| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
__________
BANYAN ACQUISITION CORP.
file number 001-41236
Delaware | 86-2556699 | |||||
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1150 Willow Road, Northbrook, IL | 60062 | |||||
(Address of Principal Executive Offices) | (Zip Code) |
400 Skokie Blvd
Suite 820
Northbrook, Illinois 60062
(Address of principal executive offices)
(847) 757-3812
(Issuer’s
N/A
(Former name, former address and former fiscal year, if changed since the last report)
number, including area code
Title of | Trading Symbol(s) |
| Name of | |||||||
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|
|
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| ||||||
|
|
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| New York Stock Exchange | ||||||
Redeemable warrants, |
|
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| New York Stock Exchange |
Large accelerated filer |
| Accelerated filer |
| |||||||||||
Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company | x |
As of May
$0.001 per share.
BANYAN ACQUISITION CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2023
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1. InterimPart I - Financial Statements.
BANYAN ACQUISITION CORPORATION
CONDENSED BALANCE SHEETS
Information
| | | | | | |
|
| March 31, |
| December 31, | ||
| | 2023 | | 2022 | ||
|
| (unaudited) |
| | ||
Assets |
| |
|
| |
|
Current assets: |
| |
|
| |
|
Cash | | $ | 1,903,164 | | $ | 510,893 |
Prepaid expenses - current | |
| 277,795 | |
| 256,157 |
Total Current Assets | |
| 2,180,959 | |
| 767,050 |
Noncurrent assets: | |
| | |
|
|
Treasury securities held in trust account | |
| 251,139,962 | |
| 250,326,857 |
Prepaid expenses - noncurrent | |
| — | |
| 12,764 |
Total Noncurrent Assets | |
| 251,139,962 | |
| 250,339,621 |
Total Assets | | $ | 253,320,921 | | $ | 251,106,671 |
Liabilities, Redeemable Class A Common Stock and Stockholders’ Deficit | |
| | |
|
|
Current liabilities: | |
| | |
| |
Accrued expenses | | $ | 140,000 | | $ | — |
Income tax payable | | | 1,346,142 | | | 783,546 |
Accrued franchise tax expense | | | 49,315 | | | 193,490 |
Accounts payable | |
| 129,064 | |
| 244,891 |
Total Current Liabilities | |
| 1,664,521 | |
| 1,221,927 |
Noncurrent liabilities: | |
| | |
| |
Warrant liability | |
| 1,052,395 | |
| 599,875 |
Deferred underwriter’s fee payable | |
| 9,660,000 | |
| 9,660,000 |
Total Noncurrent Liabilities | |
| 10,712,395 | |
| 10,259,875 |
Total Liabilities | |
| 12,376,916 | |
| 11,481,802 |
Commitments and Contingencies (Note 8) | |
| | |
| |
Redeemable Class A Common Stock | |
| | |
| |
Class A common stock, $0.0001 par value; 240,000,000 shares authorized; 24,150,000 and no shares issued and outstanding subject to possible redemption, respectively | |
| 251,139,962 | |
| 250,326,857 |
Stockholders’ Deficit: | |
| | |
|
|
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; none issued and outstanding | |
| — | |
| — |
Class A common stock, $0.0001 par value; 240,000,000 shares authorized; none issued and outstanding, excluding 24,150,000 shares subject to possible redemption | |
| — | |
| — |
Class B common stock, $0.0001 par value; 60,000,000 shares authorized; 7,245,000 shares issued and outstanding | |
| 725 | |
| 725 |
Additional paid-in capital | |
| — | |
| — |
Accumulated deficit | |
| (10,196,682) | |
| (10,702,713) |
Total Stockholders’ Deficit | |
| (10,195,957) | |
| (10,701,988) |
Total Liabilities, Redeemable Class A Common Stock and Stockholders’ Deficit | | $ | 253,320,921 | | $ | 251,106,671 |
(Unaudited) | |||||||||||
January 7, 2024 | April 30, 2023 | ||||||||||
Assets | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 39,637 | $ | 8,436 | |||||||
Accounts receivable | 2,051 | 1,310 | |||||||||
Inventories | 928 | 802 | |||||||||
Prepaid expenses and other current assets | 2,332 | 577 | |||||||||
Total current assets | 44,948 | 11,125 | |||||||||
Property and equipment, net | 72,007 | 62,842 | |||||||||
Operating lease right-of-use assets | 54,307 | 55,604 | |||||||||
Other long-term assets | 5,808 | 1,356 | |||||||||
Total assets | $ | 177,070 | $ | 130,927 | |||||||
Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Deficit | |||||||||||
Current Liabilities | |||||||||||
Accounts payable | $ | 23,508 | $ | 19,305 | |||||||
Amounts due to customers | 7,339 | 7,349 | |||||||||
Current portion of long-term notes payable | 3,056 | 1,044 | |||||||||
Accrued occupancy costs | 6,231 | 14,940 | |||||||||
Other accrued liabilities | 9,182 | 8,613 | |||||||||
Current portion of operating lease liabilities | 15,571 | 10,727 | |||||||||
Warrant liabilities | 12,327 | — | |||||||||
Total current liabilities | 77,214 | 61,978 | |||||||||
Long-term notes payable | 68,190 | 36,211 | |||||||||
Long-term accrued occupancy costs | 280 | 2,020 | |||||||||
Operating lease liabilities | 90,236 | 91,398 | |||||||||
Other long-term liabilities | 1,386 | 850 | |||||||||
Total liabilities | 237,306 | 192,457 | |||||||||
Redeemable convertible preferred stock | — | 53,468 | |||||||||
Stockholders’ deficit | |||||||||||
Common stock (par value: $0.0001; authorized: 430,000,000 shares; issued and outstanding: 39,931,785 shares at January 7, 2024 and 11,422,476 shares at April 30, 2023) | 4 | 1 | |||||||||
Additional paid-in capital | 56,656 | 3,794 | |||||||||
Accumulated deficit | (116,896) | (118,793) | |||||||||
Total stockholders’ deficit | (60,236) | (114,998) | |||||||||
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit | $ | 177,070 | $ | 130,927 |
3
Twelve Weeks Ended | Thirty-Six Weeks Ended | ||||||||||||||||||||||
January 7, 2024 | January 1, 2023 | January 7, 2024 | January 1, 2023 | ||||||||||||||||||||
Food and beverage revenues | $ | 24,854 | $ | 21,759 | $ | 64,806 | $ | 61,157 | |||||||||||||||
Recreation revenues | 7,308 | 6,419 | 17,720 | 15,946 | |||||||||||||||||||
Total revenue | 32,162 | 28,178 | 82,526 | 77,103 | |||||||||||||||||||
Cost of food and beverage | 5,017 | 4,475 | 13,732 | 13,102 | |||||||||||||||||||
Store labor and benefits | 10,831 | 9,511 | 29,465 | 27,577 | |||||||||||||||||||
Store occupancy costs, excluding depreciation | 4,947 | 4,305 | 10,537 | 12,551 | |||||||||||||||||||
Other store operating expenses, excluding depreciation | 5,140 | 4,456 | 14,696 | 12,634 | |||||||||||||||||||
General and administrative expenses | 5,274 | 2,529 | 12,576 | 9,840 | |||||||||||||||||||
Depreciation expense | 2,076 | 1,860 | 5,417 | 5,574 | |||||||||||||||||||
Pre-opening expenses | 1,934 | 1,156 | 7,238 | 2,141 | |||||||||||||||||||
Operating loss | (3,057) | (114) | (11,135) | (6,316) | |||||||||||||||||||
Interest expense | (2,485) | (278) | (6,086) | (735) | |||||||||||||||||||
Gain on change in fair value of warrant liabilities and other | 17,790 | — | 19,140 | — | |||||||||||||||||||
Gain (loss) on debt extinguishment | — | — | — | 8,448 | |||||||||||||||||||
Income (loss) before income taxes | 12,248 | (392) | 1,919 | 1,397 | |||||||||||||||||||
Income tax expense | — | — | — | 144 | |||||||||||||||||||
Net income (loss) | 12,248 | (392) | 1,919 | 1,253 | |||||||||||||||||||
Less: Cumulative unpaid dividends and change in redemption amount of redeemable convertible preferred stock | (350) | — | (2,301) | — | |||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | 11,898 | $ | (392) | $ | (382) | $ | 1,253 | |||||||||||||||
Basic earnings (loss) per share | $ | 0.35 | $ | (0.03) | $ | (0.03) | $ | 0.11 | |||||||||||||||
Diluted earnings (loss) per share | $ | 0.33 | $ | (0.03) | $ | (0.03) | $ | 0.04 | |||||||||||||||
Weighted average shares outstanding, basic | 15,784,141 | 11,408,369 | 13,324,330 | 11,404,578 | |||||||||||||||||||
Weighted average shares outstanding, diluted | 37,061,006 | 11,408,369 | 13,324,330 | 31,692,877 |
| | | | | | |
| | For the | ||||
| | Three Months Ended | ||||
| | March 31, | ||||
|
| 2023 |
| 2022 | ||
Operating expenses: |
| |
| | | |
Warrant issuance expense | | $ | — | | $ | 500,307 |
Exchange listing fees | |
| 21,020 | | | 100,188 |
Legal fees | |
| 140,000 | | | 95,000 |
General, administrative, and other expenses | |
| 217,210 | | | 228,021 |
Total operating expenses | |
