UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
| | ||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
Not applicable
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically
every Interactive Date File required to be submitted and pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company | ||||
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The | ||||
| Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 | NHICW | The NASDAQ Stock Market LLC | ||
| Units, each consisting of one share of Class A Common Stock and one-half of one Redeemable Warrant | NHICU | The NASDAQ Stock Market LLC |
As of November 10, 2022, there were
NEWHOLD INVESTMENT CORP. II
Table of Contents
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PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEWHOLD INVESTMENT CORP. II
CONDENSED BALANCE SHEETS
| September 30, 2022 | December 31, 2021 | |||||||
| ASSETS | (unaudited) | |||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Cash and investments held in Trust | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities – | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities and taxes | ||||||||
| Total current liabilities | ||||||||
| Other liabilities – Deferred underwriting compensation | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Class A common shares subject to possible redemption, $ | ||||||||
| Stockholder’s deficit: | ||||||||
| Preferred stock, $ | ||||||||
| Class A common stock, $ | ||||||||
| Class B common stock, $ | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements.
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NEWHOLD INVESTMENT CORP. II
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the |
For the | For the nine months ended September 30, 2022 | For the Period from February 25, 2021 (inception) to September 30, 2021 | |||||||||||||
| General and administrative expenses | $ | $ | $ | $ | ||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest income on Trust Account | ||||||||||||||||
| Income before income tax | ( | ) | ||||||||||||||
| Income tax provision | ( | ) | ( | ) | ||||||||||||
| Income (loss) attributable to common shares | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| $ | ||||||||||||||||
| $ | $ | $ | ( | ) | $ | ( | ) | |||||||||
| $ | $ | $ | ( | ) | $ | ( | ) | |||||||||
| (1) |
See accompanying notes to unaudited condensed financial statements.
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NEWHOLD INVESTMENT CORP. II
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the three months ended September 30, 2022:
| Class B Common Stock | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Accretion in value of Class A common shares subject to redemption | — | ( | ) | ( | ) | |||||||||||||||
| Net income attributable to common shares | — | |||||||||||||||||||
| Balances, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
For the nine months ended September 30, 2022:
| Class B Common Stock(1) | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balances, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
| Accretion in value of Class A common shares subject to redemption | — | ( | ) | ( | ) | |||||||||||||||
| Net loss attributable to common shares | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
For the three months ended September 30, 2021:
| Class B Common Stock | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net loss attributable to common shares | — | |||||||||||||||||||
| Balances, September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
For the period from February 25, 2021 (inception) to September 30, 2021:
| Class B Common Stock(1) | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balances, February 25, 2021 (inception) | $ | — | $ | $ | $ | $ | ||||||||||||||
| Sale of Class B common stock to Sponsor at approximately $ | $ | $ | $ | $ | ||||||||||||||||
| Net loss attributable to common shares | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| (1) |
See accompanying notes to unaudited condensed financial statements.
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NEWHOLD INVESTMENT CORP. II
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| For the nine months ended September 30, 2022 | For the September 30, | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Interest income on Trust account | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in prepaid expenses | ||||||||
| Decrease in accounts payable | ( | ) | ||||||
| Increase (decrease) in accrued liabilities and other | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Withdrawal of interest from Trust Account | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of Class B common stock to Sponsor | ||||||||
| Proceeds from Note Payable to Sponsor | ||||||||
| Payment of offering costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| (Decrease) increase in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of noncash activities: | ||||||||
| Deferred offering costs included in accounts payable and accrued liabilities | $ | $ | ||||||
| Supplemental information: | ||||||||
| Cash paid for taxes | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements.
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NEWHOLD INVESTMENT CORP. II
Notes to Condensed Financial Statements
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and General:
NewHold Investment Corp. II (the “Company”) was incorporated in Delaware on February 25, 2021 as NewHold Industrial Corp. II. 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”). The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,” as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
At September 30, 2022, the Company had not commenced any operations. All activity for the period from February 25, 2021 (inception) to September 30, 2022 relates to the Company’s formation and the initial public offering (“Public Offering”) described below and, subsequent to the Public Offering, identifying and completing a suitable Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on cash and investments from the proceeds derived from the Public Offering.
All dollar amounts are rounded to the nearest thousand dollars.
Sponsor and Financing:
The Company’s sponsor is NewHold Industrial
Technology Holdings LLC II, a Delaware limited liability company (the “Sponsor”). The Company intends to finance a Business
Combination with proceeds from the $
The Trust Account:
The funds in the Trust Account are invested only in U.S. government treasury bills with a maturity of one hundred and eighty (180) days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of its initial Business Combination or (ii) the distribution of the Trust Account as described below. The remaining funds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisition targets and continuing general and administrative expenses.
The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay tax obligations and up to $250,000 per year for working capital purposes, if any, (less up to $100,000 of interest to pay dissolution expenses), none of the funds held in the Trust Account will be released until the earliest of: (a) the completion of the initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the ability of holders of the public shares to seek redemption in connection with the Company’s initial Business Combination or the Company’s obligation to redeem 100% of the public shares if the Company does not complete the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period) or (ii) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, and (c) the redemption of the public shares if the Company is unable to complete the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period), subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of creditors, if any, which could have priority over the claims of the Company’s public stockholders.
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Business Combination:
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of
the Public Offering are intended to be generally applied toward consummating a Business Combination with a Target Business. As used herein,
“Target Business” is one or more target businesses that together have a fair market value equal to at least
The Company, after signing a definitive agreement
for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose
in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination,
for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the
consummation of the initial Business Combination, including interest but less taxes payable and amounts released for working capital,
or (ii) provide stockholders with the opportunity to have their shares redeemed by the Company by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in
the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes
payable and amounts released to the Company for working capital. The decision as to whether the Company will seek stockholder approval
of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its
discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would
otherwise require the Company to seek stockholder approval unless a vote is required by the rules of The Nasdaq Global Market. If the
Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares of Class A
and Class B common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its public
shares in an amount that would cause its net tangible assets to be less than $
If the Company holds a stockholder vote or there
is a tender offer for shares in connection with a Business Combination, a public stockholder will have the right to redeem its shares
for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days
prior to the consummation of the initial Business Combination, including interest but less taxes payable and amounts released to the Company
for working capital. As a result, such shares of Class A common stock will be recorded at redemption amount and classified as temporary
equity upon the completion of the Public Offering, in accordance with Financial Accounting Standards Board Accounting Standards Codification
(“FASB ASC”) 480, “Distinguishing Liabilities from Equity.
The Company will have 18 months from the closing
date of the Public Offering, until April 25, 2023 (or 24 months from the closing of the Public Offering if the Company has filed a proxy
statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination
within such 18-month period).
In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the price per Unit in the Public Offering.
6
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation:
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying unaudited financial statements as of September 30, 2022 and for the period from February 25, 2021 (inception) to September 30, 2021 have been prepared in accordance with U.S. GAAP for interim financial information and Article 8 of Regulation S-X. In the opinion of management of the Company, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the period ending December 31, 2022 or any future periods.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 24, 2022. The interim results for three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the period ending December 31, 2022 or for any other future periods.
Mandatory Liquidation, Liquidity and Going Concern:
In connection with the Company’s assessment
of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to
Continue as a Going Concern,” as of September 30, 2022, the Company has approximately $
Emerging Growth Company
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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Net Income (Loss) Per Common Share:
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of common shares outstanding during the period plus, to the extent dilutive, the incremental number of common shares to settle warrants, as calculated using the treasury stock method.
The Company has not considered the effect of the
warrants sold in the Public Offering and Private Placement to purchase an aggregate of
The Company has two classes of shares, which are referred to as Class A common shares and Class B common shares. Income and losses are shared pro rata among the two classes of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding during the respective period. The changes in redemption value that are accreted to Class A common stock subject to redemption (see below) is representative of fair value and therefore is not factored into the calculation of earnings per share.
7
The following table reflects the net loss per share for the three and nine months ended September 30, 2022 after allocating income between the shares based on outstanding shares. This presentation assumes a business combination as the most likely outcome.
| For the three months ended September 30, 2022 | For the nine months ended September 30, 2022 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| $ | $ | $ | ( | ) | $ | ( | ) | |||||||||
Accounting for Warrants:
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ 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 instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, 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 instruments are outstanding.
Management has concluded that the Public Warrants and Private Warrants issued in connection with the Public Offering in October 2021, pursuant to the warrant agreement, qualify for equity accounting treatment.
Cash and Cash Equivalents:
The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had no cash equivalents at September 30, 2022 or December 31, 2021.
Concentration of Credit Risk:
Financial instruments that potentially subject the
Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal Deposit
Insurance Corporation coverage of $
Financial Instruments:
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
8
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Use of Estimates:
The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting periods presented.
