Item
1. Interim Financial Statements.
CONYERS
PARK III ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| |
March
31, 2022 (Unaudited) | | |
December
31, 2021 | |
Assets: | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 1,344,252 | | |
$ | 1,547,800 | |
Prepaid expenses | |
| 486,500 | | |
| 577,718 | |
Total current assets | |
| 1,830,752 | | |
| 2,125,518 | |
Marketable securities held in Trust Account | |
| 357,000,000 | | |
| 357,006,796 | |
Total assets | |
$ | 358,830,752 | | |
$ | 359,132,314 | |
| |
| | | |
| | |
Liabilities, Class A Common Stock Subject to Possible
Redemption and Stockholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 209,296 | | |
$ | 144,000 | |
Accounts payable and accrued
expenses - related party | |
| 135,621 | | |
| 60,614 | |
Total current liabilities | |
| 344,917 | | |
| 204,614 | |
Warrant liability | |
| 3,853,200 | | |
| 7,030,400 | |
Deferred underwriting commissions | |
| 12,495,000 | | |
| 12,495,000 | |
Total liabilities | |
| 16,693,117 | | |
| 19,730,014 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
Class A common stock, $0.0001 par value; 500,000,000 shares authorized; 35,700,000 shares subject to possible redemption at $10.00 per share redemption value | |
| 357,000,000 | | |
| 357,000,000 | |
Stockholders’ Deficit | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | |
| - | | |
| - | |
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 8,925,000 shares issued and outstanding | |
| 893 | | |
| 893 | |
Additional paid-in capital | |
| - | | |
| - | |
Accumulated deficit | |
| (14,863,258 | ) | |
| (17,598,593 | ) |
Total stockholders’ deficit | |
| (14,862,365 | ) | |
| (17,597,700 | ) |
Total liabilities, Class A common
stock subject to possible redemption and stockholders’ deficit | |
$ | 358,830,752 | | |
$ | 359,132,314 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONYERS
PARK III ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
|
|
For
The Three Months Ended March 31, 2022 |
|
|
For
The Period From January 7, 2021 (Inception) through March 31, 2021 |
|
General and administrative expenses |
|
$ |
398,010 |
|
|
$ |
2,000 |
|
Franchise tax expense |
|
|
50,000 |
|
|
|
— |
|
Loss from operations |
|
|
(448,010 |
) |
|
|
(2,000 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
Income from interest in operating account |
|
|
37 |
|
|
|
— |
|
Income from marketable securities held in Trust Account |
|
|
6,108 |
|
|
|
— |
|
Change in fair value of warrant
liability |
|
|
3,177,200 |
|
|
|
— |
|
Net income (loss) |
|
$ |
2,735,335 |
|
|
$ |
(2,000 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, Class A common
stock subject to possible redemption |
|
|
35,700,000 |
|
|
|
— |
|
Basic and diluted net income (loss) per share, Class
A common stock subject to possible redemption |
|
$ |
0.06 |
|
|
$ |
— |
|
Weighted average shares outstanding, Class B common stock(1) |
|
|
8,925,000 |
|
|
|
8,750,000 |
|
Basic and diluted net income (loss) per share, Class
B common stock |
|
$ |
0.06 |
|
|
$ |
(0.00 |
) |
| (1) | For the period from January 7, 2021 (inception) through March 31, 2021, this number excludes an aggregate of up to 1,312,500 shares of Class B common stock that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. With partial exercise of the over- allotment option on August 24, 2021 and subsequent expiration of the over-allotment option on September 23, 2021, 8,925,000 Founder Shares were outstanding as of March 31, 2022 with 1,137,500 Founder Shares forfeited. |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONYERS
PARK III ACQUISITION CORP.