| 378,230 | | | 923,516 |
Loss from operations | |
| (378,230) | | | (923,516) |
| | | | | | |
Other income (expenses): | |
| | | | |
Change in fair value of warrant liability | |
| (452,520) | | | 10,300,756 |
Interest income on cash held in bank account | | | 10,831 | | | — |
Interest income on treasury securities held in Trust Account | | | 2,717,515 | | | — |
Unrealized (loss) gain on treasury securities held in Trust Account | |
| (15,864) | | | 65,397 |
Other income | |
| 2,259,962 | | | 10,366,153 |
Income loss before provision for income taxes | | | 1,881,732 | | | 9,442,637 |
Provision for income taxes | | | (562,596) | | | — |
Net income | | $ | 1,319,136 | | $ | 9,442,637 |
| | | | | | |
Basic and diluted weighted average shares outstanding, Class A common stock | |
| 24,125,000 | | | 17,978,833 |
| | | | | | |
Basic and diluted net income per share, Class A common stock | | $ | 0.04 | | $ | 0.37 |
| | | | | | |
Basic and diluted weighted average shares outstanding, Class B common stock (1) | |
| 7,245,000 | | | 7,245,000 |
| | | | | | |
Basic and diluted net income per share, Class B common stock | | $ | 0.04 | | $ | 0.37 |
4
Thirty-Six Weeks Ended January 7, 2024 | |||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | |||||||||||||||||||
Shares(1) | Amounts | Shares(1) | Amounts | ||||||||||||||||||||
Balance as of April 30, 2023, as previously reported | 10,203,945 | $ | 53,468 | 6,178,962 | $ | 62 | $ | 3,733 | $ | (118,793) | $ | (114,998) | |||||||||||
Retroactive application of reverse recapitalization | 8,659,145 | — | 5,243,514 | (61) | $ | 61 | — | — | |||||||||||||||
Balance as of April 30, 2023, after effect of the reverse recapitalization | 18,863,090 | $ | 53,468 | 11,422,476 | $ | 1 | $ | 3,794 | $ | (118,793) | $ | (114,998) | |||||||||||
Net loss | — | — | — | — | — | (3,046) | (3,046) | ||||||||||||||||
Issuance of Series I redeemable convertible preferred stock | 1,988,620 | 18,463 | — | — | — | — | — | ||||||||||||||||
Accretion of cumulative dividends on Series I redeemable convertible preferred stock | — | 134 | — | — | (134) | — | (134) | ||||||||||||||||
Change in the redemption value of the redeemable convertible preferred stock | — | 1,423 | — | — | (1,423) | — | (1,423) | ||||||||||||||||
Stock based compensation | — | — | — | — | 141 | — | 141 | ||||||||||||||||
Balance as of July 23, 2023 | 20,851,710 | $ | 73,488 | 11,422,476 | $ | 1 | $ | 2,378 | $ | (121,839) | $ | (119,460) | |||||||||||
Net loss | — | — | — | — | — | (7,283) | (7,283) | ||||||||||||||||
Issuance of warrants | — | — | — | — | 173 | — | 173 | ||||||||||||||||
Reclassification of liability-classified warrants | — | — | — | — | (1,834) | — | (1,834) | ||||||||||||||||
Issuance of Series I redeemable convertible preferred stock | 138,000 | 1,380 | — | — | — | — | — | ||||||||||||||||
Accretion of cumulative dividends on Series I redeemable convertible preferred stock | — | 394 | — | — | (394) | — | (394) | ||||||||||||||||
Stock based compensation | — | — | — | — | 220 | — | 220 | ||||||||||||||||
Balance as of October 15, 2023 | 20,989,710 | $ | 75,262 | 11,422,476 | $ | 1 | $ | 543 | $ | (129,122) | $ | (128,578) | |||||||||||
Net income | — | — | — | — | — | 12,248 | 12,248 | ||||||||||||||||
Issuance of warrants | — | — | — | — | 23 | (23) | — | ||||||||||||||||
Reclassification of liability-classified warrants | — | — | — | — | 940 | — | 940 | ||||||||||||||||
Accretion of cumulative dividends on Series I redeemable convertible preferred stock | — | 350 | — | — | (350) | — | (350) | ||||||||||||||||
Exercise of stock options | — | — | 45,322 | — | — | — | — | ||||||||||||||||
Exercise of warrants | — | — | 296,053 | — | 2,203 | — | 2,203 | ||||||||||||||||
Conversion of cumulative unpaid dividends on Series I redeemable convertible preferred stock to common stock in connection with the reverse recapitalization | — | (878) | 87,755 | — | 878 | — | 878 | ||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock in connection with the reverse recapitalization | (20,989,710) | (74,734) | 20,989,710 | 2 | 74,732 | — | 74,734 | ||||||||||||||||
Conversion of warrants into common stock in connection with the reverse recapitalization | — | — | 655,213 | — | — | — | — |
BANYAN ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
| | | | | | | | | | | | | | | | | | | | |
FOR THE THREE MONTHS ENDED MARCH 31, 2023 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | Class A Common Stock | | | | | | | | | | | | | | | | |||
| | Subject to | | | Class B | | Additional | | | | | Total | ||||||||
| | Possible Redemption | | | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | |||||||||
|
| Shares |
| Amount |
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||
Balance – December 31, 2022 | | 24,150,000 | | $ | 250,326,857 | | | 7,245,000 | | $ | 725 | | $ | — | | $ | (10,702,713) | | $ | (10,701,988) |
Remeasurement of Class A common stock to redemption value | | — | |
| 813,105 | | | — | |
| — | | | — | |
| (813,105) | |
| (813,105) |
Net income | | — | |
| — | | | — | |
| — | | | — | |
| 1,319,136 | |
| 1,319,136 |
Balance – March 31, 2023 (unaudited) | | 24,150,000 | | $ | 251,139,962 | | | 7,245,000 | | $ | 725 | | $ | — | | $ | (10,196,682) | | $ | (10,195,957) |
Conversion of long-term notes payable and accrued interest to common stock in connection with the reverse recapitalization | — | — | 924,304 | — | 5,000 | — | 5,000 | ||||||||||||||||
Forfeiture of accrued interest in connection with the conversion of long-term notes payable | — | — | — | — | 890 | — | 890 | ||||||||||||||||
Issuance of common stock in the reverse recapitalization pursuant to the BCA | — | — | 5,447,203 | 1 | (1) | — | — | ||||||||||||||||
Transfer of warrants related to business combination | — | — | — | — | (29,824) | — | (29,824) | ||||||||||||||||
Transaction costs incurred in connection with the reverse recapitalization | — | — | — | — | (23,362) | — | (23,362) | ||||||||||||||||
Issuance of common stock as payment for Legacy Pinstripes transaction costs incurred in connection with the reverse recapitalization | — | — | 50,000 | — | — | — | |||||||||||||||||
Issuance of common stock as settlement for the unpaid accrued interest on the convertible notes | — | — | 13,749 | — | 138 | — | 138 | ||||||||||||||||
Issuance of warrants in connection with the reverse recapitalization | — | — | — | — | 24,592 | — | 24,592 | ||||||||||||||||
Stock based compensation | — | — | — | — | 254 | — | 254 | ||||||||||||||||
Balance as of January 7, 2024 | — | $ | — | 39,931,785 | $ | 4 | $ | 56,656 | $ | (116,896) | $ | (60,236) |
| | | | | | | | | | | | | | | | | | | | |
FOR THE THREE MONTHS ENDED MARCH 31, 2022 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | Class A Common Stock | | | | | | | | | | | | | | | | |||
| | Subject to | | | Class B | | Additional | | | | | Total | ||||||||
| | Possible Redemption | | | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | |||||||||
|
| Shares |
| Amount |
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | |||||
Balance – December 31, 2021 |
| — | | $ | — | |
| 7,245,000 | | $ | 725 |
| $ | 24,275 | | $ | (22,252) | | $ | 2,748 |
Issuance of Units in IPO | | 24,150,000 | | | 219,353,777 | | | — | | | — | | | — | | | — | | | — |
Deemed capital contribution from issuance of private warrants | | — | | | — | | | — | | | — | | | 4,504,363 | | | — | | | 4,504,363 |
Remeasurement of Class A common stock to redemption value at IPO | | — | | | 26,976,223 | | | — | | | — | | | (4,528,638) | | | (22,447,585) | | | (26,976,223) |
Remeasurement of Class A common stock to redemption value | | — | | | 65,397 | | | — | | | — | | | — | | | (65,397) | | | (65,397) |
Net income | | — | | | — | | | — | | | — | | | — | | | 9,442,637 | | | 9,442,637 |
Balance – March 31, 2022 (unaudited) |
| 24,150,000 | | $ | 246,395,397 | |
| 7,245,000 | | $ | 725 |
| $ | — | | $ | (13,092,597) | | $ | (13,091,872) |
The number of shares of Redeemable Convertible Preferred Stock and Common Stock issued and outstanding prior to the Reverse Recapitalization have been retroactively adjusted by the Exchange Ratios to give effect to the Reverse Recapitalization. See Note 2.
