (vii) North Mountain having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended) remaining after the Redemption Offer, (viii) the receipt of the
approval for listing by the Nasdaq of the North Mountain Common Stock (including the Earnout Shares), North Mountain warrants and the shares of North Mountains Common Stock issuable upon the exercise of the North Mountain warrants to be
issued or delivered in connection with the Business Combination and the transactions contemplated by the Subscription Agreements, (ix) the amendment of North Mountain’s certificate of incorporation in a form to be mutually agreed by North
Mountain and Corcentric, (x) the amount of Closing Acquiror Cash (as defined in the Merger Agreement) being equal to or exceeding $150,000,000;
provided, that if the Closing Acquiror Cash is less than $125,000,001, Corcentric will have no right or ability to waive such
condition without North Mountain’s prior written consent, and (xi) customary bringdown conditions.
Subscription Agreements
In connection with the execution of the Merger Agreement, North Mountain entered into subscription agreements (the “Subscription Agreements”) with investment funds managed by Wellington
Management Company LLP (“Wellington”), Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain (“Millais”) and SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles
Bernicker, the Chief Executive Officer and a director of North Mountain (such entity, “Sponsor Interests, and together with Wellington and Millais, the “Subscribers”), pursuant to which (i) the Subscribers have agreed to purchase, and North
Mountain has agreed to sell the Subscribers, an aggregate of 5,000,000 shares of Common Stock for a purchase price of $10.00 per share and at an aggregate purchase price of $50,000,000 and (ii) North Mountain will transfer to each Subscriber
of one warrant
for each share of Common Stock purchased, which warrants will be “Public Warrants” under the warrant agreement, dated as of September 17, 2020, by and between North Mountain and Continental Stock Transfer & Trust Company. The
obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, (i) at least 5,000,000
shares of North Mountain Common Stock remaining outstanding immediately prior to the consummation of the Business Combination after giving effect to the completion of the Redemption Offer, and with respect to which North Mountain has not
entered into a forward purchase agreement that would obligate North Mountain to purchase the shares at a future date and (ii) customary closing conditions and the consummation of the Business Combination. The Subscription Agreements provide
that North Mountain will grant the Subscribers certain customary registration rights. |
STOCKHOLDERS' DEFICIT |
6 Months Ended |
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Jun. 30, 2022 | |
STOCKHOLDERS' DEFICIT [Abstract] | |
STOCKHOLDERS' DEFICIT |
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred Stock—The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of
directors. At June 30, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock—The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. At June 30, 2022 and December 31, 2021, there were 13,225,000 shares of
Class A common stock issued and outstanding, including Class A common stock subject to possible redemption which are presented as temporary equity.
Class B Common Stock—The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote
for each share. At June 30, 2022 and December 31, 2021, there were 3,306,250 shares of Class B common stock issued and outstanding.
Holders of Class B common stock will have the right to elect
all of the Company’s directors prior to the consummation of a Business Combination. On any other matter submitted to a vote of the Company’s stockholders, holders of Class A common stock and Class B common stock will vote together as a single
class on all other matters submitted to a vote of stockholders, except as required by law. These provisions of the Company’s Amended and Restated Certificate of Incorporation may only be amended if approved by a majority of at least 90% of the Company’s common stock voting at a stockholder meeting.
The shares of Class B common stock will automatically convert
into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case
that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which
shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (not including the shares of Class A common
stock underlying the Private Placement Warrants) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or
to be issued, to any seller in a Business Combination, any private placement-equivalent securities issued, or to be issued, to any seller in a Business Combination, any private placement equivalent securities issued to the Sponsor or its
affiliates upon conversion of loans made to the Company).
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WARRANT LIABILITIES |
6 Months Ended | |||||||||
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Jun. 30, 2022 | ||||||||||
WARRANT LIABILITIES [Abstract] | ||||||||||
WARRANT LIABILITIES |
NOTE 8. WARRANT LIABILITIES
Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional warrants will
be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A
common stock pursuant to the exercise of a warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable upon
exercise of the Public Warrants is then effective and a current prospectus relating thereto is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless
basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the
exercising holder, or an exemption from registration is available.