UNAUDITED
CONDENSED STATEMENTS OF CHANGES IN CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ EQUITY (DEFICIT)
For The Three
Months Ended March 31, 2022
| |
Class A Common Stock Subject to Possible Redemption | | |
Class B Common Stock | | |
Additional Paid-in | | |
Accumulated | | |
Total Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance as of December 31, 2021 | |
| 35,700,000 | | |
$ | 357,000,000 | | |
| 8,925,000 | | |
$ | 893 | | |
$ | — | | |
$ | (17,598,593 | ) | |
$ | (17,597,700 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,735,335 | | |
| 2,735,335 | |
Balance as of March 31, 2022 (Unaudited) | |
| 35,700,000 | | |
$ | 357,000,000 | | |
| 8,925,000 | | |
$ | 893 | | |
$ | — | | |
$ | (14,863,258 | ) | |
$ | (14,862,365 | ) |
For The Period
From January 7, 2021 (Inception) through March 31, 2021
| |
Class A Common Stock Subject to Possible Redemption | | |
Class B Common Stock | | |
Additional Paid-in | | |
Accumulated | | |
Total Stockholder’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance as of January 7, 2021 (Inception) | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Issuance of Class B common stock to Sponsor | |
| — | | |
| — | | |
| 10,062,500 | | |
| 1,006 | | |
| 23,994 | | |
| — | | |
| 25,000 | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,000 | ) | |
| (2,000 | ) |
Balance as of March 31, 2021 (Unaudited) | |
| — | | |
$ | — | | |
| 10,062,500 | | |
$ | 1,006 | | |
$ | 23,994 | | |
$ | (2,000 | ) | |
$ | 23,000 | |
| (1) | This
number includes an aggregate of up to 1,312,500 shares of Class B common stock that were
subject to forfeiture if the over-allotment option was not exercised in full or in part by
the underwriters. With partial exercise of the over-allotment option on August 24, 2021 and
subsequent expiration of the over-allotment option on September 23, 2021, 8,925,000 Founder
Shares were outstanding as of March 31, 2022 with 1,137,500 Founder Shares forfeited. |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONYERS
PARK III ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For
The
Three Months Ended
March 31,
2022 | | |
For
The Period From
January 7, 2021 (Inception) through March 31, 2021 | |
Cash flows from operating activities: | |
| | |
| |
Net income (loss) | |
$ | 2,735,335 | | |
$ | (2,000 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating
activities: | |
| | | |
| | |
Income from marketable securities held in Trust
Account | |
| (6,108 | ) | |
| — | |
Change in fair value of warrant liability | |
| (3,177,200 | ) | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 91,219 | | |
| — | |
Accounts payable and accrued expenses | |
| 65,296 | | |
| 2,000 | |
Accounts payable and accrued
expenses – related party | |
| 75,007 | | |
| — | |
Net cash used in operating activities | |
| (216,451 | ) | |
| — | |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Investment income released from Trust Account | |
| 12,903 | | |
| — | |
Net cash used in investing activities | |
| 12,903 | | |
| — | |
| |
| | | |
| | |
Net change in cash | |
| (203,548 | ) | |
| — | |
| |
| | | |
| | |
Cash at beginning of the period | |
| 1,547,800 | | |
| — | |
Cash at end of the period | |
$ | 1,344,252 | | |
$ | — | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Deferred offering costs included in accounts payable
and accrued expenses | |
$ | — | | |
$ | 146,360 | |
Offering costs paid by Sponsor in exchange for
issuance of Class B common stock | |
$ | — | | |
$ | 25,000 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1—Description of Organization and Business Operations
Organization
and General
Conyers
Park III Acquisition Corp. (the “Company”) was incorporated as a Delaware corporation on January 7, 2021. 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”). While the Company may pursue an acquisition opportunity
in any business, industry, sector or geographical location, it intends to focus on the consumer sector and consumer-related businesses
where its management team’s expertise will provide a competitive advantage. The Company is an emerging growth company and, as such,
the Company is subject to all of the risks associated with emerging growth companies.
As
of March 31, 2022, the Company had not commenced any operations. All activity for the period from January 7, 2021 (inception) through
March 31, 2022 relates to the Company’s formation and the preparation for its initial public offering (the “Initial Public
Offering”) as described below, and since the closing of the Initial Public Offering, the search for a prospective initial Business
Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at
the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The
Company’s sponsor is Conyers Park III Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The
registration statement for the Company’s Initial Public Offering was declared effective on August 9, 2021. On August 12, 2021,
the Company consummated its Initial Public Offering of 35,000,000 Units (the “Units” and, with respect to the Class
A common stock included in the Units, the “Public Shares”) at $10.00 per Unit, which is discussed in Note 3, generating gross
proceeds of $350 million, and incurring offering costs of approximately $20 million, inclusive of approximately $12 million in
deferred underwriting commissions (see Note 5). The Company granted the underwriters a 45-day option to purchase up to an additional
5,250,000 Units at the initial public offering price to cover over-allotments, if any (the “Over-Allotment Units”) at the
time of the Initial Public Offering.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (the “Private Placement”)
of 6,666,667 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”)
at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $10 million (see Note 4).
On
August 24, 2021, the underwriters partially exercised the over-allotment option to purchase 700,000 Over-Allotment Units at a price of
$10.00 per Over-Allotment Unit, generating aggregate gross proceeds of $7,000,000, and the Company incurred $140,000 in cash underwriting
fees and $245,000 in deferred underwriting fees. Simultaneously with the partial exercise of the over-allotment option, the Company sold
an additional 93,333 Private Placement Warrants to the Sponsor at a price of $1.50 per additional Private Placement Warrant, generating
additional gross proceeds of $140,000.
Trust
Account
Following
the closing of the Initial Public Offering on August 12, 2021 and the closing of the underwriter’s partial exercise of the over-allotment
option on August 24, 2021, $357 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering, over-allotment and
certain of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”), located in the United
States, with Continental Stock Transfer & Trust Company acting as trustee, and was invested in U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”),
with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund selected
by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the assets
held in Trust Account as described below.