5
Thirty-Six Weeks Ended January 1, 2023 | |||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | |||||||||||||||||||
Shares(1) | Amounts | Shares(1) | Amounts | ||||||||||||||||||||
Balance as of April 24, 2022, as previously reported | 10,085,612 | $ | 52,218 | 6,167,254 | $ | 62 | $ | 1,650 | $ | (111,268) | $ | (109,556) | |||||||||||
Retroactive application of reverse recapitalization | 8,558,727 | — | 5,234 | (61) | 61 | $ | — | $ | — | ||||||||||||||
Balance as of April 24, 2022, after effect of the reverse recapitalization | 18,644,339 | $ | 52,218 | 11,400,833 | $ | 1 | $ | 1,711 | $ | (111,268) | $ | (109,556) | |||||||||||
Net income | — | — | — | — | — | 5,035 | 5,035 | ||||||||||||||||
Issuance of warrants | — | — | — | — | — | — | — | ||||||||||||||||
Issuance of Series G redeemable convertible preferred stock | 194,104 | 1,050 | — | — | — | — | — | ||||||||||||||||
Issuance of Series H redeemable convertible preferred stock | 24,647 | 200 | — | — | — | — | — | ||||||||||||||||
Exercise of stock options | — | — | 2 | — | 6 | — | 6 | ||||||||||||||||
Stock based compensation | — | — | — | — | 52 | — | 52 | ||||||||||||||||
Balance as of July 17, 2022 | 18,863,090 | $ | 53,468 | 11,402,682 | $ | 1 | $ | 1,769 | $ | (106,233) | $ | (104,463) | |||||||||||
Net loss | — | — | — | — | — | (3,390) | (3,390) | ||||||||||||||||
Issuance of warrants | — | — | — | — | 10 | — | 10 | ||||||||||||||||
Stock based compensation | — | — | — | — | 59 | — | 59 | ||||||||||||||||
Balance as of October 9, 2022 | 18,863,090 | $ | 53,468 | 11,402,682 | $ | 1 | $ | 1,838 | $ | (109,623) | $ | (107,784) | |||||||||||
Net loss | — | — | — | — | — | (392) | (392) | ||||||||||||||||
Issuance of warrants | — | — | — | — | — | — | — | ||||||||||||||||
Exercise of stock options | — | — | 20 | — | 60 | — | 60 | ||||||||||||||||
Stock based compensation | — | — | — | — | 67 | — | 67 | ||||||||||||||||
Balance as of January 1, 2023 | 18,863,090 | $ | 53,468 | 11,422,477 | $ | 1 | $ | 1,965 | $ | (110,015) | $ | (108,049) |
BANYAN ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
| | 2023 | | 2022 | ||
|
| (unaudited) |
| (unaudited) | ||
Cash Flows from Operating Activities: |
| |
| | | |
Net income (loss) | | $ | 1,319,136 | | $ | 9,442,637 |
Adjustments to reconcile net income to net cash used in operating activities: | |
|
| | | |
Interest income on treasury securities held in Trust Account | | | (2,717,515) | | | — |
Unrealized loss (gain) on short term -investments held in Trust Account | |
| 15,864 | |
| (65,397) |
Change in fair value of warrant liability | |
| 452,520 | |
| (10,300,756) |
Warrant issuance expense | |
| — | |
| 500,307 |
Changes in operating assets and liabilities: | |
| | | | |
Prepaid expenses | |
| (8,874) | |
| (513,870) |
Accrued expenses | |
| 140,000 | |
| 282,821 |
Income tax payable | | | 562,596 | | | — |
Accounts payable | |
| (115,827) | |
| 69,112 |
Accrued offering costs | | | — | | | (363,952) |
Accrued franchise tax | |
| (144,175) | |
| 50,000 |
Net cash used in operating activities | |
| (496,275) | |
| (899,098) |
| | | | | | |
Cash Flows from Investing Activities: | |
|
| | | |
Investment of cash in Trust Account | |
| — | |
| (246,330,000) |
Withdrawal from Trust Account for taxes | | | 1,888,546 | | | — |
Net cash provided by (used in) investing activities | |
| 1,888,546 | |
| (246,330,000) |
| | | | | | |
Cash Flows from Financing Activities: | |
|
| | | |
Proceeds from issuance of Units in IPO, net of underwriting fee | |
| — | |
| 236,670,000 |
Proceeds from sale of private placement warrants | |
| — | |
| 11,910,000 |
Payment of promissory note – related party | |
| — | |
| (289,425) |
Deferred offering costs | |
| — | |
| (92,391) |
Net cash (used in) provided by financing activities | |
| — | |
| 248,198,184 |
| | | | | | |
Net Change in Cash | |
| 1,392,271 | |
| 969,086 |
Cash – Beginning | |
| 510,893 | |
| 54,057 |
Cash – Ending | | $ | 1,903,164 | | $ | 1,023,143 |
| | | | | | |
Non-Cash Investing and Financing Activities: | |
|
| | | |
Initial fair value of Class A common stock subject to possible redemption | | $ | — | | $ | 219,353,777 |
Remeasurement of Class A common stock subject to possible redemption | | $ | 813,105 | | $ | 27,041,620 |
Deferred underwriter fee payable | | $ | — | | $ | 9,660,000 |
Initial measurement of warrant liability | | $ | — | | $ | 14,904,212 |
6
Thirty-Six Weeks Ended | |||||||||||
January 7, 2024 | January 1, 2023 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 1,919 | $ | 1,253 | |||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities | |||||||||||
Gain on modification of operating leases | (3,281) | — | |||||||||
Depreciation expense | 5,417 | 5,574 | |||||||||
Non-cash operating lease expense | 4,048 | 3,893 | |||||||||
Operating lease tenant allowances | 3,789 | 4,753 | |||||||||
Stock based compensation | 615 | 178 | |||||||||
Gain on change in fair value of warrant liabilities and other | (19,305) | — | |||||||||
Gain on extinguishment of debt | — | (8,448) | |||||||||
Amortization of debt issuance costs | 1,425 | 13 | |||||||||
(Increase) decrease in operating assets | |||||||||||
Accounts receivable | (741) | (283) | |||||||||
Inventories | (126) | (124) | |||||||||
Prepaid expenses and other current assets | (1,265) | (380) | |||||||||
Other long-term assets | (5,808) | — | |||||||||
(Decrease) increase in operating liabilities | |||||||||||
Accounts payable | 6,400 | 3,165 | |||||||||
Amounts due to customers | (10) | (674) | |||||||||
Accrued occupancy costs | (3,954) | (2,032) | |||||||||
Other accrued liabilities | 1,867 | 697 | |||||||||
Operating lease liabilities | (6,808) | (5,897) | |||||||||
Net cash provided by (used in) operating activities | (15,818) | 1,688 | |||||||||
Cash flows from investing activities | |||||||||||
Purchase of property and equipment | (14,771) | (1,842) | |||||||||
Net cash (used in) investing activities | (14,771) | (1,842) | |||||||||
Cash flows from financing activities | |||||||||||
Proceeds from stock option exercises | — | 66 | |||||||||
Proceeds from warrant exercises | 1 | — | |||||||||
Proceeds from warrant issuances | 24,592 | — | |||||||||
Proceeds from issuance of redeemable convertible preferred stock, net | 19,843 | 200 | |||||||||
Payment of transaction costs related to reverse recapitalization | (23,437) | — | |||||||||
Principal payments on long-term notes payable | (466) | (1,379) | |||||||||
Proceeds from the Oaktree Tranche 2 Loan | 1,590 | — | |||||||||
Debt issuance costs | (773) | — | |||||||||
Redemption of long-term notes payable | — | (100) | |||||||||
Proceeds from long-term notes payable, net | 40,440 | — | |||||||||
Net cash provided by (used in) financing activities | 61,790 | (1,213) | |||||||||
Net change in cash and cash equivalents | 31,201 | (1,367) | |||||||||
Cash and cash equivalents, beginning of period | 8,436 | 8,907 | |||||||||
Cash and cash equivalents, end of period | $ | 39,637 | $ | 7,540 | |||||||
Supplemental disclosures of cash flow information | |||||||||||
Cash paid for interest | $ | 5,241 | $ | 690 | |||||||
Supplemental disclosures of non-cash operating, investing and financing activities | |||||||||||
Conversion of long-term notes payable to redeemable convertible preferred stock | $ | — | $ | 1,050 | |||||||
Conversion of long-term notes payable and accrued interest to common stock | $ | 5,137 | $ | — | |||||||
Forfeiture of accrued interest in connection with the conversion of long-term notes payable | $ | 890 | $ | — | |||||||
Reclassification of warrant liability in connection with the reverse recapitalization | $ | 940 | $ | — |
Conversion of preferred stock to common stock in connection with the reverse recapitalization | $ | 75,501 | $ | — | |||||||
Transaction costs incurred in connection with the reverse recapitalization but not yet paid | $ | 388 | $ | — | |||||||
Transfer of warrants related to business combination | $ | 29,824 | $ | — | |||||||
Conversion of Legacy Pinstripes common stock in connection with the reverse recapitalization | $ | 180 | $ | — | |||||||
Increase in operating lease right-of-use assets | $ | 5,963 | $ | 7,580 | |||||||
Non-cash finance obligation | $ | 1,270 | $ | — | |||||||
Non-cash capital expenditures included in accounts payable | $ | 2,198 | $ | 3,610 | |||||||
Change in the redemption amount of the redeemable convertible preferred stock | $ | 1,423 | $ | — | |||||||
Accretion of cumulative dividends on Series I redeemable convertible preferred stock | $ | 878 | $ | — |
BANYAN ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Banyan Acquisition Corporation (thePinstripes Holdings, Inc. (“Pinstripes”, “New Pinstripes”, the “Company”, “we”, “us”, or “our”) is a blank check company incorporated in Delaware on March 10, 2021. The Company was incorporatedformed for the purpose of effectingoperating and expanding a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses thatunique entertainment and dining concept. As of January 7, 2024, the Company has not yet identified15 locations in nine states and generates revenue primarily from the sale of food, beverages, bowling, bocce, and hosting private events. The Company operates its business as one operating and one reportable segment.
AsCombination Agreement, dated as of March 31,June 22, 2023 (as amended and restated as of September 26, 2023 and November 22, 2023, the Company had not commenced any operations. All activity for“BCA” or “Business Combination”), by and among Legacy Pinstripes, Banyan Acquisition Corporation, a
Financing
The registration statement for the Company’s Initial Public Offering was declared effective on January 19, 2022. On January 24, 2022, the Company consummated its Initial Public Offering of 24,150,000 Units at $10.00 per Unit, generating gross proceeds of $241,500,000, which is discussed in Note 3. Simultaneously“Company”). In connection with the closing of the Initial Public Offering, the Company consummated the sale of 11,910,000 Private Placement Warrants (the “Private Placement Warrants”)Business Combination, Banyan changed its name to Banyan Acquisition Sponsor LLC (the “Sponsor”), BTIG, LLC and I-Bankers Securities,Pinstripes Holdings, Inc., at an exercise price of $1.00 per Private Placement Warrant, for an aggregate of $11,910,000.
Following the (see Note 2).
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements.
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
7
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from whom shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the excise tax. The IR Act applies only to repurchases that occur after December 31, 2022. The Company is assessing the potential impact of the IR Act on its financial statements.
The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Liquidity, Capital Resources and Going Concern
As of March 31, 2023, the Company had $1,903,164 in operating cash and working capital of $516,438.
The Company’s liquidity needs up to March 31, 2023, had been satisfied through a payment from the Sponsor of $25,000 for Class B common stock, par value $0.0001 per share (“Class B common stock” and shares thereof, “Founder Shares”), the Initial Public Offering and the issuance of the Private Placement Warrants. Additionally, the Company drew on an unsecured promissory note to pay certain offering costs (see Note 5).
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Although no formal agreement exists, the Sponsor has agreed to extend Working Capital Loans as needed (defined in Note 5 below). Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that (i) new financing will be available to it on commercially acceptable terms, if at all, or (ii) its plans to consummate an initial Business Combination will be successful. In addition, management is currently evaluating the impact of the COVID-19 pandemic and its effect on the Company’s financial position, results of its operations and/or search for a target company.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern through the end of the Combination Period on December 24, 2023 (see Note 11). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statement is prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X ofas prescribed by the Securities and Exchange Commission (the “SEC”(“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotesnotes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a complete presentation ofto present fairly the financial position, results of operations or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanyingindicated.
