Item 1.
|
Financial Statements
|
Conyers
Park Acquisition Corp.
CONDENSED BALANCE SHEETS
|
|
March 31,
2017
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|
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December 31,
2016
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ASSETS:
|
|
(unaudited)
|
|
|
(audited)
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
701,522
|
|
|
$
|
954,102
|
|
Prepaid expenses
|
|
|
283,333
|
|
|
|
336,458
|
|
Total current assets
|
|
|
984,855
|
|
|
|
1,290,560
|
|
Investments held in Trust Account
|
|
|
403,146,657
|
|
|
|
402,794,587
|
|
Total assets
|
|
|
404,131,512
|
|
|
|
404,085,147
|
|
|
|
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
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Current liabilities:
|
|
|
|
|
|
|
|
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Accounts payable and accrued expenses
|
|
|
41,209
|
|
|
|
1,404
|
|
Accounts payable - related party
|
|
|
302,006
|
|
|
|
185,424
|
|
Accrued franchise and income taxes
|
|
|
106,400
|
|
|
|
126,000
|
|
Total current liabilities
|
|
|
449,615
|
|
|
|
312,828
|
|
Deferred underwriting compensation
|
|
|
14,087,500
|
|
|
|
14,087,500
|
|
Total liabilities
|
|
|
14,537,115
|
|
|
|
14,400,328
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption; 38,459,439 and 38,468,481 as of March 31, 2017 and December 31, 2016, respectively (at redemption value of $10.00 per share)
|
|
|
384,594,387
|
|
|
|
384,684,810
|
|
|
|
|
|
|
|
|
|
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Stockholders' equity:
|
|
|
|
|
|
|
|
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding as of March 31, 2017 and December 31, 2016
|
|
|
-
|
|
|
|
-
|
|
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 1,790,561 and 1,781,519 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively (excluding 38,459,439 and 38,468,481 shares subject to redemption as of March 31, 2017 and December 31, 2016, respectively)
|
|
|
179
|
|
|
|
178
|
|
Class B common stock, $0.0001 par value, 20,000,000 shares authorized, 10,062,500 issued and outstanding as of March 31, 2017 and December 31, 2016
|
|
|
1,006
|
|
|
|
1,006
|
|
Additional paid-in-capital
|
|
|
5,281,750
|
|
|
|
5,191,328
|
|
Accumulated deficit
|
|
|
(282,925
|
)
|
|
|
(192,503
|
)
|
Total stockholders' equity
|
|
|
5,000,010
|
|
|
|
5,000,009
|
|
Total liabilities and stockholders' equity
|
|
|
404,131,512
|
|
|
|
404,085,147
|
|
See
accompanying notes to condensed financial statements.
Conyers
Park Acquisition Corp.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
|
|
For the Three Months Ended
|
|
|
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March 31,
2017
|
|
Revenues
|
|
$
|
-
|
|
General and administrative expenses
|
|
|
442,492
|
|
Loss from operations
|
|
|
(442,492
|
)
|
Interest income
|
|
|
352,070
|
|
Net loss
|
|
$
|
(90,422
|
)
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
Basic and diluted
|
|
|
11,844,120
|
|
|
|
|
|
|
Net loss per common share:
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.01
|
)
|
See
accompanying notes to condensed financial statements.
Conyers
Park Acquisition Corp.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Three Months Ended March 31, 2017
(Unaudited)
|
|
|
|
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|
|
|
|
|
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|
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Additional
|
|
|
|
|
|
|
|
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Class A Common Stock
|
|
|
Class B Common Stock
|
|
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Paid-in
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance at December 31, 2016
|
|
|
1,781,519
|
|
|
$
|
179
|
|
|
|
10,062,500
|
|
|
$
|
1,006
|
|
|
$
|
5,191,328
|
|
|
$
|
(192,503
|
)
|
|
$
|
5,000,009
|
|
Class A common stock subject to possible redemption
|
|
|
9,042
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,422
|
|
|
|
-
|
|
|
|
90,423
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(90,422
|
)
|
|
|
(90,422
|
)
|
Balance at March 31, 2017
|
|
|
1,790,561
|
|
|
$
|
179
|
|
|
|
10,062,500
|
|
|
$
|
1,006
|
|
|
$
|
5,281,750
|
|
|
$
|
(282,925
|
)
|
|
$
|
5,000,010
|
|
See
accompanying notes to condensed financial statements.