The Company has agreed that as soon as practicable, but in
no event later than 15 business days after the closing of a Business Combination, the Company will use its reasonable best efforts
to file with the SEC, and within 60 business days following a Business Combination to have declared effective, a registration
statement covering the issuance of the shares of Class A common stock issuable upon exercise of the Public Warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed.
Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the
Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required
to file or maintain in effect a registration statement, but will use our reasonable best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after
the completion of a Business Combination or earlier upon redemption or liquidation.
Redemptions of Warrants for Cash — Once the warrants become exercisable, the Company may
redeem the Public Warrants:
If and when the warrants become redeemable by the Company,
the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
In addition, if the Company issue additional shares of
Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at a newly issued price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case
of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.
The Private Placement Warrants are identical to the Public
Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or
salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the
Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held
by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company’s 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 or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of common stock, all holders of the warrants would be entitled to receive cash for their warrants
(the “tender offer provision”).
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 and after discussion with the Company’s independent registered public accounting firm, concluded that the Company’s 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 and after discussion with the Company’s independent registered public accounting firm, concluded the tender offer provision included in the warrant agreement fails the “classified in shareholders’ equity” criteria as contemplated
by ASC Section 815-40-25. As such, the Company accounts for its Public Warrants and Private Placement Warrants as liabilities.
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FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
NOTE 9. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value
at least annually.
The fair value of the Company’s financial assets and
liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market
participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use
of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs
used in order to value the assets and liabilities:
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
The Warrants were accounted for as liabilities in
accordance with ASC 815-40 and are presented within warrant liabilities on our consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within
change in fair value of warrant liabilities in the statements of operations.
Private Placement Warrants
The fair value of the Private Placement Warrants is
reported in the foregoing table as Level 3 fair value. For the six months ended June 30, 2022, the Private Placement Warrants were not separately traded on an open market. As such, the Company used Modified Black-Scholes model to value the
Private Placement Warrants. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one
share of Class A common stock and
of one Public Warrant), (ii) the sale of Private Placement Warrants, and (iii) the
issuance of shares of Class B common stock, first to the Warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to Class A common stock subject to possible redemption, Class A common
stock and Class B common stock based on their relative fair values at the initial measurement date.The key inputs into the Modified Black-Scholes model for
the Private Placement Warrants at June 30, 2022 and December 31, 2021:
Public Warrants
The Public Warrants are measured at fair value on a
recurring basis. The measurement of the Public Warrants at June 30, 2022 is classified as Level 1 due to the use of an observable market quote in an active market.
The following table presents the Level 3 changes in the
fair value of warrant liabilities:
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the three months and six months ended June 30, 2022.
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SUBSEQUENT EVENTS |
6 Months Ended |
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Jun. 30, 2022 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS |
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the unaudited condensed consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Basis of Presentation |
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 10 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 interim results for the three and six months ended June
30, 2022 are not necessarily indicative of the results to be expected for period ended December 31, 2022 or for any future periods.
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Principles of Consolidation |
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
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Use of Estimates |
Use of Estimates
The preparation of the condensed consolidated financial
statements in conformity with GAAP requires the Company’s 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
consolidated 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. The Company has determined that its significant accounting estimates included in these condensed consolidated financial statements is the determination of the fair value of the warrant
liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
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Cash and Cash Equivalents |
Cash and Cash Equivalents
The Company considers all short-term investments with an
original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of June 30, 2022 and December 31, 2021.
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Marketable Securities Held in Trust Account |
Marketable Securities Held in Trust Account
At June 30, 2022 and December 31, 2021, substantially all of the assets held in
the Trust Account were held in money market funds which are invested primarily in U.S. Treasury Securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the
consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust
Account in the accompanying condensed consolidated statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
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Offering Costs |
Offering Costs
Offering costs consisted of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to
the Initial Public Offering. Offering costs were 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 allocated to
warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the Class A common stock issued were charged to temporary equity. Offering costs amounted to $339,752, of which $313,144 was
charged to temporary equity and $26,608 was expensed as incurred in the statements of operation upon the completion of the
Initial Public Offering. In addition, the underwriter was paid $2,417,300 at closing of the Initial Public Offering and a
deferred underwriting fee of $4,628,750 was recorded as a liability and presented on the accompanying consolidated balance
sheets.