8
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation ofunaudited condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atin the date of theunaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actualaccompanying notes. Actual results could differ significantly from those estimates.
The Companycash equivalents
Offering Costs
redemption by the customers. The Company complies with the requirementsdetermination of the Accounting Standards Codification (“ASC”) 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A— “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs are charged to stockholders’ equity or the statement of operationsgift card breakage is based on the relative value of the Public Warrants (as defined below) and the Private Placement Warrants to the proceeds received from the Units sold upon the completion of the Initial Public Offering. Accordingly, on January 24, 2022, offering costs totaled $15,147,955 (consisting of $4,830,000 of underwriting fees, $9,660,000 of deferred underwriting fees and $657,955 of actual offering costs, with $500,307 included in accumulated deficit as an allocation for the Public Warrants and the Private Placement Warrants, and $14,647,648 included in additional paid-in capital).
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed federally insured limits. Exposure to cash and cash equivalents credit risk is reduced by placing such deposits with major financial institutions and monitoring their credit ratings. At March 31, 2023, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
9
Derivative Financial Instruments
Company’s specific historical redemption patterns. The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Warrant Liability
The Company expects to account for warrants for the Company’s common stock that are not indexed to its own shares as liabilities at fair value on the balance sheet once issued. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the common stock warrants. At that time, the portion of the warrantcontract liability related to the common stock warrants will be reclassifiedour gift cards is included in amounts due to additional paid-in capital.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts representedcustomers in the condensed consolidated balance sheet,sheets in the amounts of $2,280 as of January 7, 2024 and $1,896 as of April 30, 2023. The components of gift card revenue were as follows:
Twelve Weeks Ended | Thirty-Six Weeks Ended | ||||||||||||||||||||||
January 7, 2024 | January 1, 2023 | January 7, 2024 | January 1, 2023 | ||||||||||||||||||||
Redemptions, net of discounts | $ | 472 | $ | (38) | $ | 1,355 | $ | 628 | |||||||||||||||
Breakage | $ | 339 | $ | 130 | $ | 584 | $ | 591 | |||||||||||||||
Gift card revenue, net | $ | 811 | $ | 92 | $ | 1,939 | $ | 1,219 |
The Company applies ASC 820, which establishes a frameworkpreparations for measuring fair valuenew locations under construction.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.
Class A Common Stock, SubjectClass B-1 Common Stock, Class B-2 Common Stock and Class B-3 Common Stock, are referred to Possible Redemption
The Company accounts for its commonas “Common Stock”) and preferred stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) will be classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption
10
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock includes certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. As of March 31, 2023 and December 31, 2022, there were 24,150,000400,000,000 shares of Class A commonCommon Stock at a par value of $0.0001 per share, of which 39,391,785 shares were issued and outstanding as of January 7, 2024
Shares | ||||||||
Legacy Pinstripes stockholders(1) | 33,449,433 | |||||||
Banyan stockholders(2) | 3,697,203 | |||||||
Series I Investors | 2,721,400 | |||||||
Other | 50,000 | |||||||
Total shares of New Pinstripes Common Stock outstanding immediately following the Reverse Recapitalization | 39,918,036 |
January 7, 2024 | April 30, 2023 | ||||||||||
Beverage | $ | 644 | $ | 545 | |||||||
Food | 284 | 257 | |||||||||
Total | $ | 928 | $ | 802 |
January 7, 2024 | April 30, 2023 | ||||||||||
Leasehold improvements | 71,292 | 61,534 | |||||||||
Furniture, fixtures, and equipment | 40,818 | 33,361 | |||||||||
Building and building improvements | 7,000 | 7,000 | |||||||||
Construction in progress | 21,935 | 24,568 | |||||||||
Total cost | 141,045 | 126,463 | |||||||||
Less: accumulated depreciation | (69,038) | (63,621) | |||||||||
Property and equipment, net | 72,007 | 62,842 |
January 7, 2024 | April 30, 2023 | ||||||||||
PPP and SBA loans | $ | 500 | $ | 500 | |||||||
Term loans | 35,000 | 22,500 | |||||||||
Equipment loan | 16,500 | 11,500 | |||||||||
Senior notes | 50,278 | — | |||||||||
Convertible notes | — | 5,000 | |||||||||
Finance obligations | 4,834 | 3,995 | |||||||||
Other | 92 | 127 | |||||||||
Less: unamortized debt issuance costs and discounts | (35,958) | (6,367) | |||||||||
Total | 71,246 | 37,255 | |||||||||
Less: current portion of long-term borrowings | (3,056) | (1,044) | |||||||||
Long-term notes payable | $ | 68,190 | $ | 36,211 |
the date on which obligations shall become due and payable in full per the loan agreement. Under the Silverview Tranche 2 Loan, the Company can borrow $2,500 per draw for each of five new store openings ($12,500 in aggregate). The Company recognizes changeshad no borrowings outstanding under the Silverview Tranche 2 Loan as of April 30, 2023.
Twelve Weeks Ended | Thirty-Six Weeks Ended | ||||||||||||||||||||||
January 7, 2024 | January 1, 2023 | January 7, 2024 | January 1, 2023 | ||||||||||||||||||||
Operating lease cost | $ | 3,701 | $ | 3,321 | $ | 7,579 | $ | 9,120 | |||||||||||||||
Variable lease cost | $ | 1,654 | $ | 1,611 | $ | 4,525 | $ | 4,744 | |||||||||||||||
Total lease cost | $ | 5,355 | $ | 4,932 | $ | 12,104 | $ | 13,864 |
Balance as of April 30, 2023 | Issuance of Redeemable Convertible Preferred Stock, net | Remeasurement to Redemption Amount | Accretion of Cumulative Dividends | Conversion in connection with the Reverse Recapitalization | Balance as of January 7, 2024 | |||||||||||||||
Series A | $ | 1,151 | $ | — | $ | — | $ | — | $ | (1,151) | $ | — | ||||||||
Series B | 930 | — | — | — | (930) | — | ||||||||||||||
Series C | 300 | — | — | — | (300) | — | ||||||||||||||
Series D | 10,340 | — | — | — | (10,340) | — | ||||||||||||||
Series E | 2,207 | — | — | — | (2,207) | — | ||||||||||||||
Series F | 27,290 | — | — | — | (27,290) | — | ||||||||||||||
Series G | 3,550 | — | — | — | (3,550) | — | ||||||||||||||
Series H | 7,700 | — | — | — | (7,700) | — | ||||||||||||||
Series I | — | 19,843 | 1,423 | 878 | (22,144) | — | ||||||||||||||
Total | $ | 53,468 | $ | 19,843 | $ | 1,423 | $ | 878 | $ | (75,612) | $ | — |
Number of Options (1) | Weighted-average Exercise Price | Weighted-average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||||||||
Outstanding at April 30, 2023, as previously reported | 2,284,399 | $ | 9.84 | 6.56 | $ | 16,628 | ||||||||||||||||||||
Retroactive application of reverse recapitalization | 1,938,936 | (4.51) | — | $ | 13,215 | |||||||||||||||||||||
Outstanding at April 30, 2023, as previously reported | 4,223,335 | $ | 5.33 | 6.56 | $ | 29,843 | ||||||||||||||||||||
Granted | 1,433,855 | 12.52 | ||||||||||||||||||||||||
Exercised | (45,177) | 3.51 | $ | 248 | ||||||||||||||||||||||
Expired | (89,655) | 2.27 | ||||||||||||||||||||||||
Forfeited or cancelled | (731,768) | 9.56 | ||||||||||||||||||||||||
Outstanding at January 7, 2024 | 4,790,590 | $ | 6.91 | 6.70 | $ | 3,774 | ||||||||||||||||||||
Exercisable at January 7, 2024 | 2,352,180 | $ | 4.15 | 4.59 |
Class A common stock subject to possible redemption is reflected on the balance sheet at March 31, 2023 and December 31, 2022, as follows:
| | | |
Gross proceeds from initial public offering |
| $ | 241,500,000 |
Less: | | | |
Fair value allocated to public warrants | |
| (7,498,575) |
Offering costs allocated to Class A common stock subject to possible redemption | |
| (14,647,648) |
Plus: | |
|
|
Remeasurement on Class A common stock subject to possible redemption | | | 30,973,080 |
Class A common stock subject to possible redemption, December 31, 2022 | | $ | 250,326,857 |
Remeasurement on Class A common stock subject to possible redemption | | | 813,105 |
Class A common stock subject to possible redemption, March 31, 2023 | | | 251,139,962 |
Income Taxes
The Company accounts for income taxes in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under the asset and liability method, as required by this accounting standard, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to the period when assets are realized or liability is settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in the operation of statement in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. There were no unrecognized tax benefits as of March 31, 2023. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The Company has identified the United States as its only “major” tax jurisdiction. The Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next 12 months.
11
Net Income Per Share of Common Stock
Net income per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstandingSilverview was entitled to subscribe and purchase from 258,303 to 162,946. A separate warrant agreement for 8,697 warrants of the 267,000 issued in fiscal year 2023 was not amended and the warrants remained issued. Under the term loan agreement, the Company was contractually obligated to issue a specified number of warrants to Silverview in the event the Company elected to exercise its right to obtain additional funding from Silverview under the term loan agreement. Therefore, the remaining warrants were considered contingently issuable and the contingency was satisfied when a draw on Silverview Tranche 2 Loan occurred. For accounting purposes, all 267,000 warrants were still considered issued and outstanding.
The Company’s statementGranite Creek warrants.
The following table reflects the calculation of basic and diluted net loss per share of common stock (in dollars, except per share amounts):
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2023 |
| 2022 | ||
Class A common stock subject to possible redemption | | | | | | |
Numerator: Income attributable to Class A common stock subject to possible redemption |
| | | | |
|
Net income | | $ | 1,014,477 | | $ | 6,730,390 |
Denominator: Weighted average Class A common stock subject to possible redemption | | | | |
| |
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | | | 24,125,000 | |
| 17,978,333 |
Basic and diluted net income per share, Class A common stock subject to possible redemption | | $ | 0.04 | | $ | 0.37 |
| | | | | | |
Non-Redeemable Class B common stock | | | | |
| |
Numerator: Net income | | | | |
| |
Net income | | $ | 304,659 | | $ | 2,712,247 |
Denominator: Weighted average non-redeemable Class B common stock | | | | |
| |
Basic and diluted weighted average shares outstanding, non-redeemable Class B common stock | | | 7,245,000 | |
| 7,245,000 |
Basic and diluted net income per share, non-redeemable Class B common stock | | $ | 0.04 | | $ | 0.37 |
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board 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 GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. We are currently assessing the impact, if any, that ASU 2020-06 would have on our 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 our financial statements.
