Net Income (Loss) Per Common Share
Net income (loss) per share is computed by dividing net income (loss) by the weighted-average number 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 up to an aggregate of 56,233,333 shares of the Company’s Class A common stock in the calculation of the diluted income per share, because the warrants are contingently exercisable, and the contingencies have not yet been met and, additionally, their inclusion would be anti-dilutive under the treasury stock method. Similarly, for the purpose of calculating the diluted income (loss) per share for the Class A common stock, the companyCompany has not considered the conversion of the Class B common stock, because the contingency for the conversion into Class A common stock was not met as of the reporting date.
The Company’s unaudited condensed statement of operations includes a presentation of income (loss) per common share for common shares subject to possible redemption in a manner similar to the two-class method of income (loss) per common share. For purposes of calculating net income (loss) per share, the Company allocated the amount using a ratio reflective of the respective participation right and the weighted average of each class of common stock. The allocation for the period from Inception through September 30March 31, 2021 also considered the accretion of temporary equity related to the Class A common stock.
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table reflects the calculation of basic and diluted net loss per common share:
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended March 31, 2022 | | For the period from January 14, 2021 (inception) through March 31, 2021 | | |
| Class A common stock subject to possible redemption | | | | | |
| Numerator: Earnings (losses) allocable to common stock subject to possible redemption | | | | | |
| Allocation of net income (loss), including accretion of temporary equity | $ | 15,050,665 | | | $ | (57,207,820) | | | |
Net income (loss) attributable to Class A common stock subject to redemption | $ | 15,050,665 | | | $ | (57,207,820) | | | |
| Denominator: Weighted average Class A common stock subject to possible redemption | | | | | |
| Basic and diluted weighted average shares outstanding | 138,000,000 | | | 23,298,701 | | | |
| Basic and diluted net income (loss) per Class A shares | $ | 0.11 | | | $ | (2.46) | | | |
| | | | | |
| Class B common stock | | | | | |
| Numerator: Earnings (losses) allocable to Class B common stock | | | | | |
| Allocation of net income (loss), including accretion of temporary equity | 3,762,666 | | | (63,011,511) | | | |
Net income (loss) attributable to Class B common stock | $ | 3,762,666 | | | $ | (63,011,511) | | | |
| Denominator: weighted average Class B common stock | | | | | |
| Basic and diluted weighted average shares outstanding, Class B common stock | 34,500,000 | | | 25,662,338 | | | |
| Basic and diluted net income (loss) per share, Class B common stock | $ | 0.11 | | | $ | (2.46) | | | |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 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. The Company adopted ASU 2020-06 on January 14, 2021. Adoption of ASU 2020-06 did not impact the Company’s financial position, results of operations or cash flows.
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 financial statement.
Note 3—Initial Public OfferingInitial Public Offering
On March 19, 2021, the Company consummated its Initial Public Offering of 138,000,000 Units, including 18,000,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of approximately $1.4 billion, and incurring offering costs of
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
approximately $77.4 million (net of reimbursement from underwriters of $13.8 million), of which $48.3 million was for deferred underwriting commissions and $0.1 million for other deferred financing costs.
Each Unit consists of one share of Class A common stock, and one-fourth of one 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 7).
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 4 — Related Party Transactions
Related Party TransactionsFounder Shares
On January 25, 2021, the Sponsor paid $25,000 to cover certain offering costs on behalf of the Company in exchange for issuance of 28,750,000 shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”). On March 16, 2021, the Company effected a stock dividend of 5,750,000 shares with respect to Class B common stock, resulting in an aggregate of 34,500,000 shares of Class B common stock outstanding. The Sponsor agreed to forfeit up to 4,500,000 Founder Shares to the extent that the option to purchase the Over-Allotment Units was not exercised in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. On March 19, 2021, the underwriter fully exercised its option to purchase the Over-Allotment Units; thus, these 4,500,000 Founder Shares were no longer subject to forfeiture.
The initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (1) one year after the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination (x) if the last reported sale price of the 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 120 days after the initial Business Combination or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 21,733,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of $32.6 million.
Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the sale of the Private Placement Warrants was added to the proceeds from the Initial Public Offering 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 will be non-redeemable for cash (except in certain limited circumstances) 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 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.