Conyers
Park Acquisition Corp.
CONDENSED STATEMENT OF CASH FLOWS
For Three Months Ended March 31, 2017
(Unaudited)
Cash flows from operating activities:
|
|
|
|
Net loss
|
|
$
|
(90,422
|
)
|
Changes in prepaid expenses
|
|
|
53,125
|
|
Changes in accounts payable and accrued expenses
|
|
|
39,805
|
|
Changes in accounts payable - related party
|
|
|
116,582
|
|
Changes in accrued franchise and income taxes
|
|
|
(19,600
|
)
|
Net cash provided by operating activities
|
|
|
99,490
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Interest earned in Trust Account
|
|
|
(352,070
|
)
|
Net cash used by investing activities
|
|
|
(352,070
|
)
|
|
|
|
|
|
Increase in cash
|
|
|
(252,580
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
954,102
|
|
Cash and cash equivalents at end of period
|
|
$
|
701,522
|
|
See
accompanying notes to condensed financial statements.
Conyers
Park Acquisition Corp.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
1 — Description of Organization and Business Operations
Organization
and General
Conyers
Park Acquisition Corp. (the “Company”) was incorporated in Delaware on April 20, 2016. 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 “Initial Business Combination”). The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,” as
modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
At
March 31, 2017, the Company had not commenced any operations. All activity for the period from April 20, 2016 (Inception) through
March 31, 2017 relates to the Company’s formation and the initial public offering (“Public Offering”) described
below and since the Public Offering, the search for a target business with which to consummate an Initial Business Combination.
The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived
from the Public Offering.
Sponsor
and Proposed Financing
The
Company’s sponsor is Conyers Park Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration
statement for the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission
(the “SEC”) on July 14, 2016. The Company intends to finance its Initial Business Combination with proceeds from the
$402,500,000 Public Offering of Units and a $10,050,000 private placement (Note 4). Upon the closing of the Public Offering and
the private placement, $402,500,000 was placed in a trust account (the “Trust Account”) (discussed below).
The
Trust Account
The
proceeds held in the Trust Account may be invested only in U.S. government treasury bills with a maturity of one hundred eighty
(180) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940
and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the
consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The
remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective
acquisitions and continuing general and administrative expenses.
The
Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to fund
working capital requirements of up to $1,000,000 and to pay taxes, if any, none of the funds held in the Trust Account will be
released until the earlier of: (i) the completion of the Initial Business Combination; (ii) the redemption of any shares of Class
A common stock, $0.0001 par value (the “Class A Common Stock”) included in the Units (the “Public Shares”)
sold in the Public Offering that have been properly tendered in connection with a stockholder vote to amend the Company’s
amended and restated certificate of incorporation to modify the substance or timing of its obligation to redeem 100% of such shares
of Class A Common Stock if it does not complete the Initial Business Combination within 24 months from the closing of the Public
Offering; and (iii) the redemption of 100% of the shares of Class A Common Stock included in the Units sold in the Public Offering
if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Public Offering
(subject to the requirements of law). The proceeds deposited in the Trust Account could become subject to the claims of the Company’s
creditors, if any, which could have priority over the claims of the Company’s public stockholders.
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering,
although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating
an Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that together
have 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 agreement to enter into the Initial Business
Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.
The
Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of
the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem
their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial
Business Combination, including interest but less taxes payable and amounts permitted to be withdrawn for working capital purposes,
or (ii) provide stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit
in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest
but less taxes payable and amounts permitted to be withdrawn for working capital purposes. The decision as to whether the Company
will seek stockholder approval of the Initial Business Combination or will allow stockholders to sell their Public Shares in a
tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing
of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval,
unless a vote is required by law or under NASDAQ rules. If the Company seeks stockholder approval, it will complete its Initial
Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business
Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets
to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related
Initial Business Combination, and instead may search for an alternate Initial Business Combination.