12
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering on January 24, 2022, the Company sold 24,150,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one warrant (“Public Warrant”). Each whole Public Warrant is anticipated to entitle the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
An aggregate of $10.20 per Unit sold in the Initial Public Offering was held in the Trust Account and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company.
NOTE 4 — PRIVATE PLACEMENT
The Company entered into an agreement with the Sponsor and the underwriters pursuant to which the Sponsor and underwriters purchased an aggregate of 11,910,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, generating $11,910,000 in the aggregate in a private placement that occurred simultaneously with the closing of the Initial Public Offering. Each Private Placement Warrant is exercisable to purchase one share of common stock at an exercise price of $11.50 per share, subject to adjustment (see Note 6). A portion of the proceeds from the Private Placement Warrants were 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 proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless.
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
In March 2021, the Sponsor purchased 8,625,000 Founder Shares for an aggregate purchase price of $25,000 and an aggregate of 142,500 of such Founder Shares were subsequently transferred to our independent directors, executive officers and special advisor and other third parties. The fair value of the shares transferred is de minimis. On November 30, 2021, the Sponsor surrendered 1,725,000 Founder Shares as a result of changes to the terms of the Initial Public Offering, resulting in the Sponsor owning 6,900,000 Founder Shares. On January 19, 2022, the Company issued an additional 345,000 shares of Class B common stock pursuant to a stock split for no additional consideration as a result of the upsize to the Company’s Initial Public Offering (see Note 6). The number of Founder Shares outstanding collectively represents approximately 23% of the Company’s issued and outstanding shares after the Initial Public Offering.
The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of (A) one year after the completion of a Business Combination or (B) subsequent to a 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 reorganizations, recapitalizations and the like) for any 20 trading days within any 30- trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.
Promissory Note — Related Party
In March 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and was due upon the consummation of the Initial Public Offering. On January 24, 2022, the Company paid $289,425, the full amount outstanding under the Promissory Note, to the Sponsor.
Related Party Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). The Working Capital Loans would either be repaid upon consummation of a Business
13
Combination, without interest, or, at the lender’s discretion, up to $1,800,000 of such Working Capital Loans, or up to an aggregate of $4,830,000 of such Working Capital Loans with respect to funded extension periods, may be convertible into warrants at a price of $1.00 per warrant, of the post-Business Combination entity. If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination 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 warrants would be identical to the Private Placement Warrants. As of March 31, 2023 and December 31, 2022, there were no amounts outstanding under the Working Capital Loans.
Support Services Agreement
Commencing on the listing date, the Company agreed to pay the Sponsor pursuant to a support services agreement a total of $10,000 per month for office space provided to the Company. Upon completion of the initial Business Combination or the Company’s liquidation, the Company’s contractual obligation under the support services agreement to pay these monthly fees will cease. For the three months ended March 31, 2023, the Sponsor permanently waived its right to receive such fees from the Company. The Sponsor expects to continue to permanently waive its rights to receive such fees in future periods.
NOTE 6 — STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.
Class A common stock — The Company is authorized to issue 240,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2023 and December 31, 2022, there were no shares of Class A common stock issued and outstanding, excluding 24,150,000 shares of Class A common stock subject to possible redemption.
Class B common stock — The Company is authorized to issue 60,000,000 shares of Class B common stock with a par value of $0.0001 per share. In March 2021, the Sponsor purchased 8,625,000 shares of Class B common stock for an aggregate purchase price of $25,000 and an aggregate of 142,500 of such shares Founder Shares were subsequently transferred to our independent directors, executive officers and special advisor and other third parties. On November 30, 2021, the Sponsor surrendered 1,725,000 shares of Class B common stock as a result of changes to the terms of the Initial Public Offering. On January 19, 2022, the Company issued an additional 345,000 shares of Class B common stock pursuant to a stock split for no additional consideration as a result of the upsize to the Company’s Initial Public Offering. Share amounts and related information have been retrospectively restated for the share surrender and stock split. Thus, as of March 31, 2023 and December 31, 2022, the Company presented 7,245,000 shares of Class B common stock issued and outstanding on the balance sheet.
With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial Business Combination, except as required by law, holders of our Founder Shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote. However, prior to the consummation of the Business Combination, holders of the Class B common stock will have the right to elect all of the Company’s directors and may remove members of the board of directors for any reason.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. 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 a 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, subject to adjustment for stock splits, stock dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like, in the aggregate, on an as-converted basis, 23% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination, excluding any shares or equity-linked
14
securities issued, or to be issued, to any seller in a Business Combination and excluding any private placement warrants issued to our Sponsor, its affiliates or any member of our management team upon conversion of Working Capital Loans.
NOTE 7 — WARRANT LIABILITY
The Company accounts for the 23,985,000 warrants issued in connection with the Initial Public Offering (the 12,075,000 Public Warrants and the 11,910,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do notWarrants. The Public Warrants and Private Warrants remained unexercised and were issued and outstanding as of January 7, 2024.
Warrants — The fair value of the Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separationis measured by the Company’s publicly traded warrant price. In determining the fair value of the UnitsPrivate Warrants, the Company utilizes the Cox-Rubenstein-Ross binomial lattice model using level 3 inputs consisting of the fair value of the Public Warrants as of the measurement and only whole warrants will trade. Accordingly, unlessimplied equity volatility. On the December 29, 2023 issuance date, the Company recorded a unit holder purchases at least two Units, they will not be able to receive or tradewarrant liability for the Public Warrants and Private Warrants in the fair value amounts of $4,456 and $25,368, respectively. During the twelve and thirty-six weeks ended January 7, 2024, the Company recognized a whole warrant. gain for the change in fair value of the Public Warrants and Private Warrants, respectively, in the amounts of $108 and $17,389.
The Company is not obligated to deliver any shares of Class A common stock pursuant to the exercise of a Public Warrant and has no obligation to settle such Public Warrant exercise unless acurrent registration statement under the Securities Actin effect with respect to the shares of Class A common stockCommon Stock underlying the Public Warrants, is then effective and a prospectus relating thereto is current, subject toexpire five years from the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No Public Warrant is exercisable, and the Company is not obligated to issue any shares of Class A common stock upon exercise of a Public Warrant unless the share of Class A common stock issuable upon such Public Warrant exercise has been registered, qualified or deemed to be exempt under the securities lawsconsummation of the state of residence of the registered holder of the Public Warrants.
The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuableReverse Recapitalization, or earlier upon exercise of the public warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the public warrants expireredemption or are redeemed, as specified in the public warrant agreement; provided that if the Class A common stock is at the time of any exercise of a public 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 public 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 elects, the Company will not be required to file or maintain in effect a registration statement, but it will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of Class A common stock issuable upon exercise of the public warrants is not effective by the 60th business day after the closing of a Business Combination, public 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 public warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
liquidation. The redemption of the warrantsPublic Warrants is as follows:
•in whole and not in part; •at a price of $0.01 per warrant; • |
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
15
Pinstripes Holdings, Inc.
•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 the Public Warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the underlying Common Stock; • |
if, and only if, the last reported sale |
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 a 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 Company’s 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 issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A commonunderlying Common Stock equals or exceeds $10.00 per share (as adjusted per stock duringsplits, stock dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 -tradingtrading days within the 30-trading day period startingending three trading days before the Company send the notice of redemption to the holders; and
above.
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Registration Rights
The holdersIn connection with the Reverse Recapitalization, the Company entered into a loan agreement with Oaktree (see Note 5). In connection with the closing of the Founder Shares, Private Placement Warrants, andOaktree Tranche 1 Loan, Oaktree was granted fully detachable warrants that may be issued upon conversion of Working Capital Loans (and anyexercisable for an aggregate 2,500,000 shares of Class A common stock issuable upon theCommon Stock, at an exercise price of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The holders will have the right to require us to register for resale these securities pursuant to a shelf registration under Rule 415 under the Securities Act. The holders of a majority of these securities will also be entitled to make up to
16
three demands, plus short form registration demands, that we register such securities. In addition, the holders will be entitled to certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriter Agreement
The Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 3,150,000 additional Units to cover over-allotments at the Initial Public Offering price less the underwriting discount. The underwriters exercised the over-allotment option in full on January 24, 2022. The underwriters were entitled to a cash underwriting discount of $0.20$0.01 per Unit, or $4,830,000 in the aggregate, paid upon the closing.share (“Oaktree Tranche 1 Warrants”). In addition, the underwriters are entitled to a deferred fee of $0.40 per Unit, or $9,660,000 in the aggregate. 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.
NOTE 9 — FAIR VALUE MEASUREMENTS
At March 31, 2023, the Company’s warrant liability was valued at $1,052,395. Under the guidance in ASC 815-40, the Public Warrants and the Private Placement Warrants do not meet the criteria for equity treatment. As such, the Public Warrants and the Private Placement Warrants must be recorded on the balance sheet at fair value. This valuation is subject to re-measurement at each balance sheet date. With each remeasurement, the valuations will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
The following table presents fair value information as of March 31, 2023,volume-weighted average price (“VWAP”) per share of the Company’s financial assetsClass A Common Stock during the period commencing on the 91st day after the closing of the Business Combination and liabilitiesending 90 days thereafter is less than $8.00 per share, the Company shall grant to Oaktree a warrant to purchase Common Stock for 187,500 shares of Class A Common Stock, at an exercise price of $0.01 per share (“Additional Oaktree Tranche 1 Warrants”). If the VWAP is less than $6.00 during the same period, the Company shall instead grant to Oaktree a warrant to purchase common stock for 412,500 shares of Class A Common Stock, at an exercise price of $0.01 per share (“Additional Oaktree Tranche 1 Warrants”).