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 as of September 30, 2022 or December 31, 2021, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Offering Costs:
The Company complies with the requirements of
the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering.” Costs
incurred in connection with preparation for the Public Offering totaled approximately $
Class A Common Stock Subject to Possible Redemption:
All of the
The Company recognizes changes immediately as they
occur and adjusts the carrying value of the securities at the end of each reporting period. Increases or decreases in the carrying amount
of redeemable Class A common stock are affected by adjustments to additional paid-in capital. Accordingly, at September 30, 2022 and December
31, 2021, all of the
| Gross proceeds of Public Offering | $ | |||
| Less: Offering costs | ( | ) | ||
| Proceeds allocated to Public Warrants | ( | ) | ||
| Plus: Accretion of carrying value to redemption value at inception | ||||
| Subtotal at the date of the Public Offering and at December 31, 2021 | ||||
| Accretion of carrying value to redemption value subsequent to inception | ||||
| Class A common shares subject to redemption | $ |
Income Taxes:
The Company follows the asset and liability method of accounting for income taxes under FASB ASC, 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
9
The Company’s currently taxable income consists
of interest income on the Trust Account net of taxes. The Company’s general and administrative costs are generally considered start-up
costs and are not currently deductible. During the three and nine months ended September 30, 2022 the Company recorded income tax expense
of approximately $
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2022 or 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 is subject to income tax examinations by major taxing authorities since inception. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Pronouncements:
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective in the fiscal year beginning after December 15, 2023, which in the Company’s case would be January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently evaluating the impact that the pronouncement may have on the financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Subsequent Events:
The Company evaluated subsequent events and transactions that occurred after September 30, 2022 up to the date that the unaudited interim condensed financial statements were available to be issued. Based upon this review, the Company has concluded that all such events and transactions that would require adjustment or disclosure in the financial statements have been recognized or disclosed.
NOTE 3 — PUBLIC OFFERING
On October 25, 2021 and October 29, 2021, the Company closed on the sale of an aggregate 19,490,000 units at a price of $10.00 per unit (the “Units”). Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value and one-half of one redeemable warrant (the “Warrants”). Each whole Warrant offered in the Public Offering is exercisable to purchase one share of our Class A common stock for $11.50 per share as further discussed in Note 5.
The Company granted the underwriters a 45-day option to purchase up to 2,625,000 additional Units to cover any over-allotments, at the Public Offering price less the underwriting discounts and commissions and on October 29, 2021 the underwriter exercised its option and purchased 1,990,000 units. The Warrants that were issued in connection with 1,990,000 over-allotment units are identical to the public Warrants and have no net cash settlement provisions.
The Company paid an underwriting discount of
10
Certain funds and accounts managed by UBS O’Connor
LLC, Magnetar Financial LLC, Kepos Capital LP, Meteora Capital Partners, L.P., Polar Asset Management Partners Inc., Sandia Investment
Management L.P., Radcliffe Capital Management, L.P., RiverNorth Capital Management, LLC, Highbridge Capital Management, LLC, Marshall
Wace LLP, Aristeia Capital, L.L.C. and Periscope Capital Inc. (collectively, the “anchor investors”) purchased an aggregate
of $
The excess of the fair value of the Founder Shares
purchased by the anchor investors of approximately $
NOTE 4 — RELATED PARTY TRANSACTIONS
Founder Shares
In February 2021, the Sponsor purchased
The Founder Shares are identical to the Class A common stock included in the Units being sold in the Public Offering except that the Founder Shares automatically convert into shares of Class A common stock at the time of the initial Business Combination and are subject to certain transfer restrictions, as described in more detail below.
The Company’s initial stockholders agreed
not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s
initial Business Combination, or (B), subsequent to the Company’s initial Business Combination, if (x) the last sale price
of the Company’s Class A common stock equals or exceeds $
The Company’s sponsor forfeited
The excess of the fair value of the Founder
Shares purchased by the anchor investors of approximately $
Private Placement Warrants
In October 2021, the Sponsor and certain funds and
accounts managed by UBS O’Connor LLC, Magnetar Financial LLC, and Kepos Capital LP purchased from the Company, collectively, an
aggregate of
If the Company does not complete a Business Combination, then the proceeds from the sale of the Private Placement Warrants will be part of the liquidating distribution to the public stockholders and the Private Placement Warrants issued to the Sponsor will expire worthless.
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Registration Rights
The Company’s initial stockholders and the holders of the Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement signed in connection with the Public Offering. These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. The Company will bear the expenses incurred in connection with the filing of any such registration statements. There will be no penalties associated with delays in registering the securities under the Public registration rights agreement.
Related Party Loans
On March 5, 2021, the Sponsor agreed to loan the
Company an aggregate of $
If the Sponsor, an affiliate of the Sponsor or
certain of the Company’s officers and directors make any loans to the Company to finance the transaction costs of an intended initial
business combination, up to $
Administrative Support Agreement
On October 25, 2021, the Company agreed to pay
$
NOTE 5 — TRUST ACCOUNT AND FAIR VALUE MEASUREMENT
The Company complies with FASB ASC 820, Fair Value Measurements, 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.
Upon the closing of the Public Offering and the
Private Placement, a total of $
At December 31, 2021, the proceeds of the Trust
Account were invested primarily in U.S. government treasury bills maturing in April 2022.
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The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Since all of the Company’s permitted investments at September 30, 2022 and December 31, 2021 consisted of U.S. government treasury bills or money market funds that invest only in U.S. government treasury bills, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities as follows:
| Description | Quoted Price Prices in Active Markets (Level 1) | |||
| Assets: | ||||
| Money market funds | $ | |||
| Description | Carrying value at December 31, 2021 | Gross Unrealized Holding Gains | Quoted Price Prices in Active Markets (Level 1) | |||||||||
| Assets: | ||||||||||||
| U.S. government treasury bills | $ | $ | $ | |||||||||
In March 2022, the Company withdrew $
NOTE 6 — STOCKHOLDERS’ DEFICIT
Common Stock
According to an amendment to the Company’s
certificate of incorporation that was filed with the Secretary of State of the State of Delaware on March 1, 2021, the Company is authorized
to issue
The Class B common shares are identical to the Class A common stock included in the Units sold in the Public Offering except that the Class B common shares automatically convert into shares of Class A common stock at the time of the initial Business Combination and are subject to certain transfer restrictions, as described in more detail in Note 4.
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Warrants
As of September 30, 2022 and December 31, 2021,
there were
Each whole Warrant issued in the Public Offering
is exercisable to purchase one share of our Class A common stock for $
The Warrants have an exercise price of $
The Private Placement Warrants are identical to the Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon 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 non-redeemable and will be exercisable at the election of the holder on a “cashless basis”, so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the holders of our Founder Shares 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 Warrants.
Redemption of Warrants: Once the Warrants become exercisable, the Company may redeem the outstanding Warrants:
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the last reported sale price of the shares of Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30 trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. |
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The Company will not redeem the Warrants as described above unless an effective registration statement under the Securities Act covering the Class A common stock issuable upon exercise of the Warrants is effective and a current prospectus relating to those of Class A common stock is available throughout the 30-day redemption period or the Company has elected to require the exercise of the warrants on a “cashless basis.” If and when the warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If the Company is unable to complete a Business Combination within 18 months from the closing date of the Public Offering (or 24 months under certain circumstances as discussed in Note 1), and the Company liquidates the funds held in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such Warrants. Accordingly, the Warrants may expire worthless.
See also Note 4 – Related Party Transactions for further information on the Private Placement warrants.
Preferred Stock
According to an amendment to the Company’s
certificate of incorporation that was filed with the Secretary of State of the State of Delaware on March 1, 2021, the Company is authorized
to issue
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties — COVID-19 — Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have an effect on the Company’s financial position, results of its operations and/or search for a target company and/or a target company’s financial position and results of its operations, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Risks and uncertainties — Hostilities in Ukraine — In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements.
Certain repurchases of stock (including redemptions) by publicly traded domestic corporations -
On August 16, 2022, the Inflation Reduction
Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal
Whether and to what extent we would be subject to the excise tax in connection with a business combination, liquidation or partial redemption would depend on a number of factors.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report to “we,” “us” or the “Company” refer to NewHold Investment Corp. II. References to our “management” or our “management team” refer to our officers and directors and references to the “Sponsor” refer to NewHold Industrial Technology Holdings LLC II, a Delaware limited liability company. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this report.
Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this section and elsewhere in this Quarterly Report on Form 10-Q regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC.
Overview
We are a blank check company incorporated on February 25, 2021 as a Delaware corporation and 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 “Initial Business Combination”). We intend to effectuate our Initial Business Combination using cash from the proceeds of our initial public offering that was completed in October 2021 (the “Public Offering”) and the sale of warrants in a private placement (the “Private Placement”) that occurred simultaneously with the completion of the Public Offering (the “Private Placement Warrants”), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. However, our management team had been actively in discussions with potential business combination partners in their capacity as officers of NewHold Investment Corp. (“NHIC I”), which completed its business combination with Evolv Technologies, Inc., a company specializing in artificial intelligence enabled touchless security screening, on July 19, 2021. Our management team may pursue business combination partners that had previously been in discussions with NHIC I’s management team.
The issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:
| ● | may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock; |
| ● | may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| ● | could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and |
| ● | may adversely affect prevailing market prices for our Class A common stock and/or warrants. |
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Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
| ● | our inability to pay dividends on our common stock; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
| ● | other purposes and other disadvantages compared to our competitors who have less debt. |
As indicated in the accompanying financial statements, at September 30, 2022, we had approximately $1,007,000 in cash, current liabilities of approximately $259,000 and a loss from operations for the nine months ended September 30, 2022 of approximately $1,229,000. We expect to incur significant costs in the pursuit of an Initial Business Combination and we cannot assure you that our plans to complete an Initial Business Combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from February 25, 2021 (inception) to September 30, 2022 were organizational activities, those necessary to prepare for the Public Offering and, after the Public Offering, efforts to identify a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our Initial Business Combination. We generate non-operating income in the form of interest income on cash and investments held after the Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) through September 30, 2021, we had a net loss of approximately $-0- and $2,000, respectively, which resulted entirely from formation costs.
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For the three and nine months ended September 30, 2022 we had a loss from operations of approximately $351,000 and $1,229,000, respectively, consisting primarily of our costs associated with maintaining our status as a public reporting company as well as approximately $76,000 and $351,000 of consulting and travel costs associated with our search for a business combination partner, approximately $75,000 and $225,000, respectively, in administrative charges from our Sponsor and approximately $50,000 and $125,000, respectively, in franchise taxes. For the three and nine months ended September 30, 2022, the Company had non-operating income from investments in the Trust Account of approximately $885,000 and $1,257,000, respectively.
After Public Offering, we are incurring increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
Liquidity and Capital Resources
In October 2021, we consummated the Public Offering of an aggregate of 19,490,000 Units (including the partial exercise of the underwriters’ overallotment option) at a price of $10.00 per unit generating gross proceeds of approximately $194,900,000 before underwriting discounts and expenses. Simultaneously with the consummation of the Public Offering, we consummated the Private Placement of 9,254,705 Private Placement Warrants, each exercisable to purchase one share of our Class A common stock at $11.50 per share, to the Sponsor and certain funds and accounts managed by Magnetar Financial LLC, UBS O’Connor LLC, and Kepos Capital, L.P., at a price of $1.00 per Private Placement Warrant, generating gross proceeds, before expenses, of approximately $9,254,705.
The net proceeds from the Public Offering and Private Placement were approximately $199,622,000, net of the non-deferred portion of the underwriting commissions of $3,898,000 and offering costs and other expenses of approximately $635,000. $196,849,000 of the proceeds of the Public Offering and the Private Placement have been deposited into a trust account, with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”), and are not available to us for operations (except amounts to pay taxes).
For the period from February 25, 2021 (inception) through September 30, 2021, there was no net cash used in operating or investing activities and approximately $7,000 generated from financing activities.
In the nine months ended September 30, 2022, the Company used approximately $1,164,000 of cash in operations and raised approximately $199,000 from withdrawals of interest income from the Trust Account to pay taxes.
We intend to use substantially all of the funds held in the Trust account, including any amounts representing interest earned on the Trust Account (less taxes payable and deferred underwriting commissions), to complete our Initial Business Combination. We may withdraw interest income (if any) to pay income taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We do not expect the interest income earned on the amount in the Trust Account (if any) will be sufficient to pay our income and franchise taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our Initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We account for all of the Class A common stock issued in our Public Offering as redeemable stock and not permanent equity and so we report negative stockholders’ equity.
Subsequent to our Public Offering and prior to the completion of our Initial Business Combination, we currently have available to us approximately $1,007,000 of proceeds held outside the Trust Account for working capital at September 30, 2022. We will use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.
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Mandatory Liquidation, Liquidity and Going Concern
In connection with the Company’s assessment of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” as of September 30, 2022, management has determined that the Company’s current liquidity is sufficient to fund the working capital needs of the Company until one year from the date of issuance of these financial statements. However, if the Company cannot complete a Business Combination prior to April 25, 2023 (or October 25, 2023 if certain conditions are met), it could be forced to wind up its operations and liquidate unless it receives an extension approval from its shareholders. This condition raises substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. The Company’s plan to deal with this uncertainty to complete a Business Combination prior to January 14, 2023. There is no assurance that the Company’s plans to consummate a Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We do not believe we will need to raise additional funds following our Public Offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our Initial Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Initial Business Combination, in which case we may issue additional securities or incur debt in connection with such business combination.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any agreements for non-financial assets.
Contractual Obligations
In March 2021, our Sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of the Public Offering pursuant to a promissory note. Prior to the Public Offering we had borrowed approximately $85,000 under the promissory note. The note was non-interest bearing, unsecured and payable promptly after the earlier of the date on which the Company consummates an initial public offering or the date on which the Company determines not to conduct an initial public offering of its securities. On October 25, 2021, the Company repaid the outstanding balance under the promissory note and the Note is no longer available to the Company.
On October 25, 2021, the Company agreed to pay $25,000 a month for office space, utilities and secretarial and administrative support to the Sponsor. Services commenced on the date the securities were first listed on The Nasdaq Global Market and will terminate upon the earlier of the consummation by the Company of an initial Business Combination or the liquidation of the Company. The Company paid and charged to operations $75,000 and $225,000, respectively, for the three and nine months ended September 30, 2022 for these services and there were no amounts unpaid at that date.
The Company paid an underwriting discount of 2.0% of the per Unit price to the underwriters, an aggregate fee of $3,898,000, at the closings of the Public Offering with an additional fee (the “Deferred Discount”) of 3.5% ($6,821,500 including the underwriters’ over-allotment option exercise) of the gross offering proceeds payable upon the consummation of the initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
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Critical Accounting Estimates and Policies
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting estimates and policies:
Emerging Growth Company
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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Net Income (Loss) Per Common Share:
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of common shares outstanding during the period plus, to the extent dilutive, the incremental number of common shares to settle warrants, as calculated using the treasury stock method.
The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 18,999,705 Class A common shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per common share is the same as basic income (loss) per common share for the period presented.
The Company has two classes of shares, which are referred to as Class A common shares and Class B common shares. Income and losses are shared pro rata among the two classes of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding during the respective period. The changes in redemption value that are accreted to Class A common stock subject to redemption (see below) is representative of fair value and therefore is not factored into the calculation of earnings per share.
The following table reflects the net loss per share for the three and nine months ended September 30, 2022 after allocating income between the shares based on outstanding shares. This presentation assumes a business combination as the most likely outcome.
| For the three months ended September 30, 2022 | For the nine months ended September 30, 2022 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income (loss) | $ | 311,000 | $ | 78,000 | $ | (117,000 | ) | $ | (29,000 | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | 19,490,000 | 4,872,500 | 19,490,000 | 4,872,500 | ||||||||||||
| Basic and diluted net income (loss) per share | $ | 0.02 | $ | 0.02 | $ | (0.01 | ) | $ | (0.01 | ) | ||||||
The Company did not have two classes of stock outstanding during the periods ended September 30, 2021 and therefore net loss of approximately $-0- and $2,000, respectively, in the three months ended September 30, 2022 and the period from February 25, 2021 (inception) to September 30 2021 was allocated 100% to Class B shareholders, net of shares that were subject to forfeiture, leading to net loss per share in that period of $0.00 and $0.00 respectively. The weighted average number of class B common shares outstanding for the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) to September 30, 2021 was 4,375,000 in both periods.
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Accounting for Warrants:
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ 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 instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, 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 instruments are outstanding.
Management has concluded that the Public Warrants and Private Warrants issued in connection with the Public Offering in October 2021, pursuant to the warrant agreement, qualify for equity accounting treatment.
Cash and Cash Equivalents:
The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had no cash equivalents at September 30, 2022 or December 31, 2021.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal Deposit Insurance Corporation coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments:
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets primarily due to their short-term nature.
Use of Estimates:
The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting periods presented.
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 as of September 30, 2022 or December 31, 2021, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Offering Costs:
The Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering.” Costs incurred in connection with preparation for the Public Offering totaled approximately $19,374,000 including Company costs of approximately $635,000 together with $10,720,000 of underwriters’ discount and approximately $8,019,000 in fair value over cost of Sponsor shares forfeited and purchased by anchor investors in connection with their investment in the Company. Such costs have been allocated to the redeemable Class A common stock subject to redemption issued upon completion of the Public Offering and additional paid in capital. None of the Public Warrants or Private Placement Warrants are classified as liabilities and so there is no charge to operations for costs related to their issuance.
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Class A Common Stock Subject to Possible Redemption:
All of the 19,490,000 shares of Class A common stock sold as part of of a Unit in the Public Offering discussed in Note 3 contain a redemption feature which allows for the redemption of common shares under the Company’s liquidation or tender offer/stockholder approval provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify a maximum redemption threshold, its articles of association provide that in no event will it redeem its Public Shares in an amount that would cause its net tangible assets (tangible assets less intangible assets and liabilities) to be less than $5,000,001. However, because all of the shares of Class A common stock are redeemable, all of the shares will be recorded as Class A common stock subject to redemption on the Company’s condensed balance sheets.