If the Company holds a stockholder vote or there is a
tender offer for shares in connection with an Initial Business Combination, a public stockholder will have the right to redeem
its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of
two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable and
amounts permitted to be withdrawn for working capital purposes. As a result, such shares of Class A Common Stock are recorded at
redemption amount and classified as temporary equity since the completion of the Public Offering, in accordance with the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing
Liabilities from Equity.”
Pursuant
to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business
Combination within 24 months from the closing of the Public Offering, the Company will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully
available funds therefore, 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 to pay up to $1,000,000 of the Company’s working capital requirements as well as to pay the Company’s franchise
and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors,
dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law.
The
Sponsor and the Company’s officers and directors entered into a letter agreement with the Company, pursuant to which they
agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined
below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public
Offering. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquires shares of Class A Common
Stock in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect
to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.
In
the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s
stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities
and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders
have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that
the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject
to the limitations described herein.
On
April 10, 2017, the Company and NCP-ATK Holdings, Inc. (“Atkins”) an affiliate of Atkins Nutritionals, Inc., a leading
developer, marketer and seller of branded nutritional food and snacking products currently owned by affiliates of Roark Capital
Group, announced that they have entered into a definitive agreement. Under the terms of the agreement, the Company and Atkins
will combine under a new holding company, The Simply Good Foods Company (“Simply Good Foods”), which is expected to
be listed on the NASDAQ stock exchange under the symbol “SMPL” upon closing of the proposed transaction. The closing
is subject to customary closing conditions. Additional information regarding the announcement is described under Note 9 —
Subsequent Events.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
unaudited interim condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and
regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments, consisting only of normal
recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position as
of March 31, 2017 and the results of operations and cash flows for the period presented. Certain information and disclosures normally
included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Interim
results are not necessarily indicative of results for a full year.
The
unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and notes
thereto included in the Form 10-K annual report and Form S-4 documents filed by the Company with the SEC on March 31, 2017 and
April 11, 2017. All dollar amounts are rounded to the nearest thousand dollars.
Liquidity
As of March 31, 2017, the Company had a balance
of cash and cash equivalents of approximately $702,000, which excludes interest income available to the Company for tax obligations
and general working capital purposes of approximately $647,000 from the Company’s investments in the Trust Account.
The Company intends to use substantially all
of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable,
general working capital needs and deferred underwriting commissions) to complete its Initial Business Combination. To the extent
that the Company’s equity or debt is used, in whole or in part, as consideration to complete the Initial Business Combination,
the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business
or businesses, make other acquisitions and pursue its growth strategies.
Based on the foregoing, management believes
that the Company will have sufficient working capital to meet the Company’s needs for the next twelve months.
Emerging
Growth Company
Section
102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has
elected not to opt out of such extended transition period which means that when 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, which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because
of the potential differences in accounting standards used.
Net
Loss Per Common Share
Net
loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common
shares outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle
warrants, as calculated using the treasury stock method. At March 31, 2017, the Company had outstanding warrants to purchase 20,116,667
shares of common stock. For the period presented, these shares were excluded from the calculation of diluted loss per share of
common stock because their inclusion would have been antidilutive. As a result, diluted loss per common share is the same as basic
loss per common share for the period.
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 coverage of $250,000. The Company had not experienced losses on these
accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates.
Redeemable
Class A Common Stock
As
discussed in Note 1, all of the 40,250,000 shares of Class A common stock sold as parts of the Units in the Public Offering contain
a redemption feature which allows for the redemption of Class A common stock under the Company’s Liquidation or Tender Offer/Stockholder
Approval provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require
the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation
of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company has not
specified a maximum redemption threshold, its amended and restated certificate of incorporation provides that in no event will
the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.
The
Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security to
equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class
A common stock shall be affected by charges against additional paid in capital. Accordingly, at March 31, 2017 and December 31,
2016, 38,459,439 and 38,468,481, respectively of the 40,250,000 shares of Class A common stock included in the Units were classified
outside of permanent equity at its redemption value.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.”
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
FASB
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31,
2017. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts
were accrued for the payment of interest and penalties at March 31, 2017. 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.
At
March 31, 2017 and December 31, 2016, the Company had no material deferred tax assets.