Oaktree Warrants.
| | | | | | | | | |
|
| Public |
| Private Placement |
| Total Level 3 | |||
|
| Warrants |
| Warrants |
| Financial Instruments | |||
Derivative warrant liabilities at December 31, 2022 | | $ | — | | $ | 298,000 | | $ | 298,000 |
Change in fair value | |
| — | |
| 240,000 | |
| 240,000 |
Level 3 derivative warrant liabilities at March 31, 2023 | | $ | — | | $ | 538,000 | | $ | 538,000 |
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
17
The following table sets forth by level within the fair value hierarchy the Company’s assetsPinstripes Holdings, Inc.
| | | | | | | | | |
|
| (Level 1) |
| (Level 2) |
| (Level 3) | |||
Assets |
| |
|
| |
|
| |
|
Treasury securities held in trust account | | $ | 251,139,962 | | $ | — | | $ | — |
Liabilities | |
|
| |
|
| |
|
|
Public Warrants | | $ | 514,395 | | $ | — | | $ | — |
Private Placement Warrants | | $ | — | | $ | — | | $ | 538,000 |
The following table presents the changes in the fair value of derivative warrant liabilities for the three months ended March 31, 2023:
| | | | | | | | | |
| | | | | Private | | | ||
| | Public | | Placement | | Warrant | |||
|
| Warrants |
| Warrants |
| Liability | |||
Derivative warrant liabilities as of December 31, 2022 | | $ | 301,875 | | $ | 298,000 | | $ | 599,875 |
Change in fair value | |
| 212,520 | |
| 240,000 | |
| 452,520 |
Derivative warrant liabilities as of March 31, 2023 | | $ | 514,395 | | $ | 538,000 | | $ | 1,052,395 |
Measurement
per share amounts)
The key inputs into the Monte Carlo simulation model formuladerivative scope exception provided by ASC 815.
Number of Warrants | Weighted-Average Exercise Price | |||||||||||||
Outstanding at April 30, 2023 | 483,649 | $ | 1.31 | |||||||||||
Granted | 28,864,100 | 9.56 | ||||||||||||
Expired | — | — | ||||||||||||
Exercised | (160,149) | $ | 0.01 | |||||||||||
Converted in connection with the reverse recapitalization | (390,100) | $ | 1.71 | |||||||||||
Outstanding as of January 7, 2024 | 28,797,500 | $ | 9.58 | |||||||||||
| | | | |
| | Private |
| |
Input |
| Warrants |
| |
Common stock price | | $ | 10.40 | |
Exercise price | | $ | 11.50 | |
Risk-free rate of interest | |
| 3.560 | % |
Volatility | |
| 0.001 | % |
Term | |
| 5.25 | |
Value of one warrant | | $ | 0.045 | |
Dividend yield | |
| 0.000 | % |
each reporting period. During the three monthsthirty-six weeks ended March 31, 2023,January 7, 2024, the Public Warrants detached fromchange in the Units and are separately tradable (NYSE: BYN.WS). As such, thefair value was as follows:
Warrant liabilities as of April 30, 2023 | $ | 1,925 | |||
Change in fair value | 409 | ||||
Warrant liabilities as of July 23, 2023 | $ | 2,334 | |||
Granted to Granite Creek | 1,015 | ||||
Reclassification of liability-classified warrants | 1,834 | ||||
Issuance of contingently issuable shares | (173) | ||||
Change in fair value | (1,759) | ||||
Warrant liabilities as of October 15, 2023 | $ | 3,251 | |||
Exercised | (2,202) | ||||
Reclassification of liability-classified warrants | (940) | ||||
Issuance of public and private warrants | 29,824 | ||||
Change in fair value | (17,606) | ||||
Warrant liabilities as of January 7, 2024 | $ | 12,327 |
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The key inputs into the Monte Carlo simulation model formula were as follows at January 24, 2022:
| | | | | | | |
| | January 24, 2022 |
| ||||
| | Public | | Private |
| ||
Input |
| Warrants |
| Warrants |
| ||
Common stock price |
| $ | 9.69 | | $ | 9.69 | |
Exercise price |
| $ | 11.50 | | $ | 11.50 | |
Risk-free rate of interest |
|
| 1.61 | % | | 1.61 | % |
Volatility | | | 10.85 | % | | 10.86 | % |
Term |
| | 6.00 | | | 6.00 | |
Value of one warrant |
| $ | 0.62 |
| $ | 0.62 | |
Dividend yield |
|
| 0.00 | % | | 0.00 | % |
NOTE 10 — INCOME TAX
The Company utilized the discrete method for estimating its interim income tax provision. During the three months ended March 31, 2023, the Company recorded an income tax provision of $562,596. Our effective tax rate was 29.90% for the three months ended March 31, 2023. The effective tax rate differs from the Federal statutory tax rate of 21% for the three months ended March 31, 2023, due to changesa separate line item in the fair valueunaudited condensed consolidated statements of warrant liabilities and valuation allowance onoperations. Upon surrender of these liability-classified warrants, the deferred tax assets.
The Company has evaluated the positive and negative evidence bearing upon its abilityholder is entitled to realize its deferred tax assets, which primarily consist of capitalized startup costs. The Company considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies, and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. As such, the Company recorded a full valuation allowance against net deferred tax assets as of March 31, 2023.
NOTE 11 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events to determine if events or transactions occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements which have not been previously adjusted or disclosed within the financial statements, other than the below.
At a reconvened special meeting of stockholders held on April 21, 2023 (the “Special Meeting”), the Company’s stockholders approved, and the Company subsequently adopted, (x) an amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment) which provided that (i) the Company shall have the option to extend the period by which it must complete an initial Business Combination by eight months, from April 24, 2023 to December 24, 2023 (the “Extension Option”) and (ii) that each of the holders of shares of the Company’s Class B common stock shall have the right at any time to convert any and all of their shares of the Company’s Class B common stock to shares of the Company’s Class A common stock on a one-for-one basis prior to the closing of an initial Business Combination, at the election of such holder and (y) an amendment to the Investment Management Trust Agreement (the “Trust Amendment”), which provided that the Company shall have the right to extend the period by which it must complete an initial Business Combination by eight months, from April 24, 2023 to December 24, 2023, without having to make any payment to the trust account established in connection with the Company’s initial public offering. Additionally, in connection with the Special Meeting, the Company and the Sponsor entered into certain non-redemption agreements with certain unaffiliated third parties, pursuant to which the Sponsor agreed to transfer an aggregate of 1,018,750 shares of Class B common stock to such third parties immediately following consummation of an initial Business Combination if such third parties continued to hold certain amountspurchase one share of Class A common stock throughCommon Stock at $11.50 per share. The outstanding liability-classified warrants expire on the five-year anniversary of the closing of the Special MeetingReverse Recapitalization.
Twelve Weeks Ended | Thirty-Six Weeks Ended | ||||||||||||||||||||||
January 7, 2024 | January 1, 2023 | January 7, 2024 | January 1, 2023 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) | 12,248 | (392) | 1,919 | 1,253 | |||||||||||||||||||
Cumulative unpaid dividends on Series I redeemable convertible preferred stock | (350) | — | (878) | — | |||||||||||||||||||
Change in redemption amount of redeemable convertible preferred stock | — | — | (1,423) | — | |||||||||||||||||||
Net income (loss) attributable to common stockholders | 11,898 | (392) | (382) | 1,253 | |||||||||||||||||||
Earnings allocated to participating securities | (6,419) | — | — | — | |||||||||||||||||||
Net income (loss) available to common stockholders, basic | 5,479 | (392) | (382) | 1,253 | |||||||||||||||||||
Earnings allocated to participating securities | 6,419 | — | — | — | |||||||||||||||||||
Impact of assumed conversions | 361 | — | — | 33 | |||||||||||||||||||
Net income (loss) available to common stockholders, diluted | 12,259 | (392) | (382) | 1,286 | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares outstanding, basic | 15,784,141 | 11,408,369 | 13,324,330 | 11,404,578 | |||||||||||||||||||
Dilutive awards outstanding | 21,276,865 | — | — | 20,288,299 | |||||||||||||||||||
Weighted average common shares outstanding, diluted | 37,061,006 | 11,408,369 | 13,324,330 | 31,692,877 | |||||||||||||||||||
Earnings (loss) per share: | |||||||||||||||||||||||
Basic | $ | 0.35 | $ | (0.03) | $ | (0.03) | $ | 0.11 | |||||||||||||||
Diluted | $ | 0.33 | (0.03) | (0.03) | $ | 0.04 |
In connectionno potential common shares excluded from the computation of diluted earnings per share for the twelve and thirty-six ended January 7, 2024.
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The Charter Amendment and the Trust Amendment received the requisite votes at the Special Meeting and were subsequently adopted by the Company. On April 21, 2023, the Company filed the Charter Amendment with the Secretary of State for the State of Delaware. On April 21, 2023, the Company exercised the Extension Option, extending the time allotted to complete an initial Business Combination by eight months, from April 24, 2023 to December 24, 2023.
On April 21, 2023, pursuant to the terms of the Charter Amendment, the Sponsor converted 2,000,000 shares of Class B common stock held by it on a one-for-one basis into shares of Class A common stock with immediate effect. Following such conversion and taking into account the redemptions described above, there are 5,998,687 shares of Class A common stock issued and outstanding and 5,245,000 shares of Class B common stock issued and outstanding as of the date hereof.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References
Special You should review the “Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933Statements” and Section 21E of 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“Risk Factors” sections in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysisfiling for a discussion of Financial Condition and Results of Operations” regarding the completion of the Initial Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. 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, including that the conditions of the Initial Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipatedthe results described in or implied by the forward-looking statements pleasecontained in the following discussion and analysis.
Overview
We are a blank check company incorporated as a Delaware corporation on March 10, 2021,vaccine requirements for team members, guests or both. Exclusions and formed for the purposequarantines of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganizationPinMembers or similar business combinationgroups thereof disrupted an individual location’s operations and often came with onelittle or more businesses (“Initial Business Combination”). We intendno notice to effectuate our Initial Business Combination using cash from the proceeds of the Initial Public Offeringlocal management. During fiscal 2022, fiscal 2023 and the salefirst thirty-six weeks of fiscal 2024, along with COVID-19, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation of wages and other cost of goods sold. These events also impacted the Private Placement Warrants,availability of PinMembers needed to staff our locations and caused additional disruptions in our product supply chain. The market for qualified talent is competitive and we must provide increasingly attractive wages, benefits, and workplace conditions to retain qualified PinMembers, particularly with respect to managerial positions where the proceedspool of the sale of our sharesqualified candidates can be small. Increases in connection with our Initial Business Combination (pursuant to forward purchase agreements or backstop agreements we may enter into or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing or other sources.