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Share-Based Compensation |
Share-Based Compensation
The Company adopted ASC Topic 718, Compensation—Stock Compensation, guidance to account for its share-based
compensation. It defines a fair value-based method of accounting for an employee share option or similar equity instrument. The Company recognizes all forms of share-based payments, including share option grants, warrants and restricted
share grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted shares, are valued using a Black-Scholes option pricing
model. Grants of share-based payment awards issued to nonemployees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a
straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the
termination of service. Share-based compensation expenses are included in costs and operating expenses depending on the nature of the services provided in the statements of operations.
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Class A Common Stock Subject to Possible Redemption |
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability
instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is 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, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
equity section of the Company’s condensed consolidated balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the measurement from carrying amount to redemption value. Increases or decreases in the
carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
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Warrant Liabilities |
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at
the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a
component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date
of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
The fair value of the private warrants was
estimated using a Modified Black-Scholes Model. The fair value of the public warrants was initially measured using the Modified Black-Scholes model, and then subsequently measured at the public trading price. The key inputs and assumptions
used for the Modified Black-Scholes model were the common stock price, expected term in years, expected volatility derived using a Monte Carlo Simulation, exercise price, and risk-free interest rate (see Note 9).
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Income Taxes |
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the
recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived
from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of June 30, 2022 and
December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was (5.26)%
and 0.00% for the three months ended June 30, 2022 and 2021, respectively, and 0.17% and 0.00% for the six months ended June 30, 2022 and
2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three and six months ended June
30, 2022 and 2021, due to changes in fair value in warrant liability and the valuation allowance on the deferred tax assets.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial
statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2022 and
December 31, 2021. 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to
income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The
Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
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Net Income per Common Stock |
Net Income per Common Stock
Basic net income per share is computed by dividing net income by the weighted-average number of common stock outstanding
during the period. Remeasurement adjustment associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The Company has not considered the effect of the
warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 10,757,500 shares in the
calculation of diluted income per share, since the exercise price of the warrants was below the average market price for the period.
The calculation of diluted income per share does not consider the effect of the warrants issued in connection with
the (i) Initial Public Offering, and (ii) the private placement. At June 30, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and
then share in the earnings of the Company. As a result, diluted net income per common stock is the same as basic net income per common stock for the periods presented.
The following table reflects the calculation of basic and diluted net (loss) income per common stock (in dollars, except per share amounts):
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Concentration of Credit Risk |
Concentration of Credit Risk
Financial instruments that potentially subject the Company
to concentrations 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. The Company has not experienced losses on this account.
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Fair Value of Financial Instruments |
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 condensed consolidated balance sheets, primarily due to their short-term nature, except for warrant liabilities (see Note 9).
