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Accounting Policies, by Policy (Policies)
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
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 period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability and FPS liability. Such estimates may be subject to change as more current information becomes available and, therefore, the actual results could differ significantly from those estimates.

 

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents in its operating account as of June 30, 2021 and December 31, 2020. The balance of the Company’s investments held in the Trust Account as of June 30, 2021 was comprised of cash equivalents.

 

Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation maximum coverage limit of $250,000, and cash equivalents held in the Trust Account. For the three and six months ended June 30, 2021 and 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

As of June 30, 2021 and December 31, 2020, the carrying values of cash, cash equivalents held in the Trust Account, accrued expenses, payables to related party, as well as the Sponsor Loan and franchise tax payable as of June 30, 2021 approximated their fair values due to the short-term nature of the instruments.

 

Offering Costs Associated with the Initial Public Offering

Offering Costs Associated with the Initial Public Offering

 

Offering costs consisted of legal, accounting, and other costs incurred in connection with the preparation for the Initial Public Offering. These costs, together with the underwriting discount, were charged to stockholders’ equity upon the completion of the Initial Public Offering.

 

Warrant and FPS Liability

Warrant and FPS Liability

 

The Company accounts for the Warrants and FPS as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and FPS using 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. The assessment considers whether the Warrants and FPS are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants and FPS are indexed to the Company’s own common shares and whether the warrant 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 issuance of the Warrants and execution of the FPA and as of each subsequent quarterly period-end date while the Warrants and FPS are outstanding. For issued or modified warrants and for instruments to be issued pursuant to the FPA that meet all of the criteria for equity classification, such warrants and instruments are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants and for the FPA instruments that do not meet all the criteria for equity classification, such warrants and instruments are required to be recorded at their initial fair value on the date of issuance, and on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified Warrants and the FPS are recognized on the statements of operations in the period of the change.

 

The Company accounts for the Warrants and FPS in accordance with guidance in ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC 815-40”), pursuant to which the Warrants and FPS do not meet the criteria for equity classification and must be recorded as liabilities. See Note 7 for further discussion of the pertinent terms of the Warrants and Note 8 for further discussion of the methodology used to determine the fair value of the Warrants and FPS.

 

Class A Common Stock Subject to Possible Redemption

Class A Common Stock Subject to Possible Redemption

 

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Shares of conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2021, 28,453,923 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. As of December 31, 2020, there were no shares of Class A common stock subject to possible redemption.

 

Income Taxes

Income Taxes

 

Income taxes are accounted for under ASC 740, Income Taxes (“ASC 740”), using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited condensed financial statement 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 includes the enactment date. To the extent that it is more likely than not that deferred tax assets will not be recognized, a valuation allowance would be established to offset their benefit.

 

ASC 740 prescribes a recognition threshold that a tax position is required to meet before being recognized in the unaudited condensed financial statements. The Company provides for uncertain tax positions, based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties related to unrecognized tax benefits as provision for income taxes on the statement of operations.

 

Net Income (Loss) Per Share of Common Stock

Net Income (Loss) Per Share of Common Stock

 

Net income (loss) per share of common stock is computed by dividing net loss applicable to stockholders by the weighted average number of shares of common stock outstanding during the periods. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 7,675,000 shares of Class A common stock in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted earnings per share of common stock is the same as basic earnings per share of common stock for the periods presented.

 

The Company’s statement of operations includes a presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of income per share. Net income (loss) per share, basic and diluted for shares of Class A common stock is calculated by dividing the interest income on investments held in the Trust Account, net of applicable taxes available to be withdrawn from the Trust Account by the weighted average number of shares of Class A common stock outstanding for the period, excluding 700,000 shares of Class A common stock held by the Sponsor, which is not subject to redemption. Net income (loss) per share, basic and diluted for shares of Class B common stock is calculated by dividing the net income (loss), less income attributable to the shares of redeemable Class A common stock by the weighted average number of shares of Class B common stock and 700,000 shares of Class A common stock held by the Sponsor and outstanding for the period.

 

The following tables reflect the calculation of basic and diluted net income (loss) per share of common stock:

 

   For the Three
Months Ended
June 30,
2021
 
Redeemable shares of Class A common stock    
Numerator: earnings allocable to redeemable shares of Class A common stock    
Interest income on investments held in Trust Account  $7,562 
Less franchise tax available to be withdrawn from the Trust Account  $(7,562)
Net earnings  $
-
 
Denominator: weighted average number of redeemable shares of Class A common stock   30,000,000 
Basic and diluted net income per redeemable share of Class A common stock  $
-
 
Non-redeemable shares of Class A private placement common stock and Class B common stock     
Numerator: net income minus redeemable net earnings     
Loss from operations  $(415,938)
Less franchise tax available to be withdrawn from the Trust Account  $7,562 
Change in fair value of warrant liability attributable to non-redeemable shares of Class A private placement common stock and Class B common stock  $2,443,720 
Change in fair value of FPS liability  $(234,372)
Non-redeemable net income  $1,800,972 
Denominator: weighted average number of non-redeemable shares of Class A private placement common stock and Class B common stock     
Non-redeemable shares of Class A private placement common stock and Class B common stock, basic and diluted   8,200,000 
Basic and diluted net income per non-redeemable share of Class A private placement common stock and Class B common stock  $0.22 

  

   For the Six
Months Ended
June 30,
2021
 
Redeemable shares of Class A common stock    
Numerator: earnings allocable to redeemable shares of Class A common stock    
Interest income on investments held in Trust Account  $7,973 
Less franchise tax available to be withdrawn from the Trust Account  $(7,973)
Net earnings  $
-
 
Denominator: weighted average number of redeemable shares of Class A common stock   30,000,000 
Basic and diluted net loss per redeemable share of Class A common stock  $
-
 
Non-redeemable shares of Class A private placement common stock and Class B common stock     
Numerator: net loss minus redeemable net earnings     
Loss from operations  $(601,422)
Less franchise tax available to be withdrawn from the Trust Account  $7,973 
Change in fair value of warrant liability attributable to non-redeemable shares of Class A private placement common stock and Class B common stock  $2,244,937 
Change in fair value of FPS liability  $(3,023,766)
Non-redeemable net loss  $(1,372,278)
Denominator: weighted average number of non-redeemable shares of Class A private placement common stock and Class B common stock     
Non-redeemable shares of Class A private placement common stock and Class B common stock, basic and diluted   8,200,000 
Basic and diluted net loss per non-redeemable share of Class A private placement common stock and Class B common stock  $(0.17)

  

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The standard is expected to reduce complexity and improve comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. The ASU also enhances information transparency by making targeted improvements to the related disclosures guidance. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The new standard will become effective for the Company beginning January 1, 2024, can be applied using either a modified retrospective or a fully retrospective method of transition and early adoption is permitted. Management is currently evaluating the impact of the new standard on the Company’s unaudited condensed 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 unaudited condensed financial statements.