Related Party Loans
On January 25, 2021, 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 payable upon the completion of the Initial Public Offering. As of March 19, 2021, the Sponsor had loaned $300,000 under the Note and advanced approximately $150,000 to the Company. The Company fully repaid the Note and the advance for a total of approximately $450,000 to the Sponsor on March 22, 2021.
In addition, in order to fund working capital deficiencies or 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 may 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
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
event that a Business Combination does not close, the Company may use a portion of 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lenders’ discretion, up to $3.0 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. The terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of SeptemberMarch 3031, 2022 and December 31, 2021, the Company had no borrowings under the Working Capital Loans.
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
As of September 30 As of March 31, 2022 and December 31, 2021, the Company had a $1.52.1 million and $1.7 million payable outstanding to a related party of the Sponsor for the reimbursement of operating expenses incurred on behalf of the Company, respectively.
Financial Advisory Services
For financial advisory services provided by KKR Capital Markets LLC (“KCM”), a registered broker-dealer and a related party to the Sponsor in connection with the Initial Public Offering, the Company agreed to pay KCM a fee in an amount equal to (1) 50% of the upfront underwriting commissions payable to the underwriters, or $13.8 million, and (2) 50% of the deferred underwriting commissions payable to the underwriters, or approximately $24.2 million, which will be paid to KCM upon the closing of the initial Business Combination. The underwriters agreed to reimburse the Company for the fee to KCM as it becomes payable out of the underwriting commission.
Note 5 — Commitments and ContingenciesCommitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares), are entitled to registration rights pursuant to a registration rights agreement. These holders are entitled to certain demand and “piggyback” registration rights. 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 18,000,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less underwriting discounts and commissions. On March 19, 2021, the underwriters fully exercised their option to purchase additional Units.
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or $27.6 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per Unit, or $48.3 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
In addition, the underwriters reimbursed $13.8 million to the Company for fees payable to KCM as described in Note 4.
Note 6 — Stockholders’ Equity
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, 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 SeptemberMarch 3031, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
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. As of SeptemberMarch 3031, 2022 and December 31, 2021, there were 138,000,000 shares of Class A common stock subject to possible redemption outstanding and classified as temporary equity.
Class B Common Stock — The Company is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. On January 25, 2021, the Company issued 28,750,000 shares of Class B common stock to the Sponsor. On
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
March 16, 2021, the Company effected a stock dividend of 5,750,000 shares with respect to Class B common stock, resulting in an aggregate of 34,500,000 shares of Class B common stock outstanding. Of the 34,500,000 shares of Class B common stock outstanding, up to 4,500,000 shares of Class B common stock were subject to forfeiture, to the Company by the Sponsor for no consideration to the extent that the underwriters’ option to purchase the Over-Allotment Units was not exercised in full or in part, so that the number of shares of Class B common stock outstanding would collectively equal 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. On March 19, 2021, the underwriters fully exercised their
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
option to purchase the Over-Allotment Units; thus, these 4,500,000 shares of Class B common stock were no longer subject to forfeiture.
Holders of Class A common stock and holders of Class B common stock will vote together as a single class, with each share entitling the holder to one vote; provided, however that, prior to the closing of the Company’s initial Business Combination, only holders of Class B common stock will have the right to elect or remove the Company’s directors.
The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering, plus (ii) all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares of Class A common stock or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination, and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). 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. Securities could be “deemed issued” for purposes of the conversion rate adjustment if such shares are issuable upon the conversion or exercise of convertible securities, warrants or similar securities.
Note 7 — Warrants
WarrantsAs of SeptemberMarch 3031, 2022 and December 31, 2021, the Company had 34,500,000 Public Warrants and 21,733,333 Private Placement Warrants outstanding.
Public Warrants may only be exercised in whole and only for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial 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” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
The warrants have an exercise price of $11.50 per share, subject to adjustment. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the completion of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common stock during the 20-trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 and $10.00 per share redemption trigger prices described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” and “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% and 100%, respectively, of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants will be identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees, except in certain limited circumstances. 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.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00: Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement 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 to each warrant holder; and
•if, and only if, the last reported sale price of Class A common stock 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 sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like).
The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period.