The Company recognizes changes immediately as they occur and adjusts the carrying value of the securities at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A common stock are affected by adjustments to additional paid-in capital. Accordingly, at December 31, 2021, all of the 19,490,000 Public Shares were classified outside of permanent equity. Class A common stock subject to redemption consist of:
| Gross proceeds of Public Offering | $ | 194,900,000 | ||
| Less: Offering costs | (18,084,000 | ) | ||
| Proceeds allocated to Public Warrants | (12,973,000 | ) | ||
| Plus: Accretion of carrying value to redemption value at inception | 33,006,000 | |||
| Subtotal at the date of the Public Offering and at December 31, 2021 | 196,849,000 | |||
| Accretion of carrying value to redemption value subsequent to inception | 605,000 | |||
| Class A common shares subject to redemption | $ | 197,4454,000 |
Income Taxes:
The Company follows the asset and liability method of accounting for income taxes under FASB ASC, 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company’s currently taxable income consists of interest income on the Trust Account net of taxes. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the three and nine months ended September 30, 2022 the Company recorded income tax expense of approximately $145,000 and $175,000, respectively, representing the tax on interest income after deducting franchise taxes. For the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) to September 30, 2021 there was no taxable interest income and therefore no income tax. The Company’s effective tax rate for three and nine months ended September 30, 2022 was approximately 603% and 27% due to start-up costs (discussed above) which are not currently deductible and business combination costs which may not be deductible. For the three months ended September 30, 2021 and the period from February 25, 2021 (inception) to September 30, 2021 the Company’s effective tax rate was zero in both periods because there was no taxable interest income and therefore no tax provision. At September 30, 2022, the Company had deferred tax assets of approximately $255,000 primarily related to start-up costs. Management has determined that a full valuation allowance of the deferred tax asset is appropriate at this time.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2022 or 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 is subject to income tax examinations by major taxing authorities since inception. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable as we are a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2022. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2022, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
23
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report as of December 31, 2021 and for the period then ended filed with the SEC on March 24, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
A new 1% U.S. federal excise tax could be imposed on us in connection with redemptions by us of our shares.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the excise tax. The IR Act applies only to repurchases that occur after December 31, 2022.
If the deadline for us to complete a business combination is extended, our public shareholders will have the right to require us to redeem their Public Shares. Any redemption or other repurchase that occurs after December 31, 2022, in connection with an extension, a business combination or otherwise may be subject to the excise tax. Whether and to what extent we would be subject to the excise tax in connection with a business combination would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the business combination, (ii) the structure of the business combination, (iii) the nature and amount of any PIPE or other equity issuances in connection with the business combination (or otherwise issued not in connection with the business combination but issued within the same taxable year of the business combination) and (iv) the content of regulations and other guidance from the United States Treasury Department. In addition, because the excise tax would be payable by us, and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a business combination and in our ability to complete a business combination.
Changes in applicable laws or regulations, including the SEC’s proposed new rules regarding SPAC transactions (if adopted), or a failure to comply with any applicable laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial Business Combination and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business Combination and results of operations.
On March 30, 2022, the SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving special purpose acquisition companies (“SPACs”) and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our ability to negotiate and complete our initial Business Combination and may significantly increase the costs and time related thereto.
24
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| * | Furnished herewith |
25
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NEWHOLD INVESTMENT CORP. II | ||
| Dated: November 10, 2022 | /s/ Kevin Charlton | |
| Name: | Kevin Charlton | |
| Title: | Chairman of the Board of Directors and | |
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: November 10, 2022 | /s/ Samy Hammad | |
| Name: | Samy Hammad | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
26
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the
Securities Exchange Act of 1934
(Section 302 of the Sarbanes-Oxley Act of 2002)
I, Kevin Charlton, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of NewHold Investment Corp. II;
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;
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 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 have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) [omitted pursuant to the transition period exemption for newly public companies.]
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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 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 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.
| Dated: November 10, 2022 | /s/ Kevin Charlton |
|
Name: Kevin Charlton Title: Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Rule 13a-14(a) and Rule 15d-14(e) under the
Securities Exchange Act of 1934
(Section 302 of the Sarbanes-Oxley Act of 2002)
I, Samy Hammad, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of NewHold Investment Corp. II;
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;
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 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 have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) [omitted pursuant to the transition period exemption for newly public companies.]
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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 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 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.
| Dated: November 10, 2022 | /s/ Samy Hammad |
|
Name: Samy Hammad Title: Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report on Form 10-Q of NewHold Investment Corp. II (the “Company”) for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Kevin Charlton, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: November 10, 2022 | /s/ Kevin Charlton |
|
Name: Kevin Charlton Title: Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report on Form 10-Q of NewHold Investment Corp. II (the “Company”) for the quarter ended September 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Samy Hammad, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: November 10, 2022 | /s/ Samy Hammad |
|
Name: Samy Hammad Title: Chief Financial Officer (Principal Financial Officer) |
Unaudited Condensed Statements of Operations - USD ($) |
3 Months Ended | 7 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2022 |
|||
| General and administrative expenses | $ 351,000 | $ 2,000 | $ 1,229,000 | |||
| Net loss from operations | (351,000) | (2,000) | (1,229,000) | |||
| Interest income on Trust Account | 885,000 | 1,258,000 | ||||
| Income before income tax | 534,000 | (2,000) | 29,000 | |||
| Income tax provision | (145,000) | (175,000) | ||||
| Income (loss) attributable to common shares | $ 389,000 | $ (2,000) | $ (146,000) | |||
| Class A Common Stock | ||||||
| Weighted average common shares outstanding – basic and diluted (in Shares) | 19,490,000 | 19,490,000 | ||||
| Net income (loss) per common share basic and diluted (in Dollars per share) | $ 0.02 | $ 0 | $ 0 | $ (0.01) | ||
| Class B Common Stock | ||||||
| Weighted average common shares outstanding – basic and diluted (in Shares) | [1] | 4,872,500 | 4,375,000 | 4,375,000 | 4,872,500 | |
| Net income (loss) per common share basic and diluted (in Dollars per share) | [1] | $ 0.02 | $ 0 | $ 0 | $ (0.01) | |
| ||||||
Unaudited Condensed Statements of Operations (Parentheticals) - $ / shares |
3 Months Ended | 7 Months Ended | 9 Months Ended | |
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2022 |
|
| Class A Common Stock | ||||
| Weighted average common shares outstanding – basic and diluted (in Shares) | 19,490,000 | 19,490,000 | ||
| Net loss per common share basic and diluted | $ 0.02 | $ 0.00 | $ 0.00 | $ (0.01) |
| Class B Common Stock | ||||
| Weighted average common shares outstanding – basic and diluted (in Shares) | 4,872,500 | 4,375,000 | 4,375,000 | 4,872,500 |
| Net loss per common share basic and diluted | $ 0.02 | $ 0.00 | $ 0.00 | $ (0.01) |
Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) - USD ($) |
Class B
Common Stock
|
Additional Paid-in Capital |
Accumulated Deficit |
Total |
|||
|---|---|---|---|---|---|---|---|
| Balance at Feb. 24, 2021 | [1] | ||||||
| Sale of Class B common stock to Sponsor at approximately $0.005 per share | $ 1,000 | [1] | 24,000 | 25,000 | |||
| Sale of Class B common stock to Sponsor at approximately $0.005 per share (in Shares) | [1] | 5,031,250 | |||||
| Net income (loss) attributable to common shares | [1] | (2,000) | (2,000) | ||||
| Balance at Sep. 30, 2021 | $ 1,000 | [1] | 24,000 | (2,000) | 23,000 | ||
| Balance (in Shares) at Sep. 30, 2021 | [1] | 5,031,250 | |||||
| Balance at Jun. 30, 2021 | $ 1,000 | 24,000 | (2,000) | 23,000 | |||
| Balance (in Shares) at Jun. 30, 2021 | 5,031,250 | ||||||
| Net income (loss) attributable to common shares | |||||||
| Balance at Sep. 30, 2021 | $ 1,000 | [1] | 24,000 | (2,000) | 23,000 | ||
| Balance (in Shares) at Sep. 30, 2021 | [1] | 5,031,250 | |||||
| Balance at Dec. 31, 2021 | $ 1,000 | [1] | (4,438,000) | (4,437,000) | |||
| Balance (in Shares) at Dec. 31, 2021 | [1] | 4,872,500 | |||||
| Accretion in value of Class A common shares subject to redemption | [1] | (605,000) | (605,000) | ||||
| Net income (loss) attributable to common shares | [1] | (146,000) | (146,000) | ||||
| Balance at Sep. 30, 2022 | $ 1,000 | [1] | (5,189,000) | (5,188,000) | |||
| Balance (in Shares) at Sep. 30, 2022 | [1] | 4,872,500 | |||||
| Balance at Jun. 30, 2022 | $ 1,000 | (4,974,000) | (4,973,000) | ||||
| Balance (in Shares) at Jun. 30, 2022 | 4,872,500 | ||||||
| Accretion in value of Class A common shares subject to redemption | (604,000) | (604,000) | |||||
| Net income (loss) attributable to common shares | 389,000 | 389,000 | |||||
| Balance at Sep. 30, 2022 | $ 1,000 | [1] | $ (5,189,000) | $ (5,188,000) | |||
| Balance (in Shares) at Sep. 30, 2022 | [1] | 4,872,500 | |||||
| |||||||
Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) (Parentheticals) |
7 Months Ended |
|---|---|
|
Sep. 30, 2021
$ / shares
| |
| Statement of Stockholders' Equity [Abstract] | |
| Sale of common stock per share | $ 0.005 |
Description of Organization and Business Operations |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Organization Consolidation and Presentation of Financial Statements [Abstract] | |
| DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and General:
NewHold Investment Corp. II (the “Company”) was incorporated in Delaware on February 25, 2021 as NewHold Industrial Corp. II. 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”). The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,” as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
At September 30, 2022, the Company had not commenced any operations. All activity for the period from February 25, 2021 (inception) to September 30, 2022 relates to the Company’s formation and the initial public offering (“Public Offering”) described below and, subsequent to the Public Offering, identifying and completing a suitable Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on cash and investments from the proceeds derived from the Public Offering.
