RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS |
NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company previously accounted for its outstanding Public Warrants (as defined in Note 5) and Placement Warrants (collectively, with the Public Warrants, the “Warrants”) issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant. In addition, the warrant agreement includes a provision that in the event of a tender or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of common stock, all holders of the Warrants would be entitled to receive cash for their Warrants (the “tender offer provision”).
In connection with the audit of the Company’s financial statements for the period ended December 31, 2020, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under ASC a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Placement Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC as described above. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded the tender offer provision included in the warrant agreement fails the “classified in stockholders’ equity” criteria as contemplated by ASC
As a result of the above, the Company should have classified the Warrants as derivative liabilities in its previously issued financial statements. Under this accounting treatment, the Company is required to measure the fair value of the Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.
The Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported operating expenses, cash flows or cash.
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Balance sheet as of December 4, 2020 |
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$ |
— |
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$ |
18,190,000 |
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$ |
18,190,000 |
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Common Stock Subject to Possible Redemption |
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217,972,620 |
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(18,190,000 |
) |
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199,782,620 |
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695 |
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182 |
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877 |
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Additional Paid-in Capital |
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5,000,411 |
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701,197 |
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5,701,608 |
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(1,096 |
) |
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(701,379 |
) |
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(702,475 |
) |
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Balance sheet as of December 31, 2020 |
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697 |
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198 |
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895 |
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Additional Paid-in Capital |
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5,201,592 |
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2,291,188 |
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7,492,780 |
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(202,287 |
) |
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(2,291,379 |
) |
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(2,493,666 |
) |
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5,000,002 |
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7 |
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5,000,009 |
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Statement of Operations for the Period from September 23,2020 (inception) to December 31, 2020 |
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Change in fair value of Warrants |
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$ |
— |
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$ |
(1,590,000 |
) |
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$ |
(1,590,000 |
) |
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Transaction costs attributable to Warrants |
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(701,379 |
) |
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(701,379 |
) |
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(202,287 |
) |
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(2,291,379 |
) |
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(2,493,666 |
) |
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Weighted average shares outstanding, Common stock subject to possible redemption |
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21,797,262 |
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(1,819,000 |
) |
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19,978,262 |
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Basic and diluted net income per share, Common stock subject to possible redemption |
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0.00 |
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— |
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0.00 |
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Weighted average shares outstanding, Common stock |
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6,081,367 |
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501,153 |
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6,582,520 |
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Basic and diluted net loss per share, Common stock |
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(0.03 |
) |
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(0.34 |
) |
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(0.37 |
) |
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Cash Flow Statement for the Period from September 23, 2020 (inception) to December 31, 2020 |
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$ |
(202,287 |
) |
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$ |
(2,291,379 |
) |
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$ |
(2,493,666 |
) |
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Change in fair value of Warrants |
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— |
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1,590,000 |
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1,590,000 |
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Transaction costs attributable to Warrants |
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701,379 |
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701,379 |
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Initial classification of common stock subject to possible redemption |
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217,972,620 |
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(18,190,000 |
) |
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199,782,620 |
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Change in value of common stock subject to possible redemption |
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(201,183 |
) |
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(1,590,007 |
) |
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(1,791,190 |
) | Statement of Changes in Stockholders’ Equity for the Period from September 23, 2020 (inception) to December 31, 2020
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Common stock subject to possible redemption – As Previously Reported |
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(21,780,266 |
) |
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$ |
(2,178 |
) |
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$ |
(217,769,259 |
) |
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$ |
— |
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$ |
(217,771,437 |
) |
Common stock subject to possible redemption – Adjustments |
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1,978,284 |
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198 |
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19,779,809 |
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— |
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19,780,007 |
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Common stock subject to possible redemption – As Restated |
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(19,801,982 |
) |
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(1,980 |
) |
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(197,989,450 |
) |
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— |
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(197,991,430 |
) |
Net loss – As Previously Reported |
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— |
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— |
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— |
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(202,287 |
) |
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(202,287 |
) |
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— |
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— |
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— |
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(2,291,379 |
) |
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(2,291,379 |
) |
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— |
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— |
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— |
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(2,493,666 |
) |
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(2,493,666 |
) |
Balance at December 31, 2020 – As Previously Reported |
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6,969,734 |
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|
697 |
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5,201,592 |
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(202,287 |
) |
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5,000,002 |
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Balance at December 31, 2020 –Adjustments |
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1,978,284 |
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|
198 |
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2,291,188 |
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(2,291,379 |
) |
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7 |
|
Balance at December 31, 2020 – As Restated |
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8,948,018 |
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|
895 |
|
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7,492,780 |
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(2,493,666 |
) |
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5,000,009 |
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