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company must complete one
or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding
the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the signing of the agreement
to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no
assurance that the Company will be able to complete a Business Combination successfully.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company will provide the holders of shares of its Class A common stock (the “Public Stockholders”) with the opportunity
to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a
stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the
Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust
Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders
who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters
(as discussed in Note 5). These Public Shares were classified as temporary equity upon the completion of the Initial Public Offering.
In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon
such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to the amended and restated certificate of incorporation which the Company adopted upon the consummation of the Initial
Public Offering (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender
offer rules of the U.S. Securities and Exchange Commission (the “SEC”) and file tender offer documents with the SEC prior
to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides
to obtain stockholder approval for business or legal reasons, the Company will offer to redeem the Public Shares in conjunction with
a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may
elect to redeem its Public Shares irrespective of whether such Public Stockholder votes for or against the proposed transaction. If the
Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed
to vote their Founder Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor
of a Business Combination. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder
Shares and any Public Shares acquired by them in connection with the completion of a Business Combination.
Notwithstanding
the foregoing, the Amended and Restated Certificate of Incorporation provides that a Public Stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is restricted from redeeming its
shares with respect to more than an aggregate of 10% or more of the Public Shares, without the prior consent of the Company.
The
Company’s Sponsor, officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the
Amended and Restated Certificate of Incorporation (a) that would modify the substance or timing of the Company’s obligation
to redeem 100% of its Public Shares if the Company does not complete a Business Combination within 24 months from the closing of the
Initial Public Offering, or August 12, 2023, (the “Combination Period”) or (b) which adversely affects the rights of
holders of the Class A common stock, unless the Company provides the Public Stockholders with the opportunity to redeem their Public
Shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations
except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned on the funds held in the Trust Account and not previously released to the Company for working capital purposes
or to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then
outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the
right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, liquidate and dissolve,
subject in the case of clauses (ii) and (iii), to the Company’s obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete
a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial
Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the
Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to
their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination
during the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will
be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value
of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially
held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company
if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business
with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability
will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in
or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public
Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).
Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible
to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that the Sponsor will have
to indemnify the Trust Account due to claims of creditors by endeavoring to have all third parties, including vendors, service providers
(excluding the Company’s independent registered public accounting firm), prospective target businesses or other entities with which
the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies
held in the Trust Account.
Liquidity
and Capital Resources
As
of March 31, 2022, the Company had approximately $1.3 million in its operating bank account and working capital of approximately $1.5
million.
The
Company’s liquidity needs have been satisfied prior to the completion of the Initial Public Offering through receipt of a $25,000
capital contribution from the Sponsor in exchange for the issuance of the Founder Shares to the Sponsor and the advancement of funds
by the Sponsor under the Note (see Note 4) to cover the Company’s expenses in connection with the Initial Public Offering. As of
March 31, 2022, no amounts remained outstanding under the Note. Subsequent to the consummation of the Initial Public Offering and Private
Placement, the Company’s liquidity needs have been satisfied from the proceeds from the consummation of the Private Placement not
held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor
or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
Working Capital Loans (see Note 4). As of March 31, 2022, there were no amounts outstanding under any Working Capital Loan.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or
an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
2—Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for financial information and pursuant to the rules and regulations
of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management,
the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the
fair statement of the balances and results for the periods presented. Operating results for the three months ended March 31, 2022 are
not necessarily indicative of the results that may be expected through December 31, 2022 or any future period.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto
included in the Annual Report on Form 10-K, filed by the Company with the SEC on March 28, 2022.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth 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 a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or
revised standard at the time private companies adopt the new or revised standard.
This
may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use
of Estimates
The
preparation of the unaudited condensed 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting periods. 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 conforming events. Accordingly, the actual results
could differ from those estimates.
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 Depository Insurance Corporation coverage of $250,000. At March 31, 2022, the Company has not
experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Cash
and Cash Equivalents
As
of March 31, 2022 and December 31, 2021, the Company had $1,344,252 and $1,547,800, respectively, in cash. The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have
any cash equivalents as of March 31, 2022 and December 31, 2021.
Marketable
Securities Held in Trust Account
The
Company’s portfolio of marketable securities is comprised solely of U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, classified as trading securities. Trading securities
are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair
value of these securities is included in gain on marketable securities held in the Trust Account in the accompanying unaudited condensed
statements of operations. The estimated fair values of marketable securities held in the Trust Account are determined using available
market information.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities which qualify as financial instruments under the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements,”
equal or approximate the carrying amounts represented in the condensed balance sheet primarily due to their short-term nature, except
for the warrant liability (see Note 8).
Fair
Value Measurements
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. U.S. 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 for identical instruments in active markets; |
|
● |
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.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly related
to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering
based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to warrant liability are expensed
as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A common shares
issued are charged to stockholders’ deficit upon the completion of the Initial Public Offering.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 Topic 480, “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured
at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified as temporary equity. At all other times, shares of common stock are classified as stockholders’ equity. The Company’s
common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, at March 31, 2022 and December 31, 2021, Class A common stock subject to possible redemption
is presented as temporary equity, outside of the stockholders’ deficit section of the Company’s unaudited condensed balance
sheet.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock
are affected by charges against additional paid in capital and accumulated deficit.