All dollar amounts are rounded to the nearest thousand dollars.
Sponsor and Financing:
The Company’s sponsor is NewHold Industrial Technology Holdings LLC II, a Delaware limited liability company (the “Sponsor”). The Company intends to finance a Business Combination with proceeds from the $194,900,000 Public Offering (Note 3) and a $9,254,705 private placement (Note 4), including the partial exercise of the underwriters’ over-allotment option. Upon the closing of the Public Offering and the private placement, $196,849,000 was placed in a trust account (the “Trust Account”).
The Trust Account:
The funds in the Trust Account are invested only in U.S. government treasury bills with a maturity of one hundred and eighty (180) days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of its initial Business Combination or (ii) the distribution of the Trust Account as described below. The remaining funds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisition targets and continuing general and administrative expenses.
The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay tax obligations and up to $250,000 per year for working capital purposes, if any, (less up to $100,000 of interest to pay dissolution expenses), none of the funds held in the Trust Account will be released until the earliest of: (a) the completion of the initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the ability of holders of the public shares to seek redemption in connection with the Company’s initial Business Combination or the Company’s obligation to redeem 100% of the public shares if the Company does not complete the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period) or (ii) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, and (c) the redemption of the public shares if the Company is unable to complete the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period), subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of creditors, if any, which could have priority over the claims of the Company’s public stockholders.
Business Combination:
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination with a Target Business. As used herein, “Target Business” is one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less deferred underwriting commissions and any taxes payable on interest earned) at the time of signing a definitive agreement in connection with the Company’s initial Business Combination. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company, after signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable and amounts released for working capital, or (ii) provide stockholders with the opportunity to have their shares redeemed by the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable and amounts released to the Company for working capital. The decision as to whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval unless a vote is required by the rules of The Nasdaq Global Market. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares of Class A and Class B common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon consummation of a Business Combination. In such case, the Company would not proceed with the redemption of its public shares and the related Business Combination, and instead may search for an alternate Business Combination
If the Company holds a stockholder vote or there is a tender offer for shares in connection with a Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable and amounts released to the Company for working capital. As a result, such shares of Class A common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 480, “Distinguishing Liabilities from Equity.” The amount in the Trust Account is initially anticipated to be $10.10 per public common share ($196,849,000 held in the Trust Account divided by 19,490,000 public shares including the underwriters’ partial exercise of their over-allotment option).
The Company will have 18 months from the closing date of the Public Offering, until April 25, 2023 (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period). If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, subject to lawfully available funds therefor, redeem 100% of the public shares of Class A common stock for a per share pro rata portion of the Trust Account, including interest, but less taxes payable and amounts released for working capital (less up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its creditors and remaining stockholders, as part of its plan of dissolution and liquidation. The initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to participate in any redemption with respect to their initial shares; however, if the initial stockholders or any of the Company’s officers, directors or affiliates acquire shares of Class A common stock in or after the Public Offering, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not complete a Business Combination within 18 months from the closing of the Public Offering, until April 25, 2023 (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period).
In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the price per Unit in the Public Offering. |
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 financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying unaudited financial statements as of September 30, 2022 and for the period from February 25, 2021 (inception) to September 30, 2021 have been prepared in accordance with U.S. GAAP for interim financial information and Article 8 of Regulation S-X. In the opinion of management of the Company, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the period ending December 31, 2022 or any future periods.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 24, 2022. The interim results for three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the period ending December 31, 2022 or for any other future periods.
Mandatory Liquidation, Liquidity and Going Concern:
In connection with the Company’s assessment of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” as of September 30, 2022, the Company has approximately $1,007,000 in cash and approximately $1,165,000 in working capital and management has determined that the Company’s current liquidity is sufficient to fund the working capital needs of the Company until one year from the date of issuance of these financial statements. However, if the Company cannot complete a Business Combination prior to April 25, 2023 (or October 25, 2023 if certain conditions are met), it could be forced to wind up its operations and liquidate unless it receives an extension approval from its shareholders. This condition raises substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. The Company’s plan to deal with this uncertainty is to complete a Business Combination prior to April 25, 2023. There is no assurance that the Company’s plans to consummate a Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Emerging Growth Company
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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Net Income (Loss) Per Common Share:
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of common shares outstanding during the period plus, to the extent dilutive, the incremental number of common shares to settle warrants, as calculated using the treasury stock method.
The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 18,999,705 Class A common shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per common share is the same as basic income (loss) per common share for the periods presented.
The Company has two classes of shares, which are referred to as Class A common shares and Class B common shares. Income and losses are shared pro rata among the two classes of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding during the respective period. The changes in redemption value that are accreted to Class A common stock subject to redemption (see below) is representative of fair value and therefore is not factored into the calculation of earnings per share.
The following table reflects the net loss per share for the three and nine months ended September 30, 2022 after allocating income between the shares based on outstanding shares. This presentation assumes a business combination as the most likely outcome.
The Company did not have two classes of stock outstanding during the periods ended September 30, 2021 and therefore net loss of approximately $-0- and $2,000, respectively, in the three months ended September 30, 2021 and the period from February 25, 2021 (inception) to September 30 2021 was allocated 100% to Class B shareholders, net of shares that were subject to forfeiture, leading to net loss per share in that period of $0.00 and $0.00 respectively. The weighted average number of Class B common shares outstanding for the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) to September 30, 2021 was 4,375,000 in both periods.
Accounting for Warrants:
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ 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 instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, 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 instruments are outstanding.
Management has concluded that the Public Warrants and Private Warrants issued in connection with the Public Offering in October 2021, pursuant to the warrant agreement, qualify for equity accounting treatment.
Cash and Cash Equivalents:
The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had no cash equivalents at September 30, 2022 or December 31, 2021.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal Deposit Insurance Corporation coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments:
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Use of Estimates:
The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting periods presented.
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 as of September 30, 2022 or December 31, 2021, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Offering Costs:
The Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering.” Costs incurred in connection with preparation for the Public Offering totaled approximately $19,374,000 including Company costs of approximately $635,000 together with $10,720,000 of underwriters’ discount and approximately $8,019,000 in fair value over cost of Sponsor shares forfeited and purchased by anchor investors in connection with their investment in the Company. Such costs have been allocated to the redeemable Class A common stock subject to redemption issued upon completion of the Public Offering and additional paid in capital. of the Public Warrants or Private Placement Warrants are classified as liabilities and so there is no charge to operations for costs related to their issuance.
Class A Common Stock Subject to Possible Redemption:
All of the 19,490,000 shares of Class A common stock sold as part of of a Unit in the Public Offering discussed in Note 3 contain a redemption feature which allows for the redemption of common shares under the Company’s liquidation or tender offer/stockholder approval provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify a maximum redemption threshold, its articles of association provide that in no event will it redeem its Public Shares in an amount that would cause its net tangible assets (tangible assets less intangible assets and liabilities) to be less than $5,000,001. However, because all of the shares of Class A common stock are redeemable, all of the shares will be recorded as Class A common stock subject to redemption on the Company’s condensed balance sheet.
The Company recognizes changes immediately as they occur and adjusts the carrying value of the securities at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A common stock are affected by adjustments to additional paid-in capital. Accordingly, at September 30, 2022 and December 31, 2021, all of the 19,490,000 Public Shares were classified outside of permanent equity. Class A common stock subject to redemption consist of:
Income Taxes:
The Company follows the asset and liability method of accounting for income taxes under FASB ASC, 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company’s currently taxable income consists of interest income on the Trust Account net of taxes. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the three and nine months ended September 30, 2022 the Company recorded income tax expense of approximately $145,000 and $175,000, respectively, representing the tax on interest income after deducting franchise taxes. For the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) to September 30, 2021 there was no taxable interest income and therefore no income tax. The Company’s effective tax rate for three and nine months ended September 30, 2022 was approximately 603% and 27% due to start-up costs (discussed above) which are not currently deductible and business combination costs which may not be deductible. For the three months ended September 30, 2021 and the period from February 25, 2021 (inception) to September 30, 2021 the Company’s effective tax rate was zero in both periods because there was no taxable interest income and therefore no tax provision. At September 30, 2022, the Company had deferred tax assets of approximately $255,000 primarily related to start-up costs. Management has determined that a full valuation allowance of the deferred tax asset is appropriate at this time.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2022 or 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 is subject to income tax examinations by major taxing authorities since inception. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Pronouncements:
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective in the fiscal year beginning after December 15, 2023, which in the Company’s case would be January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently evaluating the impact that the pronouncement may have on the financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Subsequent Events:
The Company evaluated subsequent events and transactions that occurred after September 30, 2022 up to the date that the unaudited interim condensed financial statements were available to be issued. Based upon this review, the Company has concluded that all such events and transactions that would require adjustment or disclosure in the financial statements have been recognized or disclosed. |
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Public Offering |
9 Months Ended |
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Sep. 30, 2022 | |
| Public Offering [Abstract] | |
| PUBLIC OFFERING | NOTE 3 — PUBLIC OFFERING
On October 25, 2021 and October 29, 2021, the Company closed on the sale of an aggregate 19,490,000 units at a price of $10.00 per unit (the “Units”). Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value and one-half of one redeemable warrant (the “Warrants”). Each whole Warrant offered in the Public Offering is exercisable to purchase one share of our Class A common stock for $11.50 per share as further discussed in Note 5.