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Recent Accounting Standards |
Recent Accounting Standards
Management does not believe that any recently issued, but
not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Net (Loss) Income Per Common Stock |
The following table reflects the calculation of basic and diluted net (loss) income per common stock (in dollars, except per share amounts):
|
FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on Recurring Basis |
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
|
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Key Inputs into Modified Black-Scholes Model for Private Placement Warrants |
The key inputs into the Modified Black-Scholes model for
the Private Placement Warrants at June 30, 2022 and December 31, 2021:
|
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Level 3 Changes in Fair Value of Warrant Liabilities |
The following table presents the Level 3 changes in the
fair value of warrant liabilities:
|
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS, Going Concern and Managements' Plan (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
Going Concern and Managements' Plan [Abstract] | ||
Cash within operating bank account | $ 36,376 | $ 303,615 |
Working capital deficit | $ 270,755 | |
Maximum [Member] | ||
Going Concern and Managements' Plan [Abstract] | ||
Period to complete business combination | 12 months |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cash and Cash Equivalents (Details) - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Offering Costs (Details) |
Sep. 22, 2020
USD ($)
|
---|---|
Offering Costs Abstract [Abstract] | |
Offering Costs | $ 339,752 |
Offering costs charged to stockholders' equity | 313,144 |
Offering costs expensed to operations | 26,608 |
Underwriting fees | 2,417,300 |
Deferred underwriting fees | $ 4,628,750 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Income Taxes (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Income Taxes [Abstract] | |||||
Effective tax rate | (5.26%) | 0.00% | 0.17% | 0.00% | |
Statutory tax rate | 21.00% | 21.00% | 21.00% | 21.00% | |
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
Accrued interest and penalties | $ 0 | $ 0 | $ 0 |
PRIVATE PLACEMENT (Details) - USD ($) |
6 Months Ended | |||
---|---|---|---|---|
Sep. 22, 2020 |
Dec. 31, 2020 |
Jun. 30, 2022 |
Sep. 17, 2020 |
|
Private Placement Warrants [Abstract] | ||||
Fair market value of warrants (in dollars per share) | $ 10.00 | |||
Other offering expense related to warrant liabilities | $ (55,000) | |||
Private Placement [Member] | Private Placement Warrants [Member] | ||||
Private Placement Warrants [Abstract] | ||||
Warrants issued (in shares) | 4,145,000 | |||
Share price (in dollars per share) | $ 1.00 | |||
Gross proceeds received from issuance of warrants | $ 4,145,000 | |||
Fair market value of warrants (in dollars per share) | $ 1.01 | |||
Private Placement [Member] | Class A Common Stock [Member] | Private Placement Warrants [Member] | ||||
Private Placement Warrants [Abstract] | ||||
Number of securities called by each warrant (in shares) | 1 | |||
Warrants exercise price (in dollars per share) | $ 11.50 |
RELATED PARTY TRANSACTIONS, Administrative Support Agreement, Promissory Note and Related Party Loans (Details) - USD ($) |
6 Months Ended | |||
---|---|---|---|---|
Sep. 22, 2020 |
Jul. 14, 2020 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Sponsor [Member] | Promissory Note [Member] | ||||
Related Party Transactions [Abstract] | ||||
Repayment of debt to related party | $ 75,000 | |||
Balance outstanding | $ 0 | |||
Sponsor [Member] | Promissory Note [Member] | Maximum [Member] | ||||
Related Party Transactions [Abstract] | ||||
Related party transaction | $ 300,000 | |||
Sponsor [Member] | Administrative Support Agreement [Member] | ||||
Related Party Transactions [Abstract] | ||||
Related party transaction | $ 10,000 | |||
Fees payable | 30,000 | $ 60,000 | ||
Sponsor or an Affiliate of the Sponsor, or Certain of the Company's Officers and Directors [Member] | Working Capital Loans [Member] | ||||
Related Party Transactions [Abstract] | ||||
Related party transaction | $ 1,500,000 | |||
Unit price (in dollars per share) | $ 1.00 |
FAIR VALUE MEASUREMENTS, Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring [Member] - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Level 1 [Member] | ||
Assets [Abstract] | ||
Marketable securities held in Trust Account | $ 132,443,616 | $ 132,261,826 |
Level 1 [Member] | Public Warrants [Member] | ||
Liabilities [Abstract] | ||
Warrant Liability | 1,983,750 | 5,170,975 |
Level 3 [Member] | Private Placement Warrants [Member] | ||
Liabilities [Abstract] | ||
Warrant Liability | $ 1,251,000 | $ 3,275,000 |
FAIR VALUE MEASUREMENTS, Level 3 Changes in Fair Value of Warrant Liabilities (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2022 |
|
Transfers to/from Fair Value Hierarchy Levels [Abstract] | |||
Transfers into Level 3 | $ 0 | $ 0 | |
Transfers out of Level 3 | 0 | 0 | |
Private Placement Warrants [Member] | |||
Changes in Fair Value of Warrant Liabilities [Roll Forward] | |||
Fair value, beginning of period | 1,200,000 | $ 3,275,000 | 3,275,000 |
Change in fair value of warrant liabilities | 51,000 | (2,075,000) | |
Fair value, end of period | $ 1,251,000 | $ 1,200,000 | $ 1,251,000 |
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