Except as described below, none of the Private Placement Warrants will be redeemable by us so long as they are held by the Sponsor or its permitted transferees.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00: Once the warrants become exercisable, the Company may redeem the outstanding warrants:
•in whole and not in part;
•at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock;
•if, and only if, the Reference Value equals or exceeds $10.00 per share as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like; and
•if the Reference Value is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above.
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
The “fair market value” of Class A common stock shall mean the volume-weighted average price of Class A common stock for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject to adjustment).
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 warrants will not receive any of such funds with respect to their warrants, nor will
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 8 — Fair Value Measurements
Fair Value MeasurementsThe following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of SeptemberMarch 30, 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: | | | | | | |
| Investments held in Trust Account - Money market funds | | $ | 1,380,213,705 | | | $ | — | | | $ | — | |
| | | | | | |
| Liabilities: | | | | | | |
| Derivative warrant liabilities - Public warrants | | $ | 22,770,000 | | | $ | — | | | $ | — | |
| Derivative warrant liabilities - Private placement warrants | | $ | — | | | $ | — | | | $ | 14,561,330 | |
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.
Transfers to or from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels for the period from January 14, 2021 (inception) to September 30, 2021 except for the transfer from Level 3 to Level 1 of the Public Warrants, which started trading on an active market in May 2021.
The estimated fair value of the Private Placement Warrants is measured at fair value using a Black-Scholes valuation model | | | | | | | | | | | | | | | | | | | | |
| Description | | Quoted Prices in
Active Markets
(Level 1) | | Significant Other
Observable Inputs
(Level 2) | | Significant Other
Unobservable Inputs
(Level 3) |
| Assets: | | | | | | |
| Investments held in Trust Account - Money market funds | | $ | 1,380,085,256 | | | $ | — | | | $ | — | |
| | | | | | |
| Liabilities: | | | | | | |
| Derivative warrant liabilities - Public warrants | | $ | 34,500,000 | | | $ | — | | | $ | — | |
| Derivative warrant liabilities - Private placement warrants | | $ | — | | | $ | — | | | $ | 22,602,670 | |
The estimated fair value of the Private Placement Warrants is measured at fair value using a Black-Scholes valuation model as of March 31, 2022 and December 31, 2021, while the Public Warrants were valued using a Monte-Carlo simulation model as of March 31, 2021 and the fair value of the Public Warrants is based on their quoted market price as of September 30March 31, 20212022. The estimated fair value of the Private Placement Warrants is determined using Level 3 inputs. Inherent in option pricing and simulation models are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock assumption based on the implied volatility of the Public Warrants. The risk-free interest rate is based on the U.S. Treasury constant maturity rate on the issuance 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.
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | |
| | March 31, 2022 | | December 31, 2021 |
| Exercise price | | $ | 11.50 | | | $ | 11.50 | |
| Class A common share value | | $ | 9.83 | | | $ | 9.74 | |
| Term | | 5 | | 5 |
| Volatility | | 10.3 | % | | 17.8 | % |
| Risk-free rate | | 2.57 | % | | 1.59 | % |
The change in the fair value of Level 3 derivative warrant liabilities for the three months ended SeptemberMarch 3031, 20212022 is summarized as follows:
| | | | | |
| Level 3 - Derivative warrant liabilities at January 1, 2022 | $ | 22,602,670 | |
| Change in fair value of derivative warrant liabilities | (8,041,340) | |
| Level 3 - Derivative warrant liabilities at March 31, 2022 | $ | 14,561,330 | |
| |
| Unrealized gain on level 3 derivative warrant liabilities held at March 31, 2022 | $ | 8,041,340 | |
The change in the fair value of Level 3 derivative warrant liabilities for the period from January 14, 2021 (inception) through September 30, 2021isMarch 31, 2021 is summarized as follows:
| | | | | |
| Level 3 - Derivative warrant liabilities at January 14, 2021 (inception) | $ | — | |
| Issuance of Public and Private Warrants | 64,847,670 | |
| Change in fair value of derivative warrant liabilities | 3,591,330 | |
| Level 3 - Derivative warrant liabilities at March 31, 2021 | $ | 68,439,000 | |
| |
| Unrealized loss on level 3 derivative warrant liabilities held at March 31, 2021 | $ | (3,591,330) | |
Transfers to or from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels for the period for the quarter ended March 31, 2022 and March 31, 2021.