Marketable
Securities Held in Trust Account
The
amounts held in the Trust Account represent proceeds from the Public Offering and the Private Placement of $402,500,000 which
were invested in a money market instrument that invests in United States Treasury Securities with original maturities of six months
or less and can only be used by the Company in connection with the consummation of an Initial Business Combination.
Recent
Accounting Pronouncements
The
Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company’s financial statements.
Note
3 — Public Offering
On
July 20, 2016, in the Public Offering, the Company sold 40,250,000 units at a price of $10.00 per unit (the “Units”),
including the full exercise of the underwriter’s overallotment option. The Sponsor purchased an aggregate of 6,700,000 warrants
at a price of $1.50 per warrant in a private placement that occurred simultaneously with the closing of the Public Offering.
Each
Unit consists of one share of the Company’s Class A Common Stock, and one-third of one warrant to purchase shares of Class
A Common Stock (each, a “Warrant” and, collectively, the “Warrants”). Each whole Warrant entitles the
holder to purchase one share of Class A Common Stock at a price of $11.50 per share. No fractional shares will be issued upon
separation of the Units and only whole Warrants will trade. Each Warrant will become exercisable on the later of 30 days after
the completion of the Company’s Initial Business Combination or 12 months from the closing of the Public Offering and will
expire five years after the completion of the Company’s Initial Business Combination or earlier upon redemption or liquidation.
Once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.01
per Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s
Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third
trading day prior to the date on which the Company sent the notice of redemption to the Warrant holders.
The
Company paid an underwriting discount of $8,050,000 to the underwriters at the closing of the Public Offering, with an additional
fee (the “Deferred Discount”) of $14,087,500, payable upon the Company’s completion of an Initial Business Combination.
The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the
Company completes its Initial Business Combination.
Note
4 — Related Party Transactions
Founder
Shares
On
April 29, 2016, the Sponsor purchased 10,062,500 shares of Class B Common Stock (the “Founder Shares” or “Class
B Common Stock”) for an aggregate price of $25,000, or approximately $0.002 per share. As used herein, unless the context
otherwise requires, “Founder Shares” shall be deemed to include the shares of Class A Common Stock issuable upon conversion
thereof. The Founder Shares are identical to the Class A Common Stock included in the Units sold in the Public Offering except
that the Founder Shares automatically convert into shares of Class A Common Stock at the time of the Company’s Initial Business
Combination and are subject to certain transfer restrictions, as described in more detail below. Holders of Founder Shares may
also elect to convert their shares of Class B Common Stock into an equal number of shares of Class A Common Stock, subject to
adjustment as provided above, at any time.
The
Company’s 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 Company’s Class A Common Stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after the Initial Business Combination, or (y) the date on
which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s
stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private
Placement Warrants
The
Sponsor has purchased an aggregate of 6,700,000 private placement warrants (including warrants required to be purchased in connection
with the over-allotment option) at a price of $1.50 per warrant in a private placement that occurred simultaneously with the closing
of the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant is exercisable for one whole
share of the Company’s Class A Common Stock at a price of $11.50 per share. A portion of the purchase price of the Private
Placement Warrants has been added to the proceeds from the Public Offering held in the Trust Account pending completion of the
Initial Business Combination such that at the closing of the Public Offering $402.5 million was held in the Trust Account. If
the Initial Business Combination is not completed within 24 months from the closing of the Public Offering, the proceeds from
the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares
(subject to the requirements of applicable law) and 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 (including the Class A Common Stock issuable upon exercise of the Private Placement
Warrants) until 30 days after the completion of the Initial Business Combination.
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans,
if any, are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares
of Class A Common Stock) as stated in the registration rights agreement signed on the date of the prospectus for the Public Offering.
These holders are entitled to certain demand and “piggyback” registration rights.
However,
the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities
Act to become effective until 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.
Related
Party Loans
On
April 29, 2016, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Public
Offering pursuant to a promissory note (the “Note”). This note was non-interest bearing and payable on the earlier
of December 31, 2016 or the completion of the Public Offering. On April 29, 2016, the Company borrowed $100,000 under the Note.
From April 30, 2016 through July 19, 2016, the Company borrowed an additional $125,000 under the Note. On July 20, 2016, the total
balance of $225,000 of the Note was repaid to the Sponsor.
