Berenson Acquisition Corp. I - Quarter Report: 2023 June (Form 10-Q)

BERENSON ACQUISITION CORP. I

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

References in this Quarterly Report on Form 10-Q (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Berenson Acquisition Corp. I. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Berenson SPAC Holdings I, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report 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”), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “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. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of this Quarterly Report and our Annual Report of Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2023. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

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Overview

We are a blank check company incorporated on June 1, 2021 as a Delaware corporation 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 (a “Business Combination”). We may pursue an initial Business Combination target in any industry or geographical location.

On September 30, 2021, we consummated our initial public offering of securities (the “Initial Public Offering”) and simultaneous private placement (the “Private Placement”) of private placement warrants to our sponsor, Berenson SPAC Holdings I, LLC, a Delaware limited liability company, (“Sponsor”). We intend to effectuate our initial Business Combination using cash from the proceeds of our Initial Public Offering and Private Placement, our capital stock, debt or a combination of cash, stock and debt.

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.

Transfer of Listing

On March 1, 2023, we received approval to transfer the listing of our Class A common stock from the New York Stock Exchange (“NYSE”) to the NYSE American and on March 13, 2023, our Class A common stock began trading on the NYSE American under the symbol “BACA.” Following the notice of delisting and suspension of trading of our warrants by the NYSE, effective February 3, 2023, our warrants are trading on the OTC Market under the symbol “BACA WS.” In addition, in connection with the transfer, effective March 13, 2023, any remaining units were mandatorily separated into its component parts and the units are no longer traded on the NYSE.

Conversion of Class B Ordinary Shares

On March 10, 2023, 2,980,000 shares of Class B shares common stock held by our Sponsor were converted into 2,980,000 shares of Class A common stock on a one-for-one basis.

Extension

On March 21, 2023, we filed with the SEC a Current Report on Form 8-K relating to the entry into a non-redemption agreement (the “Non-Redemption Agreement”) with the Sponsor, one or more unaffiliated third party or parties in exchange for such third party or third parties agreeing not to redeem an aggregate of 1,959,269 shares of our Class A common stock, sold in our Initial Public Offering (the “Non-Redeemed Shares”) at the special meeting of stockholders (the “Meeting”). In exchange for the foregoing commitments not to redeem such shares, our Sponsor has agreed to transfer to such third party or third parties an aggregate of 489,819 shares of our Class A common stock held by the Sponsor immediately following consummation of an initial Business Combination if they continue to hold such Non-Redeemed Shares through the Meeting.

On March 28, 2023, at the Meeting, the stockholders approved the following items: (i) a proposal to amend the Company’s amended and restated certificate of incorporation (the “Charter”) to extend the date by which the Company has to consummate a Business Combination (the “Extension”) from March 30, 2023 to September 30, 2023 or such earlier date as determined by the Company’s board of directors (such date, the “Extended Date,” and such proposal, the “Charter Amendment Proposal”) and (ii) an amendment to the trust agreement to change the date on which the trustee thereunder must commence the liquidation of the trust account (the “Trust Account”) to be consistent with the amendment to the Charter contemplated by the Charter Amendment Proposal.

In connection with the votes to approve the Extension, the holders of 24,899,629 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.18 per share, for an aggregate redemption amount of approximately $253.4 million, leaving approximately $26.6 million in the Trust Account. Following the redemption and as of August 9, 2023 there are 5,590,371 shares of Class A common stock issued and outstanding and 3,897,500 shares of Class B common stock, par value $0.0001 per share, issued and outstanding.

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Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through June 30, 2023 were organizational activities and those necessary to prepare for our Initial Public Offering, and since our Initial Public Offering, our activity has been limited to identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account with Continental Stock Transfer & Trust Company acting as trustee, located in the United States, established for the benefit of our public stockholders. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, our initial Business Combination.

For the three and six months ended June 30, 2023, we had net (loss) income of $(109,519) and $2,323,036, respectively, which consisted of operating costs of $222,166 and $898,528, respectively, interest income of $318,668 and $3,244,397, respectively, and change in fair value of derivative warrant liabilities of $(148,799) and $638,331, respectively.