At
March 31, 2022 and December 31, 2021, the Class A common stock reflected in the condensed balance sheet is reconciled in the following
table:
Gross proceeds received from sale of 35,700,000 Units | |
$ | 357,000,000 | |
Less: | |
| | |
Fair
value of public warrants included in the Units sold | |
| (16,466,920 | ) |
Offering
costs allocated to Class A common stock | |
| (20,281,629 | ) |
Plus: | |
| | |
Accretion
on Class A common stock to possible redemption value | |
| 36,748,549 | |
Class
A common stock subject to possible redemption | |
$ | 357,000,000 | |
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 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. As of March 31, 2022 and December 31, 2021, the Company had deferred tax assets of approximately $93,000 and $91,000,
respectively, with a full valuation allowance against them.
FASB
ASC Topic 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 March 31, 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 as of March 31, 2022. 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.
Net Income
(Loss) Per Common Share
Net
income (loss) per common share is computed by dividing net income 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 the Private Placement
to purchase an aggregate of 18,660,000 shares of the Company’s Class A common stock in the calculation of diluted income per share,
the exercise of the warrants and the conversion of the rights into Class A common stock is contingent upon the occurrence of future events.
Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates
fair value.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company’s unaudited condensed statements of operations include a presentation of income (loss) per share for common stock subject
to redemption in a manner similar to the two-class method of income (loss) per share. In order to determine the net income (loss) attributable
to both the public Class A common stock subject to redemption and Class B common stock, the Company first calculated the total income
(loss) allocable to both sets of shares. Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company
split the amount to be allocated using a ratio of 80% for the Class A common stock and 20% for the Class B common stock for the three
months ended March 31, 2022.
The
following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
| |
For
The Three Months Ended March 31,
2022 | | |
For
The Period From January 7, 2021 (Inception) through March 31,
2021 | |
| |
Class
A | | |
Class
B | | |
Class
A | | |
Class
B | |
Basic and diluted net income (loss) per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | 2,188,268 | | |
$ | 547,067 | | |
$ | — | | |
$ | (2,000 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 35,700,000 | | |
| 8,925,000 | | |
| — | | |
| 8,750,000 | |
Basic and diluted
net income (loss) per common share | |
$ | 0.06 | | |
$ | 0.06 | | |
$ | — | | |
$ | (0.00 | ) |
Recent
Accounting Pronouncements
In
August 2020, the FASB issued Accounting Standards Update (“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” (“ASU 2020-06”), which simplifies accounting
for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement
conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted
earnings per share calculation in certain areas. For smaller reporting companies, this update is effective for fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company’s management is
currently evaluating the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s
financial statements.
The
Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying unaudited condensed financial statements.
Note
3—Initial Public Offering
On
August 12, 2021, the Company sold 35,000,000 Units at a price of $10.00 per Unit, generating gross proceeds of $350 million,
and incurring offering costs of approximately $20 million, inclusive of approximately $12 million in deferred underwriting
commissions.
On
August 24, 2021, the underwriters partially exercised the over-allotment option to purchase 700,000 Over-Allotment Units at a price of
$10.00 per Over-Allotment Unit, generating aggregate gross proceeds of $7,000,000.
Each
Unit consists of one share of Class A common stock and one-third of one redeemable warrant (each, a “Public
Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50
per share, subject to adjustment (see Note 8).
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
4—Related Party Transactions
Founder
Shares
On
March 29, 2021, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration of 10,062,500 shares of Class
B common stock, par value $0.0001, (the “Founder Shares”). In June 2021, the Sponsor transferred 25,000 Founder Shares to
each of the Company’s independent directors. The initial stockholders agreed to forfeit up to 1,312,500 Founder Shares to the extent
that the over-allotment option was not exercised in full by the underwriters. The forfeiture will be adjusted to the extent that
the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20% of the Company’s
issued and outstanding shares after the Initial Public Offering. With partial exercise of the over-allotment option on August 24, 2021
and subsequent expiration of the over-allotment option on September 23, 2021, 8,925,000 Founder Shares were outstanding as of March 31,
2022 with 1,137,500 Founder Shares forfeited.
The
initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the
earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial
Business Combination, (x) if the last sale price of the shares of 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 initial Business Combination, or (y) the date on which the Company completes a liquidation,
merger, capital stock exchange or other similar transaction 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.
Private
Placement Warrants
Concurrently
with the closing of the Initial Public Offering, on August 12, 2021 the Company sold 6,666,667 Private Placement Warrants at a price
of $1.50 per Private Placement Warrant to the Sponsor, generating gross proceeds of approximately $10 million.