Administrative
Support Agreement
The
Company has agreed to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial
and administrative support. Services commenced on July 15, 2016, the date the securities were first listed on the NASDAQ Capital
Market and will terminate upon the earlier of the completion of the Initial Business Combination or the Company’s liquidation.
Note
5 — Investments Held in Trust Account
Upon
the closing of the Public Offering and the Private Placement, $402,500,000 was placed in the Trust Account. At March 31, 2017,
funds in the Trust Account totaled $403,146,657 and were held in investment securities consisting only of money market funds meeting
certain conditions under Rule 2a- 7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government
obligations. Such investment securities are carried at cost, which approximates fair value.
Note
6 — Fair Value Measurements
The
following table presents information about the Company’s assets that are measured on a recurring basis as of March 31, 2017
and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In
general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or
liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest
rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and
includes situations where there is little, if any, market activity for the asset or liability.
|
|
March 31,
2017
|
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Investments in money market fund held in Trust Account
|
|
$
|
403,146,657
|
|
|
$
|
403,146,657
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
|
|
$
|
403,146,657
|
|
|
$
|
403,146,657
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
7 — Deferred Underwriting Commission
The
Company is committed to pay the Deferred Discount of 3.5% of the gross proceeds of the Public Offering, or $14,087,500, to the
underwriters upon the Company’s completion of an Initial Business Combination. The underwriters are not entitled to receive
any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount, and no Deferred Discount is
payable to the underwriters if an Initial Business Combination is not completed within 24 months after the Public Offering.
Note
8 — Stockholders’ Equity
Common
Stock
The
authorized common stock of the Company consists of 200,000,000 shares of Class A Common Stock and 20,000,000 shares of Class B
Common Stock. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business
Combination) be required to increase the number of shares of Class A Common Stock which the Company is authorized to issue at
the same time as the Company’s stockholders vote on the Initial Business Combination to the extent the Company seeks stockholder
approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled to one
vote for each share of common stock. At March 31, 2017, there were 40,250,000 shares of Class A (of which 38,459,439 was classified
outside of permanent equity) and 10,062,500 shares of Class B Common Stock issued and outstanding.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences
as may be determined from time to time by the Company’s board of directors. At March 31, 2017, there were no shares of preferred
stock issued or outstanding.
Note 9 — Subsequent Events
The Merger Agreement
On April 10, 2017, the Company and Atkins, a leading
developer, marketer and seller of branded nutritional food and snacking products currently owned by affiliates of Roark Capital
Group, announced that they have entered into a definitive agreement. Under the terms of the agreement, the Company and Atkins will
combine under a new holding company, Simply Good Foods, which is expected to be listed on the NASDAQ stock exchange under the symbol
“SMPL” upon closing of the proposed transaction. The closing is subject to customary closing conditions.
This transaction will be funded through a combination
of cash, stock, and debt financing. The selling equity owners of Atkins will receive $730,125,000 in total consideration, inclusive
of 10,250,000 shares of common stock of Simply Good Foods valued at $10.00 per share, subject to adjustment in accordance with
the terms of the definitive agreement. The selling equity owners will also be entitled to cash payments pursuant to a tax receivable
agreement.
Along with the $402.5 million of cash held in the Company’
s Trust Account, the Company has secured commitments for a $100 million common stock private placement at $10.00 per share from
large institutional investors. The proposed transaction includes committed debt financing.
Completion of the proposed transaction, which is expected in June 2017, is subject to customary and other
closing conditions, including regulatory approvals, receipt of approvals from the Company’s stockholders, and completion
of the offer for the Company’s stockholders to have their shares redeemed.
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of Operations
|
References
to the "Company," "us," “our” or "we" refer Conyers Park Acquisition Corp. The following
discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited
condensed financial statements and related notes included herein.
Cautionary
Note Regarding Forward-Looking Statements
All
statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under
"Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial
position, business strategy and the plans and objectives of management for future operations, are forward- looking statements.
When used in this Form 10-Q, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's management, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially from those contemplated by the forward- looking
statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking
statements attributable to us or persons acting on the Company's behalf are qualified in their entirety by this paragraph.