The Company granted the underwriters a 45-day option to purchase up to 2,625,000 additional Units to cover any over-allotments, at the Public Offering price less the underwriting discounts and commissions and on October 29, 2021 the underwriter exercised its option and purchased 1,990,000 units. The Warrants that were issued in connection with 1,990,000 over-allotment units are identical to the public Warrants and have no net cash settlement provisions.
The Company paid an underwriting discount of 2.0% of the per Unit price to the underwriters, an aggregate fee of $3,898,000, at the closings of the Public Offering with an additional fee (the “Deferred Discount”) of 3.5% ($6,821,500 including the underwriters’ over-allotment option exercise) of the gross offering proceeds payable upon the consummation of the initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
Certain funds and accounts managed by UBS O’Connor LLC, Magnetar Financial LLC, Kepos Capital LP, Meteora Capital Partners, L.P., Polar Asset Management Partners Inc., Sandia Investment Management L.P., Radcliffe Capital Management, L.P., RiverNorth Capital Management, LLC, Highbridge Capital Management, LLC, Marshall Wace LLP, Aristeia Capital, L.L.C. and Periscope Capital Inc. (collectively, the “anchor investors”) purchased an aggregate of $172,900,000 of units in the Public Offering, the full amount required for them not to forfeit any of their Founder Shares purchased.
The excess of the fair value of the Founder Shares purchased by the anchor investors of approximately $8,019,000 has been determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Accordingly, the offering cost was allocated to the Public Shares and Public Warrants (being accounted for as equity instruments) and was charged to the carrying value of the Class A Common Stock upon the completion of the Public Offering. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 4 — RELATED PARTY TRANSACTIONS
Founder Shares
In February 2021, the Sponsor purchased 5,031,250 shares of Class B common stock (the “Founder Shares”) for $25,000, or approximately $0.005 per share (up to 656,250 of which were subject to forfeiture by the Sponsor to the extent the underwriters’ over-allotment option is not exercised in full by the underwriters’). The Founder Shares are identical to the Class A common stock included in the Units being sold in the Public Offering. The forfeiture would be adjusted to the extent that the over-allotment option is not exercised in full by the underwriters so that the initial stockholders will own 20.0% of the Company’s issued and outstanding shares of common stock after the Public Offering. In connection with the Public Offering 158,750 Founder Shares were forfeited in December in connection with the underwriters’ partial exercise of their over-allotment option. See also Notes 3 and 5.
The Founder Shares are identical to the Class A common stock included in the Units being sold in the Public Offering except that the Founder Shares automatically convert into shares of Class A common stock at the time of the initial Business Combination and are subject to certain transfer restrictions, as described in more detail below.
The Company’s initial stockholders agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or (B), subsequent to the Company’s initial Business Combination, if (x) the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination or (y) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction after the initial Business Combination that results in all of the Company’s stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.
The Company’s sponsor forfeited 1,635,126 Founder Shares and the anchor investors purchased 1,635,126 Founder Shares in connection with the Public Offering and the anchor investors investment.
The excess of the fair value of the Founder Shares purchased by the anchor investors of approximately $8,019,000 was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Accordingly, offering costs allocated to the Public Shares and Public Warrants (being accounted for as equity instruments) were charged to temporary equity and additional paid in capital upon the completion of the Public Offering. The fair value of the Founder Shares was determined based upon 18 months to acquisition, 3.37% discount rate, 65% probability of acquisition, 21.3% discount for lack of marketability and results in a per share fair value of $4.87.
Private Placement Warrants
In October 2021, the Sponsor and certain funds and accounts managed by UBS O’Connor LLC, Magnetar Financial LLC, and Kepos Capital LP purchased from the Company, collectively, an aggregate of 9,254,705 warrants at a price of $1.00 per warrant, a purchase price of $9,254,705 including the underwriter’s partial exercise of their overallotment option, in a private placement that occurred simultaneously with the completion of the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one share of Class A common stock at $11.50 per share. A portion of the purchase price of the Private Placement Warrants will be added to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Company’s initial Business Combination. The Private Placement Warrants (including the Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination. Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Warrants being sold as part of the Units in the Public Offering and have no net cash settlement provisions.
If the Company does not complete a Business Combination, then the proceeds from the sale of the Private Placement Warrants will be part of the liquidating distribution to the public stockholders and the Private Placement Warrants issued to the Sponsor will expire worthless.
Registration Rights
The Company’s initial stockholders and the holders of the Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement signed in connection with the Public Offering. These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. The Company will bear the expenses incurred in connection with the filing of any such registration statements. There will be no penalties associated with delays in registering the securities under the Public registration rights agreement.
Related Party Loans
On March 5, 2021, the Sponsor agreed to loan the Company an aggregate of $300,000 by drawdowns against the issuance of an unsecured promissory note (the “Note”) to cover expenses related to the Public Offering. The Note is non-interest bearing and payable promptly after the earlier of the date on which the Company consummates the Public Offering and the date on which the Company determines not to conduct the Public Offering. As of the date of the Public Offering, the Sponsor had loaned $85,000 to the Company under the Note and on October 25, 2021, the Note was repaid in full upon the consummation of the Public Offering and there is no further availability to borrow under the Note.
If the Sponsor, an affiliate of the Sponsor or certain of the Company’s officers and directors make any loans to the Company to finance the transaction costs of an intended initial business combination, up to $100,000 of such loans may be converted into warrants, at the price of $1.00 per warrant, at the option of the lender. Such warrants would be identical to the Private Placement Warrants. As of September 30, 2022 and December 31, 2021, no such loans had been made to the Company.
Administrative Support Agreement
On October 25, 2021, the Company agreed to pay $25,000 a month for office space, utilities and secretarial and administrative support to the Sponsor. Services commenced on the date the securities were first listed on The Nasdaq Global Market and will terminate upon the earlier of the consummation by the Company of an initial Business Combination or the liquidation of the Company. The Company paid and charged to operations $75,000 and $225,000, respectively, for the three and nine months ended September 30, 2022 for these services and there were no amounts unpaid at that date. |
Trust Account and Fair Value Measurement |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trust Account and Fair Value Measurement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TRUST ACCOUNT AND FAIR VALUE MEASUREMENT | NOTE 5 — TRUST ACCOUNT AND FAIR VALUE MEASUREMENT
The Company complies with FASB ASC 820, Fair Value Measurements, 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.
Upon the closing of the Public Offering and the Private Placement, a total of $196,849,000 was deposited into the Trust Account. The proceeds in the Trust Account may be invested in either U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, and that invest solely in U.S. government treasury obligations.
At December 31, 2021, the proceeds of the Trust Account were invested primarily in U.S. government treasury bills maturing in April 2022. Upon maturity, such U.S. government treasury bills were invested in U.S. government treasury bills maturing in July 2022. At maturity in July 2022, the proceeds of the U. S. government treasury bills were invested in a money market fund meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940. When it owns them, the Company classifies its U.S. government treasury bills and equivalent securities as held-to-maturity in accordance with FASB ASC 320, “Investments – Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity U.S. government treasury bills, when we own them, are recorded at amortized cost on the accompanying condensed balance sheets adjusted for the amortization of discounts. Investments in money market accounts are recorded at fair value.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Since all of the Company’s permitted investments at September 30, 2022 and December 31, 2021 consisted of U.S. government treasury bills or money market funds that invest only in U.S. government treasury bills, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities as follows:
In March 2022, the Company withdrew $44,000 from the Trust Account to pay taxes. In July 2022, the Company withdrew approximately $154,000 from the Trust Account to pay taxes. |
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Stockholders’ Deficit |
9 Months Ended | ||||||||||||
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Sep. 30, 2022 | |||||||||||||
| Stockholders' Equity Note [Abstract] | |||||||||||||
| STOCKHOLDERS’ DEFICIT | NOTE 6 — STOCKHOLDERS’ DEFICIT
Common Stock
According to an amendment to the Company’s certificate of incorporation that was filed with the Secretary of State of the State of Delaware on March 1, 2021, the Company is authorized to issue 51,000,000 shares of common stock, including 45,000,000 shares of Class A common stock, par value, $0.0001 and 6,000,000 shares of Class B common stock par value $0.0001. Upon completion of the Public Offering, the Company may (depending on the terms of the Business Combination) be required to increase the authorized number of shares at the same time as its stockholders vote on the Business Combination to the extent the Company seeks stockholder approval in connection with its Business Combination. Holders of the Company’s Class A and Class B common stock vote together as a single class and are entitled to one vote for each share of Class A and Class B common stock. At both September 30, 2022 and December 31, 2021, there were 4,872,500 shares of Class B common stock issued and outstanding and shares of Class A common stock issued or outstanding.