On
August 24, 2021, simultaneously with the sale of the Over-Allotment Units, the Company consummated the sale of an additional 93,333 Private
Placement Warrants at $1.50 per additional Private Placement Warrant, generating additional gross proceeds of $140,000.
Each
whole Private Placement Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share. Certain of
the proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering and are
held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement
Warrants will expire worthless. The Private Placement Warrants are non-redeemable and exercisable on a cashless basis
so long as they are held by the Sponsor or its permitted transferees.
The
Sponsor and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any
of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside
the Trust Account. In the event that a Business Combination is not consummated within the Combination Period, the Company may use a portion
of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be
used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined
and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender’s discretion, up to $2.0 million of such Working Capital Loans may be convertible
into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private
Placement Warrants. As of March 31, 2022 and December 31, 2021, the Company had no borrowings under any Working Capital Loan.
Promissory
Note
Prior to the closing of the Initial Public Offering,
the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant
to a promissory note (the “Note”). This loan was non-interest bearing and was payable on the earlier of March 31, 2022 or
the completion of the Initial Public Offering. On August 12, 2021, the total balance of $172,426 of the Note was repaid to the Sponsor.
Subsequent to the repayment, the Note was no longer available to the Company.
Administrative
Support Agreement
Commencing
on the effective date of the Initial Public Offering, the Company agreed to pay the Sponsor a total of $10,000 per month for office space,
utilities and secretarial and administrative support. Upon completion of an initial Business Combination or the Company’s liquidation,
the Company will cease paying these monthly fees. The Company incurred $30,000 in expenses in connection with such services during the
three months ended March 31, 2022 as reflected in the accompanying unaudited condensed statement of operations. As of March 31, 2022
and December 31, 2021, the Company had approximately $80,000 and $50,000, respectively, in accrued expenses for related party in connection
with such services as reflected in the accompanying unaudited condensed balance sheets.
Note
5—Commitments & Contingencies
Registration
and Stockholder Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any,
will be entitled to registration rights pursuant to a registration and stockholder rights agreement entered into in connection with the
consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration
rights. However, the registration and stockholder rights agreement provides that the Company will not permit any registration statement
filed under the Securities Act to become effective until the termination of the applicable lock-up period for the
securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public
Offering to purchase up to 5,250,000 Over-Allotment Units to cover over-allotments, if any, at the Initial Public Offering price less
underwriting discounts and commissions. On August 24, 2021, the underwriters partially exercised their over-allotment option for 700,000
Over-Allotment Units.
The
underwriters were entitled to an underwriting discount of 2% of the gross proceeds of the Initial Public Offering, or $7,000,000 (or
up to $8,050,000 if the underwriters’ over-allotment option is exercised in full). Additionally, the underwriters will be entitled
to a deferred underwriting discount of 3.5% of the gross proceeds of the Initial Public Offering, or $12,250,000 (or up to $14,087,500
if the underwriters’ over-allotment option is exercised in full), held in the Trust Account and payable upon the completion of
the Company’s initial Business Combination, subject to the terms of the underwriting agreement. The underwriters were entitled
an underwriting discount of $7,140,000 in the aggregate, which was paid upon the closing of the Initial Public Offering and the partial
exercise of the over-allotment option. In addition, the underwriters are entitled to a deferred fee of $12,495,000 in the aggregate in
connection with the closing of the Initial Public Offering and the partial exercise of the over-allotment option.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Risks
and Uncertainties
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 a negative effect on the Company’s financial position, and the results of its operations and/or search for
a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The
unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Various social and
political circumstances in the U.S. and around the world (including wars and other forms of conflict, including rising trade tensions
between the United States and China, and other uncertainties regarding actual and potential shifts in the U.S. and foreign, trade, economic
and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes,
tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or
deterioration in the U.S. and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility
could adversely affect the Company’s ability to complete a business combination. In response to the conflict between Russia and Ukraine,
the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including
sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s
ability to complete a business combination and the value of the Company’s securities.
Note
6—Warrant Liability
Private
Placement Warrants—The Company accounts for the Private Placement Warrants in accordance with the guidance contained in
ASC 815-40. Such guidance provides that because the private placement warrants do not meet the criteria for equity treatment thereunder,
each private placement warrant must be recorded as a liability. Accordingly, the Company will classify each private placement warrant
as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement,
the private placement warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s
statement of operations.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the 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 exercisable on a cashless basis and non-redeemable so long as they are held by the Sponsor or such its permitted
transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
As
of March 31, 2022 and December 31, 2021, there were 6,760,000 Private Placement Warrants outstanding.
Note
7—Class A Common Stock Subject To Possible Redemption
Class
A Common Stock — The Company is authorized to issue 500,000,000 shares of Class A common stock, with a par value of $0.0001
per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2022 and December 31, 2021, there were
35,700,000 shares of Class A common stock issued and outstanding, including shares of Class A common stock subject to possible redemption
which are presented as temporary equity.