Overview
We
are an organized blank check company incorporated as a Delaware corporation on April 20, 2016 and formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or
more businesses. We intend to effectuate our Initial Business Combination using cash from the proceeds of our Public Offering
and the private placement of warrants that occurred simultaneously with the consummation of the Public Offering, our capital stock,
debt or a combination of cash, stock and debt.
The
issuance of additional shares of our stock in a business combination:
|
●
|
may
significantly dilute the equity interest of investors in the Public Offering, which dilution would increase if the anti-dilution
provisions in the Class B Common Stock resulted in the issuance of shares of Class A Common Stock on a greater than one-to-one
basis upon conversion of the Class B Common Stock;
|
|
●
|
may
subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our
common stock;
|
|
●
|
could
cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors;
|
|
●
|
may
have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a
person seeking to obtain control of us; and
|
|
●
|
may
adversely affect prevailing market prices for our Class A Common Stock and/or warrants.
|
Similarly,
if we issue debt securities, it could result in:
|
●
|
default
and foreclosure on our assets if our operating revenues after an Initial Business Combination are insufficient to repay our
debt obligations;
|
|
●
|
acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
|
|
●
|
our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
|
|
●
|
our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding;
|
|
●
|
our
inability to pay dividends on our common stock;
|
|
●
|
using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund
other general corporate purposes;
|
|
●
|
limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
|
|
●
|
increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation;
|
|
●
|
limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and
execution of our strategy; and
|
|
●
|
other
purposes and other disadvantages compared to our competitors who have less debt.
|
As
indicated in the accompanying financial statements, at March 31, 2017, we had $701,522 in cash and cash equivalents. We expect
to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
our Initial Business Combination will be successful.
On April 10, 2017, the Company and Atkins, a leading
developer, marketer and seller of branded nutritional food and snacking products currently owned by affiliates of Roark Capital
Group, announced that they have entered into a definitive agreement. Under the terms of the agreement, the Company and Atkins will
combine under a new holding company, Simply Good Foods, which is expected to be listed on the NASDAQ stock exchange under the symbol
“SMPL” upon closing of the proposed transaction. The closing is subject to customary closing conditions.
This transaction will be funded through a combination
of cash, stock, and debt financing. The selling equity owners of Atkins will receive $730,125,000 in total consideration, inclusive
of 10,250,000 shares of common stock of Simply Good Foods valued at $10.00 per share, subject to adjustment in accordance with
the terms of the definitive agreement. The selling equity owners will also be entitled to cash payments pursuant to a tax receivable
agreement.
Along with the $402.5 million of cash held in the Company’
s Trust Account, the Company has secured commitments for a $100 million common stock private placement at $10.00 per share from
large institutional investors. The proposed transaction includes committed debt financing.
Completion of the proposed transaction, which is expected in June 2017, is subject to customary and other
closing conditions, including regulatory approvals, receipt of approvals from the Company’s stockholders, and completion
of the offer for the Company’s stockholders to have their shares redeemed.
Results
of Operations
For
the period from April 20, 2016 (inception) to March 31, 2017, we had a net loss of $282,925. For the three months period ended
March 31, 2017, we had a net loss of $90,422. Our entire activity from April 20, 2016 through March 31, 2017, consisted of formation
and preparation for the Public Offering and since the Public Offering, the search for a target business with which to consummate
an Initial Business Combination, and as such, we had no operations and no significant operating expenses. Subsequent to the closing
of the Public Offering on July 20, 2016, our normal operating costs included costs associated with our search for the business
combination, costs associated with our governance and public reporting, state franchise taxes and charges of $10,000 per month
from our Sponsor for administrative services.
Liquidity
and Capital Resources
Until
the consummation of the Public Offering, our only sources of liquidity were an initial purchase of Founder Shares for $25,000
by the Sponsor, and a total of $225,000 (out of $300,000 that was available) loaned by the Sponsor. This Note was non-interest
bearing and was paid in full on July 20, 2016 in connection with closing of the Public Offering.