Note 9 — Restatement of Prior Period Financial Statements
During the course of preparing the quarterly report on Form 10-Q for the period ended September 30, 2021, the Company concluded it should restate its financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In September 2021, the SEC's staff addressed the treatment of redeemable shares issued by special purpose acquisition companies (“SPACs”) and objected to the historical accounting classification for such shares, notwithstanding the typical provisions in a SPAC’s charter providing that the company cannot redeem public shares that would cause the company’s net tangible assets to be less than US $5,000,001 following such redemptions. In accordance with this guidance, which relates to ASC Topic 480, “Distinguishing Liabilities from Equity” (ASC 480), paragraph 10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity, due to the Company's charter provision which does not allow the Company to redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In the light of the guidance, the Company concluded that the threshold did not change the nature of the underlying shares as redeemable and thus the underlying shares would be required to be disclosed outside equity.
As a result, the Company has now concluded it was appropriate to restate its previous financial statements to classify all Class A common stock as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering and in accordance with ASC 480. The change in the carrying value of redeemable shares of Class A common stock resulted in charges against additional paid-in capital and accumulated deficit. Pursuant to ASC Topic 250, Accounting Changes and Error Corrections issued by the FASB and Staff Accounting Bulletin 99, “Materiality” (“SAB 99”) issued by the SEC, the Company determined the impact of this error was material.
The following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the period, indicated:
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
KKR ACQUISITION HOLDINGS I CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 10 — Subsequent Events
Subsequent Events
Management has evaluated subsequent events to determine if events or transactions occurring through the date the financial statements were issued require potential adjustment to or disclosure in the financial statements and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “our,” “us” or “we” refer to KKR Acquisition Holdings I 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 (the “Securities Act”), 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 the Risk Factors section of our final prospectus for our Initial Public Offering (as defined below) and in our other Securities and Exchange Commission (“SEC”) filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in Delaware on January 14, 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We are an early-stage emerging growth company and, as such, subject to all of the risks associated with early stage and emerging growth companies. Our sponsor is KKR Acquisition Sponsor I LLC, a Delaware limited liability company (our “Sponsor”).
Our registration statement for our Initial Public Offering (the “Initial Public Offering”) became effective on March 16, 2021. On March 19, 2021, we consummated an Initial Public Offering of 138,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including the exercise of the underwriters’ option to purchase 18,000,000 additional Units (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $1.4 billion, and incurring offering costs of approximately $77.4 million (net of reimbursement from underwriters of $13.8 million), of which $48.3 million was for deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 21,733,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to our Sponsor, generating proceeds of $32.6 million.
Upon the closing of the Initial Public Offering and the Private Placement, approximately $1.4 billion ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or March 19, 2023 (as such period may be extended by our stockholders in accordance with the Certificate of Incorporation, the “Combination Period”), we will (1) cease all operations except for the purpose of winding up; (2) 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 in the Trust Account (net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and our board of directors, liquidate and dissolve, subject in each case 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 September 30March 31, 20212022 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 gain on investment (net), dividends and interest held in Trust Account. 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 related to prospective business combination candidates. There can be no assurance that our plans to complete a Business Combination will be successful.
For the three months ended September 30March 31, 2021,2022 we had net income of approximately $1218.38 million, which consisted of a loss from operations of approximately $01.81 million, a non-operating income of approximately $1319.8 million for changes in fair value of derivative liabilities, and income from investments held in the Trust Account of approximately $19128,000. The loss from operations consisted of approximately $727,0001.0 million of general and administrative expenses and approximately $50,000 in franchise tax expense.
For the period from January 14, 2021 (inception) through September 30March 31, 2021, we had net incomeloss of approximately $6.3 million, which consisted of a loss from operations of approximately $1.8 million289,000, a non-operating expense of approximately $2.2 million for offering costs associated with derivative warrant liabilities, a non-operating incomeloss of approximately $103.26 million for changes in fair value of derivative liabilities, and income from investments held in the Trust Account of approximately $606,000. The loss from operations consisted of approximately $1.6 million248,000 of general and administrative expenses and approximately $14041,000 in franchise tax expense.