The Class B common shares are identical to the Class A common stock included in the Units sold in the Public Offering except that the Class B common shares automatically convert into shares of Class A common stock at the time of the initial Business Combination and are subject to certain transfer restrictions, as described in more detail in Note 4.
Warrants
As of September 30, 2022 and December 31, 2021, there were 9,745,000 Public Warrants and 9,254,705 Private Placement Warrants outstanding (an aggregate of warrants to purchase 18,999,705 Class A common shares).
Each whole Warrant issued in the Public Offering is exercisable to purchase one share of our Class A common stock for $11.50 per share. Only whole Warrants may be exercised. 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 Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). The Company agreed that as soon as practicable, but in no event later than 30 business days after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the initial Business Combination and to maintain the effectiveness of such registration statement.
The Warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue 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 initial stockholders or their affiliates, without taking into account any Founder Shares held by them, as applicable, prior to such issuance) (the “newly issued price”), the exercise price of the Warrants and the Private Placement Warrants (as defined below) 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 Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon 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 non-redeemable and will be exercisable at the election of the holder on a “cashless basis”, so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the holders of our Founder Shares 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 Warrants.
Redemption of Warrants: Once the Warrants become exercisable, the Company may redeem the outstanding Warrants:
The Company will not redeem the Warrants as described above unless an effective registration statement under the Securities Act covering the Class A common stock issuable upon exercise of the Warrants is effective and a current prospectus relating to those of Class A common stock is available throughout the 30-day redemption period or the Company has elected to require the exercise of the warrants on a “cashless basis.” If and when the warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If the Company is unable to complete a Business Combination within 18 months from the closing date of the Public Offering (or 24 months under certain circumstances as discussed in Note 1), and the Company liquidates the funds held in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such Warrants. Accordingly, the Warrants may expire worthless.
See also Note 4 – Related Party Transactions for further information on the Private Placement warrants.
Preferred Stock
According to an amendment to the Company’s certificate of incorporation that was filed with the Secretary of State of the State of Delaware on March 1, 2021, the Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2022 and December 31, 2021 there were shares of preferred stock issued or outstanding. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 7 — COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties — COVID-19 — Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have an effect on the Company’s financial position, results of its operations and/or search for a target company and/or a target company’s financial position and results of its operations, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Risks and uncertainties — Hostilities in Ukraine — In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements.
Certain repurchases of stock (including redemptions) by publicly traded domestic corporations -
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations, among others. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The IR Act applies to repurchases that occur after December 31, 2022.
Whether and to what extent we would be subject to the excise tax in connection with a business combination, liquidation or partial redemption would depend on a number of factors. |
Accounting Policies, by Policy (Policies) |
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| Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation:
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying unaudited financial statements as of September 30, 2022 and for the period from February 25, 2021 (inception) to September 30, 2021 have been prepared in accordance with U.S. GAAP for interim financial information and Article 8 of Regulation S-X. In the opinion of management of the Company, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the period ending December 31, 2022 or any future periods.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 24, 2022. The interim results for three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the period ending December 31, 2022 or for any other future periods.
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| Mandatory Liquidation, Liquidity and Going Concern | Mandatory Liquidation, Liquidity and Going Concern:
In connection with the Company’s assessment of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” as of September 30, 2022, the Company has approximately $1,007,000 in cash and approximately $1,165,000 in working capital and management has determined that the Company’s current liquidity is sufficient to fund the working capital needs of the Company until one year from the date of issuance of these financial statements. However, if the Company cannot complete a Business Combination prior to April 25, 2023 (or October 25, 2023 if certain conditions are met), it could be forced to wind up its operations and liquidate unless it receives an extension approval from its shareholders. This condition raises substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. The Company’s plan to deal with this uncertainty is to complete a Business Combination prior to April 25, 2023. There is no assurance that the Company’s plans to consummate a Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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| Emerging Growth Company | Emerging Growth Company
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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
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| Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share:
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of common shares outstanding during the period plus, to the extent dilutive, the incremental number of common shares to settle warrants, as calculated using the treasury stock method.
The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 18,999,705 Class A common shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per common share is the same as basic income (loss) per common share for the periods presented.
The Company has two classes of shares, which are referred to as Class A common shares and Class B common shares. Income and losses are shared pro rata among the two classes of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding during the respective period. The changes in redemption value that are accreted to Class A common stock subject to redemption (see below) is representative of fair value and therefore is not factored into the calculation of earnings per share.
The following table reflects the net loss per share for the three and nine months ended September 30, 2022 after allocating income between the shares based on outstanding shares. This presentation assumes a business combination as the most likely outcome.
The Company did not have two classes of stock outstanding during the periods ended September 30, 2021 and therefore net loss of approximately $-0- and $2,000, respectively, in the three months ended September 30, 2021 and the period from February 25, 2021 (inception) to September 30 2021 was allocated 100% to Class B shareholders, net of shares that were subject to forfeiture, leading to net loss per share in that period of $0.00 and $0.00 respectively. The weighted average number of Class B common shares outstanding for the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) to September 30, 2021 was 4,375,000 in both periods.
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| Accounting for Warrants | Accounting for Warrants:
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ 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 instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, 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 instruments are outstanding.
Management has concluded that the Public Warrants and Private Warrants issued in connection with the Public Offering in October 2021, pursuant to the warrant agreement, qualify for equity accounting treatment.
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| Cash and Cash Equivalents | Cash and Cash Equivalents:
The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. The Company had no cash equivalents at September 30, 2022 or December 31, 2021.
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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 cash accounts in a financial institution, which at times, may exceed the Federal Deposit Insurance Corporation coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
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| Financial Instruments | Financial Instruments:
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
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| Use of Estimates | Use of Estimates:
The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting periods presented.
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 as of September 30, 2022 or December 31, 2021, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
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| Offering Costs | Offering Costs:
The Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering.” Costs incurred in connection with preparation for the Public Offering totaled approximately $19,374,000 including Company costs of approximately $635,000 together with $10,720,000 of underwriters’ discount and approximately $8,019,000 in fair value over cost of Sponsor shares forfeited and purchased by anchor investors in connection with their investment in the Company. Such costs have been allocated to the redeemable Class A common stock subject to redemption issued upon completion of the Public Offering and additional paid in capital. of the Public Warrants or Private Placement Warrants are classified as liabilities and so there is no charge to operations for costs related to their issuance.
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| Class A Common Stock Subject to Possible Redemption | Class A Common Stock Subject to Possible Redemption:
All of the 19,490,000 shares of Class A common stock sold as part of of a Unit in the Public Offering discussed in Note 3 contain a redemption feature which allows for the redemption of common shares under the Company’s liquidation or tender offer/stockholder approval provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify a maximum redemption threshold, its articles of association provide that in no event will it redeem its Public Shares in an amount that would cause its net tangible assets (tangible assets less intangible assets and liabilities) to be less than $5,000,001. However, because all of the shares of Class A common stock are redeemable, all of the shares will be recorded as Class A common stock subject to redemption on the Company’s condensed balance sheet.