Liquidity, Capital Resources and Going Concern

Until the consummation of our Initial Public Offering, our only source of liquidity was an initial purchase of shares of Class B common stock, par value $0.0001 per share by the Sponsor and loans from the Sponsor.

On September 30, 2021, we consummated our Initial Public Offering of 25,000,000 units, at $10.00 per unit, generating gross proceeds of $250,000,000. Simultaneously with the consummation of our Initial Public Offering, we consummated the Private Placement of an aggregate of 7,000,000 private placement warrants to the Sponsor at a price of $1.00 per private placement warrants, generating gross proceeds of $7,000,000.

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Following our Initial Public Offering (including the partial exercise of the over-allotment option), and Private Placement, a total of $275,100,000 was placed in the Trust Account. We incurred $15,636,971 in transaction costs, including $5,502,00 of underwriting commissions, $9,628,500 of deferred underwriting commissions and $506,471 of other costs.

For the six months ended June 30, 2023, cash used in operating activities was $1,668,740. Net income of $2,323,036 was affected by interest income from the trust of $3,239,657 and change in fair value of derivative warrant liabilities of $638,331 and changes in operating assets and liabilities, which used $113,788 of cash from operating activities.

For the six months ended June 30, 2022, cash used in operating activities was $480,424. Net income of $6,798,216 was affected by interest income on trust of $397,667 and changes in fair value of warrant liability of $7,302,400. Changes in operating assets and liabilities provided $421,427 of cash for operating activities.

As of June 30, 2023, we had cash and marketable securities held in the Trust Account of $27,081,496. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions and income taxes payable), to complete our initial Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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 our growth strategies.

As of June 30, 2023, we had cash held outside of the Trust Account of $168,156. We intend to use the funds held outside of the Trust Account primarily 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.

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 our officers and directors will loan us funds as may be required (“Working Capital Loans”). If we complete our Business Combination, we expect to repay any Working Capital Loans out of the proceeds of the Trust Account released to us. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. Up to $1,500,000 of Working Capital Loans may be convertible into warrants at a price of $1.00 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 the Working Capital Loans have not been determined and no written agreements exist with respect to such Working Capital Loans. As of June 30, 2023, there were no amounts outstanding under any Working Capital Loans.

We do not believe we will need to raise additional funds 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 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 public shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, “Presentation of Financial Statements-Going Concern,” management has evaluated the Company’s liquidity and financial condition and determined that it may not be sufficient to meet the Company’s obligation over the period of twelve months from the issuance date of the financial statements. The Company’s Sponsor has agreed to provide support to enable the Company to continue its operations and meet its potential obligations over a period of one year from the issuance date of these financial statements. Management believes current working capital, and the support from its Sponsor, provides sufficient capital to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of those financial statements and therefore substantial doubt has been alleviated.

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Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2023.

Contractual Obligations

We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for office space, secretarial and administrative support. We began incurring these fees on September 28, 2021 and will continue to incur these fees monthly until the earlier of the completion of our initial Business Combination and our liquidation.

The underwriters of our Initial Public Offering are entitled to a deferred underwriting commission of $0.35 per unit, or $9,628,500 in the aggregate. Subject to the terms of the underwriting agreement, (i) the deferred underwriting commission was placed in the Trust Account and will be released to the underwriters only upon the completion of our initial Business Combination and (ii) the deferred underwriting commission will be waived by the underwriters in the event that we do not complete a Business Combination.

Critical Accounting Policies and Estimates

The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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 condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Net income (loss) Per Common Stock Shares

We apply the two-class method in calculating net income per share of common stock. The contractual formula utilized to calculate the redemption amount approximates fair value. The class feature to redeem at fair value means that there is effectively only one class of stock. Changes in fair value are not considered a dividend for the purposes of the numerator in the earnings per share calculation. Net income per share of common stock is computed by dividing the pro rata net income between the shares of Class A common stock and the shares of Class B common stock by the weighted average number of shares common stock outstanding for each of the periods. The calculation of diluted income per share of common stock does not consider the effect of the warrants and rights issued in connection with our Initial Public Offering since the exercise of the warrants and rights are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable for 21,257,000 shares of Class A common stock in the aggregate.