As indicated in the accompanying financial statements, at March 31, 2023 we had $1,903,164 in cashwage and working capital of $516,438. Further, we expect to continue to incur significantbenefits costs, in the pursuit of our Initial Business Combination. We cannot assure our stockholders that our plans to complete an Initial Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from March 10, 2021 (inception) through March 31, 2023, were organizational activities and those related to our intent to effectuate an Initial Business Combination. We do not expect to generate any operating revenues until after completion of our Initial Business Combination. We will generate non-operating income in the form of interest income on the cash and cash equivalents held in the Trust Account. No material adverse change has occurred since the date of our audited financial statements. We expect to continue to incur expensesincluding as a result of beingincreases in minimum wages, including sub minimum wages applicable to tipped positions, and other governmental regulations affecting labor costs, have significantly increased our labor costs and operating expenses and have made it more difficult to fully staff our restaurants.
Fiscal Year Ended | ||||||||||||||||||||
(dollar amounts in millions) | April 30, 2023 | April 24, 2022 | April 25, 2021 | |||||||||||||||||
Total Locations | 13 | 13 | 13 | |||||||||||||||||
AUV | 8.6 | 5.9 | 1.9 |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Store labor and benefits | $ | 10,831 | $ | 9,511 | 13.9 | % | ||||||||||||||
As a percentage of total revenue | 33.7 | % | 33.8 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Store labor and benefits | $ | 29,465 | $ | 27,577 | 6.8 | % | ||||||||||||||
As a percentage of total revenue | 35.7 | % | 35.8 | % |
Twelve Weeks Ended | |||||||||||
January 7, 2024 | January 1, 2023 | ||||||||||
Same Store Sales Growth | 6.9 | % | 38.2 | % | |||||||
Store Base | 13 | 13 |
Thirty-Six Weeks Ended | |||||||||||
January 7, 2024 | January 1, 2023 | ||||||||||
Same Store Sales Growth | 4.1 | % | 42.5 | % | |||||||
Store Base | 13 | 13 |
21
For the three months ended March 31, 2023, we had net income of $1,319,136, which consisted of $378,230 in expenses, a $452,520 loss on the change inasset group exceeds the fair value of warrant liabilities, a $15,864 unrealized loss on short -term investments heldthe asset group. See Note 2, Significant Accounting Policies, to our audited consolidated financial statements included included in the trust accountregistration statement on Form S-4/A filed on November 28, 2023.
For the three months ended March 31, 2022, we had net incomedeferred financing costs, mainly debt origination and commitment fees.
fair value of our outstanding warrant liabilities and Oaktree Tranche 2 Loan written option are recognized in the unaudited condensed consolidated statements of operations. Decreases or increases on the liability are based on changes to our fair market valuation.
Twelve Weeks Ended | Dollar Change | Percentage Change | ||||||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | ||||||||||||||||||||||||
Food and beverage revenues | $ | 24,854 | $ | 21,759 | $ | 3,095 | 14.2 | % | ||||||||||||||||||
Recreation revenues | 7,308 | 6,419 | 889 | 13.8 | % | |||||||||||||||||||||
Total revenue | 32,162 | 28,178 | 3,984 | 14.1 | % | |||||||||||||||||||||
Cost of food and beverage | 5,017 | 4,475 | 542 | 12.1 | % | |||||||||||||||||||||
Store labor and benefits | 10,831 | 9,511 | 1,320 | 13.9 | % | |||||||||||||||||||||
Store occupancy costs, excluding depreciation | 4,947 | 4,305 | 642 | 14.9 | % | |||||||||||||||||||||
Other store operating expenses, excluding depreciation | 5,140 | 4,456 | 684 | 15.4 | % | |||||||||||||||||||||
General and administrative expenses | 5,274 | 2,529 | 2,745 | 108.5 | % | |||||||||||||||||||||
Depreciation expense | 2,076 | 1,860 | 216 | 11.6 | % | |||||||||||||||||||||
Pre-opening expenses | 1,934 | 1,156 | 778 | 67.3 | % | |||||||||||||||||||||
Operating loss | (3,057) | (114) | (2,943) | 2581.6 | % | |||||||||||||||||||||
Interest expense | (2,485) | (278) | (2,207) | 793.9 | % | |||||||||||||||||||||
Gain on change in fair value of warrant liabilities and other | 17,790 | — | 17,790 | NM | ||||||||||||||||||||||
Gain (loss) on debt extinguishment | — | — | — | NM | ||||||||||||||||||||||
Income (loss) before income taxes | 12,248 | (392) | 12,640 | (3224.5) | % | |||||||||||||||||||||
Income tax expense | — | — | — | NM | ||||||||||||||||||||||
Net income (loss) | $ | 12,248 | $ | (392) | $ | 12,640 | (3224.5) | % | ||||||||||||||||||
NM data not meaningful |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Cost of food and beverage | $ | 5,017 | $ | 4,475 | 12.1 | % | ||||||||||||||
As a percentage of total revenue | 15.6 | % | 15.9 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Store labor and benefits | $ | 10,831 | $ | 9,511 | 13.9 | % | ||||||||||||||
As a percentage of total revenue | 33.7 | % | 33.8 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Store occupancy costs, excluding depreciation | $ | 4,947 | $ | 4,305 | 14.9 | % | ||||||||||||||
As a percentage of total revenue | 15.4 | % | 15.3 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Other store operating expenses, excluding depreciation | $ | 5,140 | $ | 4,456 | 15.4 | % | ||||||||||||||
As a percentage of total revenue | 16.0 | % | 15.8 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
General and administrative expenses | $ | 5,274 | $ | 2,529 | 108.5 | % | ||||||||||||||
As a percentage of total revenue | 16.4 | % | 9.0 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Depreciation expense | $ | 2,076 | $ | 1,860 | 11.6 | % | ||||||||||||||
As a percentage of total revenue | 6.5 | % | 6.6 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Pre-opening expenses | $ | 1,934 | $ | 1,156 | 67.3 | % | ||||||||||||||
As a percentage of total revenue | 6.0 | % | 4.1 | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Total interest expense | $ | (2,485) | $ | (278) | 794 | % | ||||||||||||||
As a percentage of total revenue | 7.7 | % | 1.0 | % |
As and Note 5).
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Gain on change in fair value of warrant liabilities and other | $ | 17,790 | $ | — | NM | |||||||||||||||
As a percentage of total revenue | 55.3 | % | 0.0 | % | ||||||||||||||||
NM data not meaningful |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Income (loss) before income taxes | $ | 12,248 | $ | (392) | (3224.5) | % |
Twelve Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Net income (loss) | $ | 12,248 | $ | (392) | (3224.5) | % |
Thirty-Six Weeks Ended | Dollar Change | Percentage Change | ||||||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | ||||||||||||||||||||||||
Food and beverage revenues | $ | 64,806 | $ | 61,157 | $ | 3,649 | 6.0 | % | ||||||||||||||||||
Recreation revenues | 17,720 | 15,946 | 1,774 | 11.1 | % | |||||||||||||||||||||
Total revenue | 82,526 | 77,103 | 5,423 | 7.0 | % | |||||||||||||||||||||
Cost of food and beverage | 13,732 | 13,102 | 630 | 4.8 | % | |||||||||||||||||||||
Store labor and benefits | 29,465 | 27,577 | 1,888 | 6.8 | % | |||||||||||||||||||||
Store occupancy costs, excluding depreciation | 10,537 | 12,551 | (2,014) | (16.0) | % | |||||||||||||||||||||
Other store operating expenses, excluding depreciation | 14,696 | 12,634 | 2,062 | 16.3 | % | |||||||||||||||||||||
General and administrative expenses | 12,576 | 9,840 | 2,736 | 27.8 | % | |||||||||||||||||||||
Depreciation expense | 5,417 | 5,574 | (157) | (2.8) | % | |||||||||||||||||||||
Pre-opening expenses | 7,238 | 2,141 | 5,097 | 238.1 | % | |||||||||||||||||||||
Operating loss | (11,135) | (6,316) | (4,819) | 76.3 | % | |||||||||||||||||||||
Interest expense | (6,086) | (735) | (5,351) | 728.0 | % | |||||||||||||||||||||
Gain on change in fair value of warrant liabilities and other | 19,140 | — | 19,140 | NM | ||||||||||||||||||||||
Gain (loss) on debt extinguishment | — | 8,448 | (8,448) | (100.0) | % | |||||||||||||||||||||
Income (loss) before income taxes | 1,919 | 1,397 | 522 | 37.4 | % | |||||||||||||||||||||
Income tax expense | — | 144 | (144) | (100.0) | % | |||||||||||||||||||||
Net income (loss) | $ | 1,919 | $ | 1,253 | 666 | 53.2 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Cost of food and beverage | $ | 13,732 | $ | 13,102 | 4.8 | % | ||||||||||||||
As a percentage of total revenue | 16.6 | % | 17.0 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Store labor and benefits | $ | 29,465 | $ | 27,577 | 6.8 | % | ||||||||||||||
As a percentage of total revenue | 35.7 | % | 35.8 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Store occupancy costs, excluding depreciation | $ | 10,537 | $ | 12,551 | (16.0) | % | ||||||||||||||
As a percentage of total revenue | 12.8 | % | 16.3 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Other store operating expenses, excluding depreciation | $ | 14,696 | $ | 12,634 | 16.3 | % | ||||||||||||||
As a percentage of total revenue | 17.8 | % | 16.4 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
General and administrative expenses | $ | 12,576 | $ | 9,840 | 27.8 | % | ||||||||||||||
As a percentage of total revenue | 15.2 | % | 12.8 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Depreciation expense | $ | 5,417 | $ | 5,574 | (2.8) | % | ||||||||||||||
As a percentage of total revenue | 6.6 | % | 7.2 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Pre-opening expenses | $ | 7,238 | $ | 2,141 | 238.1 | % | ||||||||||||||
As a percentage of total revenue | 8.8 | % | 2.8 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Total interest expense | $ | (6,086) | $ | (735) | 728.0 | % | ||||||||||||||
As a percentage of total revenue | (7.4) | % | (1.0) | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Gain on change in fair value of warrant liabilities and other | $ | 19,140 | $ | — | NM | |||||||||||||||
As a percentage of total revenue | 23.2 | % | — | |||||||||||||||||
NM data not meaningful |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Gain (loss) on debt extinguishment | $ | — | $ | 8,448 | (100.0) | % | ||||||||||||||
As a percentage of total revenue | — | 11.0 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Income (loss) before income taxes | $ | 1,919 | $ | 1,397 | 37.4 | % |
Thirty-Six Weeks Ended | ||||||||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | Percentage Change | |||||||||||||||||
Net (loss)/income | $ | 1,919 | $ | 1,253 | 53.2 | % |
On January 24, 2022, we consummatedprimary liquidity and capital requirements have been for new location development, initiatives to improve the customer experience in our Initial Public Offering of 24,150,000 Units, including the issuance of 3,150,000 Unitslocations, working capital and general corporate needs. We have not required significant working capital because landlords have provided substantial tenant improvement allowances for construction, customers generally pay using cash or credit and debit cards and, as a result, our operations do not generate significant receivables. We have benefited from tenant improvement allowances. Additionally, our operations do not require significant inventories due, in part, to our use of numerous fresh ingredients, and we are able to sell most of our inventory items before payment is due to the underwriters’ exercisesupplier of their over-allotment option in full. Each Unit sold consistedsuch items.