Note
8—Stockholders’ Deficit
Class B
Common Stock—As of March 31, 2022, the Company was authorized to issue 50,000,000 shares of Class B common stock with a
par value of $0.0001 per share. As of March 29, 2021, there were 10,062,500 shares of Class B common stock issued and outstanding. Of
the 10,062,500 shares of Class B common stock outstanding, up to 1,312,500 shares were subject to forfeiture to the Company by the Sponsor
for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full. The forfeiture will
be adjusted to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will
represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. With partial exercise of the over-allotment
option on August 24, 2021 and subsequent expiration of the over-allotment option on September 23, 2021, 8,925,000 Founder Shares were
outstanding as of March 31, 2022 and December 31, 2021 with 1,137,500 Founder Shares forfeited.
Holders
of shares of Class A common stock and holders of shares of Class B common stock will vote together as a single class on all matters submitted
to a vote of the Company’s stockholders, except as required by law or stock exchange rule; provided that only holders of shares
of Class B common stock have the right to vote on the election of the Company’s directors prior to the initial Business Combination.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination at a ratio
such that the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on
an as-converted basis, 20% of the sum of (i) the total number of shares of Class A common stock issued and outstanding upon completion
of the Initial Public Offering, plus (ii) the total number of shares of Class A common stock issued or deemed issued or issuable
upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in
relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities
exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination
and any Private Placement Warrants issued to the Sponsor upon conversion of Working Capital Loans.
Preferred
Stock—The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share,
and 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 March 31, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
Public
Warrants—As of March 31, 2022 and December 31, 2021, there were 11,900,000 Public Warrants outstanding.
The
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable 30 days after the consummation of a Business Combination. The Public Warrants will expire
five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation
to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A
common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to
the Company satisfying its obligations with respect to registration. No Public Warrant will be exercisable for cash or on a cashless
basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance
of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration is available.
The
registration statement of which the prospectus forms a part registers the shares of Class A common stock issuable upon exercise of the
warrants. The Company has agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business
Combination, it will use commercially reasonable efforts to file with the SEC a registration statement registering the issuance of the
shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to
maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified
in the warrant agreement. Because the warrants are not exercisable until 30 days after the completion of the initial business combination,
the Company does not currently intend to update the registration statement of which the prospectus forms a part or file a new registration
statement covering the shares of Class A common stock issuable upon exercise of the warrants until after the initial business combination
has been consummated. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants
is not effective by the 60th business day after the closing of a Business Combination or within a specified period following the consummation
of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period
when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis”
pursuant to the exemption provided by Section 3(a)(9) of the Securities Act; provided that such exemption is available. If that exemption,
or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
Redemption
of Public Warrants—Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
|
● |
in whole and not in part; |
|
● |
at a price of $0.01 per Public Warrant; |
|
● |
upon not less than 30 days’ prior written notice
of redemption to each warrant holder; and |
| ● | if, and only if, the reported closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) 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. |
If
and when the warrants become redeemable by the Company, the Company may not exercise their redemption right if the issuance of shares
of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or
the Company is unable to effect such registration or qualification.
The
exercise price and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances
including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However,
except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise
price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete
a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public
Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
Note
9—Fair Value Measurements
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis as of March 31, 2022 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine
such fair value.
Description | |
Quoted
Prices in Active Markets (Level 1) | | |
Significant
Other Observable Inputs (Level 2) | | |
Significant
Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Marketable securities held in Trust
Account | |
$ | 357,000,000 | | |
$ | — | | |
$ | — | |
Total | |
$ | 357,000,000 | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Warrant liability | |
$ | — | | |
$ | — | | |
$ | 3,853,200 | |
Total | |
$ | — | | |
$ | — | | |
$ | 3,853,200 | |
The following table
presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December
31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
Description | |
Quoted
Prices in Active Markets (Level 1) | | |
Significant
Other Observable Inputs (Level 2) | | |
Significant
Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Marketable securities held in Trust
Account | |
$ | 357,006,796 | | |
$ | — | | |
$ | — | |
Total | |
$ | 357,006,796 | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Warrant liability | |
$ | — | | |
$ | — | | |
$ | 7,030,400 | |
Total | |
$ | — | | |
$ | — | | |
$ | 7,030,400 | |
Transfers
to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. No transfers to/from Levels 1, 2 or 3 were recognized
during the reporting period.
CONYERS
PARK III ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Level
1 assets include investments in money market funds. The Company uses inputs such as actual trade data, quoted market prices from dealers
or brokers, and other similar sources to determine the fair value of its investments.