Common Stock Subject to Possible Redemption

We account for our shares of common stock subject to possible redemption in accordance with ASC 480. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within our control require common stock subject to redemption 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 ASC 480.

All of our shares of Class A common stock sold as part of the units in our Initial Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with our liquidation if there is a stockholder vote or tender offer in connection with a Business Combination and in connection with certain amendments to our amended and restated certificate of incorporation. We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable shares of common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares of common stock are affected by charges against additional paid-in capital and accumulated deficit.

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Public Warrants and Private Placement Warrants

We account for the public warrants and the private placement warrants in accordance with ASC Topic 815—40, Derivatives and Hedging, Contracts in Entity’s Own Equity, under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, “Fair Value Measurement,” with changes in fair value recognized in the statements of operations in the period of change. As of June 30, 2023 the private placement warrants were no longer Level 3 inputs, since a quoted price for a similar instrument was used. As of December 31, 2022, the estimated fair value of the public warrants was determined by their public trading price and the estimated fair value of the private placement warrants was determined using a modified Black-Scholes valuation model using Level 3 inputs such as exercise price, stock price, volatility, term, risk-free rate and dividend yield.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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 defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the fiscal quarter ended June 30, 2023. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this Quarterly Report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended on June 30, 2023 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

None.

Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 27, 2023 (the “Annual Report”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On June 25, 2021, we issued 7,187,500 shares of Class B common stock, par value $0.0001 per share (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000, or approximately $0.004 per share. On September 15, 2021, the Sponsor transferred an aggregate of 25,000 Founder Shares to each of our independent directors and our special advisor (for a total of 125,000 Founder Shares) for their original purchase price. Subsequently, on September 30, 2021, the Sponsor sold an aggregate of 1,872,159 Founder Shares to eleven qualified institutional buyers or institutional accredited investors that have each purchased units in the Initial Public Offering, at their original purchase price. On November 12, 2021, in connection with the underwriters’ partial exercise of their over-allotment option and waiver of the remaining portion of such option, the Sponsor forfeited an aggregate of 310,000 Founder Shares to us at no cost, accordingly 6,877,500 Founder Shares remain outstanding.

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As previously reported on a Current Report on Form 8-K, on September 30, 2021, simultaneously with the consummation of the Initial Public Offering, we consummated the Private Placement of an aggregate of 7,000,000 warrants to the Sponsor at a price of $1.00 per private placement warrant, generating gross proceeds of $7,000,000.

On October 22, 2021, the underwriters of the Initial Public Offering partially exercised their over-allotment option and purchased 2,510,000 additional units at $10.00 per additional unit, generating additional gross proceeds of $25,100,000. In addition, October 22, 2021, simultaneously with the partial exercise of the over-allotment option by the underwriters, the Sponsor purchased an additional 502,000 private placement warrants at $1.00 per private placement warrant, generating additional gross proceeds of $502,000. A total of $25,100,000 of the net proceeds from the sale of such additional units and additional private placement warrants was deposited in the Trust Account established for the benefit of the Company’s public stockholders, with Continental Stock Transfer & Trust Company acting as trustee, bringing the aggregate proceeds held in such Trust Account to $275,100,000.

The foregoing issuances of Founder Shares and private placement warrants were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such issuances.

In connection with the votes to approve the Extension, the holders of 24,899,629 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.18 per share, for an aggregate redemption amount of approximately $253.4 million, leaving approximately $26.6 million in the Trust Account.

For a description of the use of the proceeds generated in the Initial Public Offering, see Part I, Item 2 of this Quarterly Report.

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None.

Not Applicable.

None.

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The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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