FollowingPublic Warrants and Private Warrants is $11.50 per share, which exceeds the Initialclosing price of the Pinstripes Class A Common Stock on February 15, 2024, which was $3.02 per share, and we believe that, for so long as the Public Offering,Warrants and Private Warrants are “out of the fullmoney,” the holders thereof are not likely to exercise the Public Warrants or the Private Warrants. Any cash proceeds associated with the exercise of the over-allotment option,Public Warrants and the salePrivate Warrants are dependent on our stock price. Accordingly, we have not included the net proceeds from any exercise of the Public Warrants or Private Placement Warrants in our assessment of our liquidity and our ability to fund operations on a totalprospective basis.
Thirty-Six Weeks Ended | ||||||||||||||
(dollar amounts in thousands) | January 7, 2024 | January 1, 2023 | ||||||||||||
Net cash provided by (used in) operating activities | $ | (15,818) | $ | 1,688 | ||||||||||
Net cash (used in) investing activities | (14,771) | (1,842) | ||||||||||||
Net cash provided by (used in) financing activities | 61,790 | (1,213) | ||||||||||||
Net change in cash and cash equivalents | $ | 31,201 | $ | (1,367) |
As of March 31, 2023, we had treasury securities heldtwo new store locations in the Trust Account of $251,139,962 (including approximately $2,717,515 of interest income and $15,864 of unrealized loss on U.S. Treasury Bills with a maturity of 185 days or lessthirty-six weeks ended January 7, 2024 as compared to the thirty-six weeks ended January 1, 2023.
We intend to use substantially all of the funds held$(1.8) million in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable thereon and excluding deferred underwriting commissions) to complete our Initial Business Combination. We may withdraw interest to pay taxes, and we expect the only taxes payable by us out of the funds in the Trust Account will be related to income and franchise taxes, which we expect the interest earned on the amount in the Trust Account will be sufficient to pay. To the extent that shares of our common 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 March 31,thirty-six weeks ended January 1, 2023 we had available to us $1,903,164 of cash held outside the Trust Account. We intend to use these funds 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, structure and negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.
22
We do 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, other than any funds available from loans from our Sponsor, its affiliates or members of our management team. 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. In order to fund working capital deficiencies or finance transaction costs in connection with an intended Initial Business Combination, our Sponsor or an affiliatetwo locations that have opened to date in fiscal 2024.
Additionally, 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 completion of our Initial Business Combination, in which case we may issue additional securities or incur debttransaction costs paid in connection with such business combination. If we have not consummated our Initial Business Combination within the required time period becauseReverse Recapitalization, principal payments of long-term notes payable of $0.5 million and debt discount and issuances costs of of $27.5 million.
At a reconvened special meeting of stockholders held on April 21, 2023 (the “Special Meeting”), the Company’s stockholders approved, and the Company subsequently adopted, (x) an amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment) which provided that (i) the Company shall have the option to extend the period by which it must complete an initial Business Combination by eight months, from April 24, 2023 to December 24, 2023 (the “Extension Option”) and (ii) that each of the holders of shares of the Company’s Class B common stock shall have the right at any time to convert any and all of their shares of the Company’s Class B common stock to shares of the Company’s Class A common stock on a one-for-one basis prior to the closing of an initial Business Combination, at the election of such holder and (y) an amendment to the Investment Management Trust Agreement (the “Trust Amendment”), which provided that the Company shall have the right to extend the period by which it must complete an initial Business Combination by eight months, from April 24, 2023 to December 24, 2023, without having to make any payment to the trust account established in connection with the Company’s initial public offering. Additionally, in connection with the Special Meeting, the Company and the Sponsor entered into certain non-redemption agreements with certain unaffiliated third parties, pursuant to which the Sponsor agreed to transfer an aggregate of 1,018,750 shares of Class B common stock to such third parties immediately following consummation of an initial Business Combination if such third parties continued to hold certain amounts of Class A common stock through the closing of the Special Meeting and assuming the Charter Amendment and the Trust Amendment were adopted.
In connection with the stockholders’ vote at the Special Meeting, holders of 20,151,313 shares of Class A common stock exercised their right to redeem their shares for cash at an approximate price of $10.42 per share, which resulted in an aggregate payment to such redeeming holders of $210,031,815.49. As of April 30, 2023 (and inclusive of the payment referenced in the preceding sentence), the trust account balance was $41,877,015.
On April 21, 2023, pursuant to the terms of the Charter Amendment, the Sponsor converted 2,000,000 shares of Class B common stock held by it on a one-for-one basis into shares of Class A common stock with immediate effect. Following such conversion and taking into account the redemptions described above, there are 5,998,687 shares of Class A common stock issued and outstanding and 5,245,000 shares of Class B common stock issued and outstanding as of the date hereof. For more information on the Special Meeting, please refer to Item 1. Note 11 “Subsequent Events.”
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
23
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space, operational support and secretarial and administrative services. We became contractually obligated to pay these fees on January 19, 2022, and will continue to be contractually obligated to pay these fees monthly until the earlier of the completion of the Initial Business Combination and our liquidation. For the three months ended March 31, 2023, the Sponsor permanently waived its right to receive such fees from the Company. The Sponsor expects to continue to permanently waive its rights to receive such fees in future periods.
The underwriters are entitled to a deferred fee of $0.40 per Unit, or $9,660,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete an Initial Business Combination and certain other conditions are met.
Critical Accounting Policies and Estimates
Recent Accounting Standards
initial direct costs incurred and lease prepayment, less any tenant improvement allowance incentives received. Most of our leases include one or more options to renew, with terms that can extend from five to ten years. To determine the expected lease term, we excluded all options to renew as it is not reasonably certain we would exercise these options.
Management doesother financial instrument is outside the control of the Company. Otherwise, we account for the financial instrument as permanent equity.
24
not effective due to material weaknesses in internal control over financial reporting, as described below. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.
Changes Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in Internal Control overconditions or deterioration in the degree of compliance with policies and procedures.
DuringInformation” under “Commitments and Contingencies” of this Quarterly Report on Form 10-Q.
stockholder activism.
25
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from thosethe other information included in this report includeQuarterly Report, before making an investment decision. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances may have an adverse effect on our business, cash flows, financial condition and results of operations. You should also carefully consider the following risk factors in addition to the other information included in this Quarterly Report, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to them, or that they currently deem immaterial, which may also impair their respective businesses or financial condition.
The reduction indisplay and provision of nutritional information for our menu offerings, and new information or attitudes regarding diet and health or adverse opinions about the amount currently held in trusthealth effects of consuming our menu offerings, could affect consumer preferences and negatively impact our business, financial condition and results of operations.
accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations.
There are no assurances that the extension will enable us to complete an Initial Business Combination.
Even though we extended the time to complete a business combination by eight months from April 24, 2023 to December 24, 2023, pursuant to our amended and restated certificate of incorporation, as amended, and the trust agreement, as amended, we can still provide no assurances that an Initial Business Combination will be consummated prior to such date. Our ability to consummate an Initial Business Combinationamend the terms of the Public Warrants with the consent of at least 65% of the then-outstanding Public Warrants is dependent on a varietyunlimited, examples of factors, manysuch amendments could be amendments to, among other things, increase the exercise price of which are beyond our control. We expect to seek stockholder approval prior to consummating an Initial Business Combination, and we will be required to offer stockholders redemption rights again in connection with any stockholder vote to approve an Initial Business Combination. Even if an Initial Business Combination is approved by our stockholders, it is possible that redemptions will leave us with insufficientthe Public Warrants, convert the Public Warrants into cash to consummate an Initial Business Combination on commercially acceptable terms, or at all. Other than in connection with a redemption offerstock, shorten the exercise
a Public Warrant.
All recent unregisteredProceeds
reported in a Current Report on Form 8-K.
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
Incorporated by Reference | |||||||||||||||||||||||||||
| Exhibit | Filing Date | |||||||||||||||||||||||||
| 8-K | 3.2 | January 5, 2024 | ||||||||||||||||||||||||
| 8-K | 3.3 | January 5, 2024 | ||||||||||||||||||||||||
| 8-K | 4.2 | January 5, 2024 | ||||||||||||||||||||||||
| 8-K | 10.1 | January 5, 2024 | ||||||||||||||||||||||||
| 8-K | 10.2 | January 5, 2024 | ||||||||||||||||||||||||
| 8-K | January 5, 2024 | |||||||||||||||||||||||||
| 10.4 | January 5, 2024 | |||||||||||||||||||||||||
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| 8-K | 10.5 | January 5, 2024 | |||||||||||||||||||||||
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| 8-K | 10.9 | January 5, 2024 | |||||||||||||||||||||||
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| 8-K | 10.20 | January 5, 2024 |
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By: | /s/ Dale Schwartz | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Date: February 21, 2024 | By: | /s/ Anthony Querciagrossa | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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