The Company recognizes changes immediately as they occur and adjusts the carrying value of the securities at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A common stock are affected by adjustments to additional paid-in capital. Accordingly, at September 30, 2022 and December 31, 2021, all of the 19,490,000 Public Shares were classified outside of permanent equity. Class A common stock subject to redemption consist of:
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| Income Taxes | Income Taxes:
The Company follows the asset and liability method of accounting for income taxes under FASB ASC, 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company’s currently taxable income consists of interest income on the Trust Account net of taxes. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the three and nine months ended September 30, 2022 the Company recorded income tax expense of approximately $145,000 and $175,000, respectively, representing the tax on interest income after deducting franchise taxes. For the three months ended September 30, 2021 and for the period from February 25, 2021 (inception) to September 30, 2021 there was no taxable interest income and therefore no income tax. The Company’s effective tax rate for three and nine months ended September 30, 2022 was approximately 603% and 27% due to start-up costs (discussed above) which are not currently deductible and business combination costs which may not be deductible. For the three months ended September 30, 2021 and the period from February 25, 2021 (inception) to September 30, 2021 the Company’s effective tax rate was zero in both periods because there was no taxable interest income and therefore no tax provision. At September 30, 2022, the Company had deferred tax assets of approximately $255,000 primarily related to start-up costs. Management has determined that a full valuation allowance of the deferred tax asset is appropriate at this time.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2022 or 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 is subject to income tax examinations by major taxing authorities since inception. 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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| Recent Accounting Pronouncements | Recent Accounting Pronouncements:
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective in the fiscal year beginning after December 15, 2023, which in the Company’s case would be January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently evaluating the impact that the pronouncement may have on the financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
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| Subsequent Events | Subsequent Events:
The Company evaluated subsequent events and transactions that occurred after September 30, 2022 up to the date that the unaudited interim condensed financial statements were available to be issued. Based upon this review, the Company has concluded that all such events and transactions that would require adjustment or disclosure in the financial statements have been recognized or disclosed. |
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Summary of Significant Accounting Policies (Tables) |
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| Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of net loss per share |
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| Schedule of class A common stock subject to redemption |
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Trust Account and Fair Value Measurement (Tables) |
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| Trust Account and Fair Value Measurement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of active markets for identical assets |
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Description of Organization and Business Operations (Details) |
9 Months Ended |
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Sep. 30, 2022
USD ($)
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| Description of Organization and Business Operations (Details) [Line Items] | |
| Proceeds from public offering | $ 194,900,000 |
| Amended and restated certificate, description | The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay tax obligations and up to $250,000 per year for working capital purposes, if any, (less up to $100,000 of interest to pay dissolution expenses), none of the funds held in the Trust Account will be released until the earliest of: (a) the completion of the initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the ability of holders of the public shares to seek redemption in connection with the Company’s initial Business Combination or the Company’s obligation to redeem 100% of the public shares if the Company does not complete the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period) or (ii) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, and (c) the redemption of the public shares if the Company is unable to complete the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months from the closing of the Public Offering if the Company has filed a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 18-month period), subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of creditors, if any, which could have priority over the claims of the Company’s public stockholders. |
| Trust account, percentage | 80.00% |
| Business combination of redeem shares | $ 5,000,001 |
| Trust account, description | ” The amount in the Trust Account is initially anticipated to be $10.10 per public common share ($196,849,000 held in the Trust Account divided by 19,490,000 public shares including the underwriters’ partial exercise of their over-allotment option). |
| Business combination, description | If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, subject to lawfully available funds therefor, redeem 100% of the public shares of Class A common stock for a per share pro rata portion of the Trust Account, including interest, but less taxes payable and amounts released for working capital (less up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its creditors and remaining stockholders, as part of its plan of dissolution and liquidation. |
| Private Placement [Member] | |
| Description of Organization and Business Operations (Details) [Line Items] | |
| Proceeds from issuance of warrants | $ 9,254,705 |
| Trust account deposit | $ 196,849,000 |
Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | 7 Months Ended | 9 Months Ended | 10 Months Ended | |
|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Summary of Significant Accounting Policies (Details) [Line Items] | |||||
| Cash | $ 1,007,000 | $ 1,007,000 | |||
| Working capital | 1,165,000 | $ 1,165,000 | |||
| Common shareholders description | The Company did not have two classes of stock outstanding during the periods ended September 30, 2021 and therefore net loss of approximately $-0- and $2,000, respectively, in the three months ended September 30, 2021 and the period from February 25, 2021 (inception) to September 30 2021 was allocated 100% to Class B shareholders, net of shares that were subject to forfeiture, leading to net loss per share in that period of $0.00 and $0.00 respectively. | ||||
| Weighted average number shares (in Shares) | 4,375,000 | 4,375,000 | |||
| Federal deposit insurance corporation coverage | 250,000 | $ 250,000 | |||
| Total public offering | 19,374,000 | ||||
| Public offering company cost | 635,000 | ||||
| Underwriters discount amount | 10,720,000 | ||||
| Fair value of forfeited shares | 8,019,000 | ||||
| Warrants issued | |||||
| Tangible assets less intangible assets and liabilities | 5,000,001 | $ 5,000,001 | |||
| Number of public shares (in Shares) | 19,490,000 | 19,490,000 | |||
| Income tax expense | 145,000 | $ 175,000 | |||
| Tax rate | 6.03 | $ 0 | $ 0 | 0.27 | |
| Deferred tax assets | $ 255,000 | $ 255,000 | |||
| Class A Common Stock [Member] | |||||
| Summary of Significant Accounting Policies (Details) [Line Items] | |||||
| Aggregate of common shares (in Shares) | 18,999,705 | ||||
| Shares of common stock (in Shares) | 19,490,000 | 19,490,000 | |||
Summary of Significant Accounting Policies (Details) - Schedule of net loss per share - USD ($) |
3 Months Ended | 7 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2022 |
|||
| Class A [Member] | ||||||
| Numerator: | ||||||
| Allocation of net income (loss) | $ 311,000 | $ (117,000) | ||||
| Denominator: | ||||||
| Weighted average shares outstanding | 19,490,000 | 19,490,000 | ||||
| Basic and diluted net income (loss) per share | $ 0.02 | $ 0 | $ 0 | $ (0.01) | ||
| Class B [Member] | ||||||
| Numerator: | ||||||
| Allocation of net income (loss) | $ 78,000 | $ (29,000) | ||||
| Denominator: | ||||||
| Weighted average shares outstanding | 4,872,500 | 4,872,500 | ||||
| Basic and diluted net income (loss) per share | [1] | $ 0.02 | $ 0 | $ 0 | $ (0.01) | |
| ||||||
Summary of Significant Accounting Policies (Details) - Schedule of net loss per share (Parentheticals) - $ / shares |
3 Months Ended | 7 Months Ended | 9 Months Ended | |
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2022 |
|
| Class A [Member] | ||||
| Summary of Significant Accounting Policies (Details) - Schedule of net loss per share (Parentheticals) [Line Items] | ||||
| Basic and diluted net income (loss) per share | $ 0.02 | $ 0.00 | $ 0.00 | $ (0.01) |
| Class B [Member] | ||||
| Summary of Significant Accounting Policies (Details) - Schedule of net loss per share (Parentheticals) [Line Items] | ||||
| Basic and diluted net income (loss) per share | $ 0.02 | $ 0.00 | $ 0.00 | $ (0.01) |
Summary of Significant Accounting Policies (Details) - Schedule of class A common stock subject to redemption |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Schedule of Class A Common Stock Subject to Redemption [Abstract] | |
| Gross proceeds of Public Offering | $ 194,900,000 |
| Less: Offering costs | (18,084,000) |
| Proceeds allocated to Public Warrants | (12,973,000) |
| Plus: Accretion of carrying value to redemption value at inception | 33,006,000 |
| Subtotal at the date of the Public Offering and at December 31, 2021 | 196,849,000 |
| Accretion of carrying value to redemption value subsequent to inception | 605,000 |
| Class A common shares subject to redemption | $ 197,454,000 |
Public Offering (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |
|---|---|---|---|
Oct. 29, 2021 |
Oct. 25, 2021 |
Sep. 30, 2022 |
|
| Public Offering | |||
| Public offering, description | On October 25, 2021 and October 29, 2021, the Company closed on the sale of an aggregate 19,490,000 units at a price of $10.00 per unit (the “Units”). Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value and one-half of one redeemable warrant (the “Warrants”). Each whole Warrant offered in the Public Offering is exercisable to purchase one share of our Class A common stock for $11.50 per share as further discussed in Note 5. | On October 25, 2021 and October 29, 2021, the Company closed on the sale of an aggregate 19,490,000 units at a price of $10.00 per unit (the “Units”). Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value and one-half of one redeemable warrant (the “Warrants”). Each whole Warrant offered in the Public Offering is exercisable to purchase one share of our Class A common stock for $11.50 per share as further discussed in Note 5. | |
| Shares issued, description | The Company granted the underwriters a 45-day option to purchase up to 2,625,000 additional Units to cover any over-allotments, at the Public Offering price less the underwriting discounts and commissions and on October 29, 2021 the underwriter exercised its option and purchased 1,990,000 units. The Warrants that were issued in connection with 1,990,000 over-allotment units are identical to the public Warrants and have no net cash settlement provisions. | ||
| Underwriting discount percentage | 2.00% | ||
| Aggregate fee | $ 3,898,000 | ||
| Additional fee, percentage | 3.50% | ||
| Purchased aggregate units amount | $ 172,900,000 | ||
| Offering cost | 8,019,000 | ||
| Over-Allotment Option [Member] | |||
| Public Offering | |||
| Underwriters exercise price | $ 6,821,500 | ||
Trust Account and Fair Value Measurement (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |
|---|---|---|---|
Jul. 31, 2022 |
Mar. 31, 2022 |
Sep. 30, 2022 |
|
| Trust Account and Fair Value Measurement (Details) [Line Items] | |||
| Maturity date, description | Upon maturity, such U.S. government treasury bills were invested in U.S. government treasury bills maturing in July 2022. At maturity in July 2022, the proceeds of the U. S. government treasury bills were invested in a money market fund meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940. | ||
| Trust account to pay taxes | $ 154,000 | $ 44,000 | |
| Private Placement [Member] | |||
| Trust Account and Fair Value Measurement (Details) [Line Items] | |||
| Deposited into the trust account | $ 196,849,000 | ||
| U.S. Government Treasury [Member] | |||
| Trust Account and Fair Value Measurement (Details) [Line Items] | |||
| Maturity term | 185 days | ||
Trust Account and Fair Value Measurement (Details) - Schedule of active markets for identical assets - USD ($) |
10 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Sep. 30, 2022 |
|
| U.S. government treasury bill [Member] | ||
| Assets: | ||
| Gross Unrealized Holding Gains | $ 196,865,000 | |
| Quoted Price Prices in Active Markets (Level 1) | 3,000 | |
| Level 1 [Member] | Money market funds [Member] | ||
| Assets: | ||
| Carrying value | $ 197,923,000 | |
| Level 1 [Member] | U.S. government treasury bill [Member] | ||
| Assets: | ||
| Carrying value | $ 196,868,000 |
Commitments and Contingencies (Details) |
Aug. 16, 2022 |
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Federal excise tax rate | 1.00% |
| Fair market value percentage | 1.00% |