The
estimated fair value of the Private Placement Warrants is measured at fair value using a Black-Scholes option pricing model with the
volatility calculated by backsolving in a Monte Carlo simulation. Inherent in a Black-Scholes option pricing model with the volatility
calculated by backsolving in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free
interest rate and dividend yield. The Company estimates the volatility of its warrants based on implied volatility from the Company’s
publicly traded warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity
similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining
contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The
following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:
| |
As
of December 31, 2021 | | |
As
of
March 31,
2022 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 9.77 | | |
$ | 9.83 | |
Volatility | |
| 19.00 | % | |
| 9.60 | % |
Term (in years) | |
| 5.61 | | |
| 5.67 | |
Risk-free rate | |
| 1.48 | % | |
| 2.57 | % |
Dividend yield | |
| 0.00 | % | |
| 0.00 | % |
The
change in the fair value of the warrant liability, measured with Level 3 inputs, for the period ended March 31, 2022 is summarized as
follows:
Fair value as of December 31, 2021
(audited) | |
$ | 7,030,400 | |
Change
in fair value of warrant liability | |
| (3,177,200 | ) |
Warrant
liability balance as of March 31, 2022 (unaudited) | |
$ | 3,853,200 | |
Note
10—Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the condensed balance sheet date up to the date that the unaudited
condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have
required adjustment or disclosure in the unaudited condensed financial statements.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “our,” “us” or “we” refer to Conyers Park III Acquisition Corp. The
following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction
with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained
in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary
Note Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We
have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements
are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed
or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include,
but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements
other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We
are a blank check company incorporated on January 7, 2021 as a Delaware corporation 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”) that we have not yet identified. While the Company may pursue an acquisition opportunity in any business, industry,
sector or geographical location, it intends to focus on the consumer sector and consumer-related businesses where its management team’s
expertise will provide a competitive advantage. Our sponsor is Conyers Park III Sponsor LLC, a Delaware limited liability company (our
“Sponsor”).
Our
registration statement for our Initial Public Offering was declared effective on August 9, 2021. On August 12, 2021, the Company consummated
its Initial Public Offering of 35,000,000 Units (the “Units” and, with respect to the Class A common stock included in the
Units, the “Public Shares”) at $10.00 per Unit generating gross proceeds of $350 million, and incurring offering costs of
approximately $20 million, inclusive of approximately $12 million in deferred underwriting commissions. The Company granted the underwriters
a 45-day option to purchase up to an additional 5,250,000 Units at the initial public offering price to cover over-allotments, if any
(the “Over-Allotment Units”) at the time of the Initial Public Offering.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (the “Private Placement”)
of 6,666,667 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”)
at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of approximately $10 million.
On
August 24, 2021, the underwriters partially exercised the over-allotment option to purchase 700,000 Over-Allotment Units at a price of
$10.00 per Over-Allotment Unit, generating aggregate gross proceeds of $7,000,000, and the Company incurred $140,000 in cash underwriting
fees and $245,000 in deferred underwriting fees. Simultaneously with the partial exercise of the over-allotment option, the Company sold
an additional 93,333 Private Placement Warrants to the Sponsor at a price of $1.50 per additional Private Placement Warrant, generating
additional gross proceeds of $140,000.
Following
the closing of the Initial Public Offering on August 12, 2021 and the closing of the underwriter’s partial exercise of the over-allotment
option on August 24, 2021, $357 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering, over-allotment and certain
of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”), located in the United States,
with Continental Stock Transfer & Trust Company acting as trustee, and was invested in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity
of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting
the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until
the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the assets held in Trust Account as described
below.
If
we are unable to complete a Business Combination within 24 months from the closing of our Initial Public Offering, or August 12, 2023
(the “Combination Period”), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust
Account and not previously released to us for working capital purposes or to pay our franchise and income taxes (less up to $100,000
of interest to pay dissolution expenses), divided by the number of the then outstanding Public Shares, which redemption will completely
extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any);
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and
our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
Results
of Operations
Our
entire activity since inception through March 31, 2022 related to our formation, the preparation for the Initial Public Offering, and
since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We have neither engaged
in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial
Business Combination. We will generate non-operating income in the form of interest income on cash and cash equivalents. We expect to
incur 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.
For
the three months ended March 31, 2022, we had net income of $2,735,335, which consisted of $3,177,200 of non-operating gain resulting
from the change in fair value of warrant liability and $6,145 of income from interest in operating account and marketable securities
held in Trust Account, offset by $398,010 in general and administrative costs.
Liquidity
and Capital Resources
As
of March 31, 2022, the Company had approximately $1.3 million in its operating bank account and working capital of approximately $1.5
million.
The
Company’s liquidity needs have been satisfied prior to the completion of the Initial Public Offering through receipt of a $25,000
capital contribution from the Sponsor in exchange for the issuance of the Founder Shares to the Sponsor and the advancement of funds
by the Sponsor under the Note (as defined below) to cover the Company’s expenses in connection with the Initial Public Offering.