On
July 20, 2016, we consummated our Public Offering in which we sold 40,250,000 Units at a price of $10.00 per Unit (including the
full exercise of the underwriter’s overallotment option) generating gross proceeds of $402,500,000 before underwriting discounts
and expenses. The Sponsor purchased an aggregate of 6,700,000 warrants at a price of $1.50 per warrant in a private placement
that occurred simultaneously with the Public Offering. In connection with the Public Offering, we incurred offering costs of $22,697,678
(including an underwriting discount of $8,050,000 and a Deferred Discount of $14,087,500). Other incurred offering costs consisted
principally of formation and preparation fees related to the Public Offering. A total of $402,500,000 of the net proceeds from
the Public Offering and the Private Placement were deposited in a Trust account established for the benefit of our public stockholders.
Prior
to the completion of our Initial Business Combination, we will have available to us the $701,522 of cash and cash equivalents
on our balance sheet. We will use these funds to identify and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives
or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete
a business combination. We are also entitled to up to $1,000,000 in interest from the Trust Account to be used for working capital
purposes. The amount of interest available to us from the Trust Account may be less than $1,000,000 as a result of the current
interest rate environment. As of March 31, 2017 our interest income in the Trust Account is $646,657.
In
order to fund working capital deficiencies or finance transaction costs in connection with an intended Initial Business Combination,
our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds
as may be required. If we complete our Initial Business Combination, we would repay such loaned amounts. In the event that our
Initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may
be convertible into warrants, at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to
the private placement warrants, including as to exercise price, exercisability and exercise period. The terms of such loans by
our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do
not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties
will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
We
expect that we have sufficient resources subsequent to our Public Offering to fund our operations through July 20, 2018. We do
not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating
our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and
negotiating an Initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds
available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either
to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion
of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination,
which may include a specified future issuance. Subject to compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our business combination. If we are unable to complete our Initial Business Combination
because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.
In addition, following our Initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing
in order to meet our obligations.
Off-Balance
Sheet Financing Arrangements
We
have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in
transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest
entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We
have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt
or commitments of other entities, or entered into any non-financial assets.
Contractual
Obligations
At
March 31, 2017, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
On July 14, 2016, in connection with the Public Offering, we entered into an Administrative Services Agreement with our Sponsor,
pursuant to which the Company pays a total of $10,000 per month for office space, utilities and administrative support. Upon completion
of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
The
underwriters are entitled to underwriting commissions of 5.5%, of which 2.0% ($8,050,000) was paid at the closing of the Public
Offering, and 3.5% ($14,087,500) has been deferred. The deferred underwriting commissions will become payable to the underwriters
from the amounts held in the Trust Account solely in the event that the Company completes an Initial Business Combination, subject
to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting
commissions.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ
from those estimates. The Company has identified the following as its critical accounting policies:
Emerging
Growth Company
Section
102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has
elected not to opt out of such extended transition period which means that when 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, which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because
of the potential differences in accounting standards used.
Net
Loss Per Common Share
Net
loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common
shares outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle
warrants, as calculated using the treasury stock method. At March 31, 2017, the Company had outstanding warrants to purchase 20,116,667
shares of common stock. For the period presented, these shares were excluded from the calculation of diluted loss per share of
common stock because their inclusion would have been antidilutive. As a result, diluted loss per common share is the same as basic
loss per common share for the period.
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.”
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
FASB
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31,
2017. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts
were accrued for the payment of interest and penalties at March 31, 2017. 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.
At
March 31, 2017 and December 31, 2016, the Company had no material deferred tax assets.
Redeemable
Common Stock
All
of the 40,250,000 Class A Common Stock sold as parts of the Units in the Public Offering contain a redemption feature which allows
for the redemption of Class A Common Stock under the Company’s Liquidation or Tender Offer/Stockholder Approval provisions.
In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be
classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the
entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company has not specified a
maximum redemption threshold, its amended and restated certificate of incorporation provides that in no event will the Company
redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.
The
Company will recognize changes in redemption value immediately as they occur and will adjust the carrying value of the security
to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable
Class A Common Stock shall be affected by charges against additional paid in capital.
Accordingly,
at March 31, 2017 and December 31, 2016, 38,459,439 and 38,468,481, respectively of the 40,250,000 shares of Class A common stock
included in the Units were classified outside of permanent equity at its redemption value.
Recent
Accounting Pronouncements
The
Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company’s financial statements.