Liquidity and Capital Resources
Prior to the completion of the Initial Public Offering, our liquidity needs were satisfied through expenses totaling $25,000 being paid by our Sponsor in exchange for issuance of 28,750,000 shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”) to our Sponsor, the proceeds of a promissory note (the “Note”) from the Sponsor in the amount of $300,000 and an advancement of approximately $150,000. We fully repaid the Note and the advance for a total of approximately $450,000 to the Sponsor on March 22, 2021. We have since completed our Initial Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was released to us for general working capital purposes. Accordingly, management has
As of March 31, 2022, we since reevaluated our liquidity and financial condition and determined thathad current liabilities of $3.4 million and approximately $1.6 million in our operating bank account. We do not have sufficient capital existsliquidity to sustain operations onemeet our anticipated obligations over the next year from the date the condensed financial statements is issued and therefore substantial doubtof issuance of the financial statements included in this report. In connection with the Company's assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern,” our management has determined that if the Company is unsuccessful in consummating an initial business combination, the mandatory liquidation and subsequent dissolution raise substantial doubt about our ability to continue as a going concern. We have access to funds from our Sponsor that are sufficient to fund the working capital needs of the Company until a potential business combination or up to the mandatory liquidation date as stipulated in the certificate of incorporation. As of March 31,2022, there were no amounts outstanding under any working capital loan (see Note 4 to our unaudited condensed financial statements contained elsewhere in this Quarterly Report hason been alleviated.
We doForm 10-Q). As of March 31, 2022, We had not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial Business Combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our shares of Class A common stock upon completion of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination (including from our affiliates or affiliates of our Sponsor)a $2.1 million payable outstanding to a related party of our Sponsor for the reimbursement of operating expenses incurred on behalf of the Company. Management further intends to close an initial business combination before the mandatory liquidation date.
We continue to evaluate the impact of the COVID-19 pandemic and Russia-Ukraine conflict and have concluded that the specific impact is not readily determinable as of the date of the balance sheet. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than a contingent obligation to pay the underwriters to our Initial Public Offering $48.3 million in the aggregate for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts
held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our 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 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. The Company has identifiedFor a discussion of the following as its critical accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, marketcompany’s critical accounting policies, see Part II, or foreign currency risks. We evaluate allItem 7. Management’s Discussion and Analysis of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 and FASB ASC Topic 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The 34,500,000 warrants issued in connection with the Initial Public Offering and exercise of the over-allotment (the “Public Warrants”) and the 21,733,333 Private Placement Warrants are recognized as derivative liabilities in accordance with FASB ASC Topic 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The estimated fair value of the Private Placement Warrants is measured at fair value using a Black-Scholes valuation model, while the Public Warrants were valued using a Monte-Carlo simulation model as of March 31, 2021 and theFinancial Condition and Results of Operations in our Annual Report on Form 10-K filed March 31, 2022. There have fair value of the Public Warrants is based on their quoted market price as of September 30, 2021.
been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K.Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption (if any) is classified as a liability instrument and measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our outstanding Class A common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2021, all 138,000,000 shares of Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the unaudited condensed balance sheet.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 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. We adopted ASU 2020-06 on January 14, 2021. Adoption of the ASU 2020-06 did not impact our financial position, results of operations or cash flows.
Recent Accounting Pronouncements
Management does not believe that any 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 September 30March 31, 20212022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions weand mayare not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act. Due to the short-term nature of these investments, we believe that there will be no associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Restatement BackgroundGeneral
In September 2021, the SEC'Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s staff addressed the treatment of redeemable shares issuedrules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial and accounting officer, to allow timely decisions regarding required disclosure.