As of March 31, 2022, no amounts remained outstanding under the Note. Subsequent to the consummation of the Initial Public Offering and
Private Placement, the Company’s liquidity needs have been satisfied from the proceeds from the consummation of the Private Placement
not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor
or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
Working Capital Loans (see Note 4). As of March 31, 2022, there were no amounts outstanding under any Working Capital Loan.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or
an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
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 a negative effect on the Company’s financial position, and the results of its operations and/or search for
a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The
unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual
Obligations
Underwriting
Agreement
We
granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering
to purchase up to 5,250,000 Over-Allotment Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting
discounts and commissions. On August 24, 2021, the underwriters partially exercised their over-allotment option for 700,000 Over-Allotment
Units.
The
underwriters were entitled to an underwriting discount of 2% of the gross proceeds of the Initial Public Offering, or $7,140,000 in the
aggregate, which was paid upon the closing of the Initial Public Offering and the partial exercise of the over-allotment option. In addition,
the underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of the Initial Public Offering, or $12,495,000 in the aggregate
in connection with the closing of the Initial Public Offering and the partial exercise of the over-allotment option.
Administrative
Support Agreement
Commencing
on the effective date of the Initial Public Offering, the Company agreed to pay the Sponsor a total of $10,000 per month for office space,
utilities and secretarial and administrative support. Upon completion of an initial Business Combination or the Company’s liquidation,
the Company will cease paying these monthly fees. The Company incurred $30,000 in expenses in connection with such services during the
three months ended March 31, 2022 as reflected in the accompanying unaudited condensed statement of operations. As of March 31, 2022
and December 31, 2021, the Company had approximately $80,000 and $50,000, respectively, in accrued expenses for related party in connection
with such services as reflected in the accompanying unaudited condensed balance sheets.
Critical
Accounting Policies and Estimates
This
management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial
statements, which have been prepared in accordance with U.S. dollars in conformity with accounting principles generally accepted in the
United States (“GAAP”). The preparation of these unaudited condensed financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments, including
those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. We have identified the following as our critical accounting
policies:
Offering
Costs Associated with the Initial Public Offering
Offering
costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly related
to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering
based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to warrant liability are expensed
as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A common shares
issued were charged to stockholders’ deficit upon the completion of the Initial Public Offering.
Marketable
Securities Held in Trust Account
Our
portfolio of investments held in trust account are comprised solely of U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, classified as trading securities. Trading securities are
presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair
value of these securities is included in gain on marketable securities (net), dividends and interest, held in trust account in our statements
of operations. The fair value for trading securities is determined using quoted market prices in active markets.
Warrant
Liability
The
Company accounts for the Private Placement Warrants in accordance with the guidance contained in ASC 815-40. Such guidance provides that
because the private placement warrants do not meet the criteria for equity treatment thereunder, each private placement warrant must
be recorded as a liability. Accordingly, the Company will classify each private placement warrant as a liability at its fair value. This
liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the private placement warrant liability
will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the 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 exercisable on a cashless basis and non-redeemable so long as they are held by the Sponsor or such its permitted
transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory
redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common
stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, shares of common
stock are classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2022, Class
A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of
the Company’s unaudited condensed balance sheet.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock
are affected by charges against additional paid in capital and accumulated deficit.
Net
Income (Loss) Per Common Share
Net
income (loss) per share is computed by dividing net income 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 the Private Placement
to purchase an aggregate of 18,660,000 shares of the Company’s Class A common stock in the calculation of diluted income per share,
since their inclusion would be anti-dilutive under the treasury stock method. Accretion associated with the redeemable Class A common
stock is excluded from earnings per share as the redemption value approximates fair value.
The
Company’s unaudited condensed statements of operations include a presentation of income (loss) per share for common stock subject
to redemption in a manner similar to the two-class method of income (loss) per share. In order to determine the net income (loss) attributable
to both the public Class A common stock subject to redemption and Class B common stock, the Company first calculated the total income
(loss) allocable to both sets of shares. Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company
split the amount to be allocated using a ratio of 80% for the Class A common stock and 20% for the Class B common stock for the three
months ended March 31, 2022.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities which qualify as financial instruments under the Financial Accounting Standards
Board’s (“FASB”) ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented
in the condensed balance sheet primarily due to their short-term nature, except for the warrant liability.
Fair
Value Measurements
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. U.S. 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 for identical instruments in active markets; |
|
● |
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.
Recent
Accounting Pronouncements
In
August 2020, the FASB issued Accounting Standards Update (“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 (“ASU 2020-06”), which simplifies accounting for convertible
instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that
are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share
calculation in certain areas. For smaller reporting companies, this update is effective for fiscal years beginning after December 15,
2023, and interim periods within those fiscal years. Early adoption is permitted. The Company’s management is currently evaluating
the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s financial statements.
The
Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying unaudited condensed financial statements.
Off-Balance Sheet Arrangements
As
of March 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)
of Regulation S-K and did not have any commitments or contractual obligations.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth 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 a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or
revised standard at the time private companies adopt the new or revised standard.
This
may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.