Previously Disclosed Restatement and Material Weakness
As disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report byon SPACs and objected to the historical accounting classification for such shares, notwithstanding the typical provisions in a SPAC’s charter providing that the company cannot redeem public shares that would cause the company’s net tangible assets to be less than US $5,000,001 following such redemptions (“SEC Staff Statement”). In accordance with this guidance, which relates to ASC Topic 480, “Distinguishing Liabilities from Equity” (ASC 480), paragraph 10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of itsForm 10-K, we previously identified a material weakness in our internal control over financial reporting related to the classification of our Class A common stock in permanent equity due to the Company's charter provision which does not allow the Company to redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In light of the guidance, the Company considered that the threshold would not change the nature of the underlying shares as redeemable and thus the underlying shares would be required to be disclosed outside permanent equity. As a result, our management and our audit committee, after consultation with our independent registered public accounting firm, concluded it is appropriate to restateand related restatement of the Company's previous financial statements to classify all Class A common stock as temporary equity and to recognize accretion from the initial book value to redemption value at the time of the Company's Initial Public Offering and in accordance with ASC 480, as discussed in Note 9 to the interim financial statements (the “Restatement”). The change in the carrying value of redeemable shares of Class A common stock resulted in charges against additional paid-in capital and accumulated deficit. Pursuant to ASC Topic 250, Accounting Changes and Error Corrections issued by the FASB and Staff Accounting Bulletin 99, “Materiality” (“SAB 99”) issued by the SEC, the Company determined the impact of the error was material. included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (the “Restatement”).
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021March 31, 2022, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our chiefprincipal executive officer and principal financial and accounting officer has concluded that during the period covered by this reportQuarterly Report on Form 10-Q and solely due to the events that led to the Restatement, our disclosure controls and procedures were not effective because of the material weakness in our internal control over financial reporting.
Remediation of Material Weakness in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around the interpretation and accounting for certain complex features of the Class A common stock issued by the Company was not effectively designed or maintained. This material weakness resulted in the restatementRestatement of the Company’s financial statements as described above.
In response to this material weakness, we are evaluatinghave evaluated what actions to take to further enhance our processes to identify and appropriately apply applicable accounting requirements in the preparation of our financial statements, which are still in progress. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we are improving these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards. We continue to make progress in having increased communication and involvement among our personnel, our sponsorSponsor and third-party professionals with whom we consult and depend upon regarding the application of complex accounting standards. The elements of our plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Changes in Internal Control over Financial Reporting
Other than as set forth above, there was no change in our internal control over financial reporting that occurred during the quarter ended September 30March 31, 2021,2022 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
There have been no material changes from thewith respect to those risk factors previously disclosed in the Company’s final prospectus for the Initial Public Offering as filed with the SEC on March 18, 2021, other than as set forth below.
Due to the events that led to the restatement of our previous financial statements discussed in Note 9 to the interim financial statements contained in Part I, Item 9 of this Form 10-Q report, we determined that as of September 30, 2021 there was a material weakness in our internal control over financial reporting and that, as a result, our disclosure controls and procedures were not effective as of such date. If we are unable to develop and maintain an effective system of internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following the SEC Staff Statement, and after consultation with our independent registered public accounting firm, our management and our audit committee concluded that, in light of the SEC Staff Statement, it was appropriate to restate our previously issued financial statements as of March 19, 2021 and for the quarters ended March 31, 2021 and June 30, 2021. As part of such process, we identified a material weakness in our internal controls over financial reporting. In addition, management, along with our principal executive and financial officer, have concluded that the Company’s disclosure controls and procedures related to this matter were not effective as of September 30, 2021.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and the prices of our securities may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknessesour Annual Report on Form 10-K for the year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
| | | | | |
Exhibit
Number | Description |
| 10.1+ | |
| |
| 10.1+ | |
| |
| 31.1* | |
| |
| 32.1** | |
| |
| 101.INS* | XBRL Instance Document |
| |
| 101.SCH* | XBRL Taxonomy Extension Schema Document |
| |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
| |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
| |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
| |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith
** Furnished herewith
+ Management contract or compensatory plan or arrangement in which directors or executive officers are eligible to participate.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrantRegistrant has duly caused this reportReport to be signed on its behalf by the undersigned, thereunto duly authorized on this 15th day of November 2021.
| | | | | | | | |
| KKR ACQUISITION HOLDINGS I CORP. |
| | |
| By: | /s/ Glenn Murphy |
| Name: | Glenn Murphy |
| Title: | Chief Executive Officer |
. | | | | | | | | | | | |
| | KKR ACQUISITION HOLDINGS I CORP. |
| | | |
Date: May 16, 2022 | | By: | /s/ Glenn Murphy |
| | | Glenn Murphy |
| | | Chief Executive Officer, Executive Chairman and Director
|