References in this Quarterly Report on Form 10-Q (the "Quarterly Report") to
"we," "us," "our" or the "Company" are to Banner Acquisition Corp., except where
the context requires otherwise. The following discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the condensed financial statements and the notes thereto
contained elsewhere in this Quarterly Report. Certain information contained in
the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are not historical facts, and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's final prospectus for its initial public offering (the "Initial Public
Offering") filed with the U.S. Securities and Exchange Commission (the "SEC").
The Company's securities filings can be accessed on the EDGAR section of the
SEC's website at www.sec.gov. Except as expressly required by applicable
securities law, the Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise.
Overview
We are a blank check company incorporated in Delaware on March 12, 2021 for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses that we have not yet identified (the "Business Combination").
Our entire activity through March 31, 2022 relates to our formation and Initial
Public Offering, described below, and since the closing of the Initial Public
Offering, the search for a prospective acquisition target for a Business
Combination. We have selected December 31 as our fiscal year end.
Our sponsor is Banner SPAC Sponsor, LLC, a Delaware limited liability company
(the "Sponsor"). The registration statement for the Initial Public Offering was
declared effective on September 7, 2021. In September 2021, we consummated its
Initial Public Offering of 15,700,000 units (the "Units"), including 700,000
Units that were issued pursuant to the underwriter's partial exercise of its
over-allotment option. Each Unit consists of one share of Class A common stock
of the Company, par value $0.0001 per share ("Class A Common Stock"), and
one-half of one redeemable warrant of the Company ("Public Warrant"), with each
whole Public Warrant entitling the holder thereof to purchase one share of Class
A Common Stock for $11.50 per share. The Units were sold at a price of $10.00
per Unit, generating gross proceeds to the Company of $157,000,000.
In connection with the Initial Public Offering, the underwriter was granted an
option to purchase up to an additional 2,250,000 Units to cover over-allotments,
if any. On September 22, 2021, the underwriter partially exercised its
over-allotment option and, on September 27, 2021, the underwriter purchased
700,000 Units (the "Over-allotment Units") at a price of $10.00 per Unit,
generating gross proceeds to the Company of $7,000,000.
18
Table of Contents
On September 10, 2021, simultaneously with the closing of the Initial Public
Offering and pursuant to the Private Placement Warrants Purchase Agreement,
dated September 7, 2021, between the Company and the Sponsor (the "Private
Warrant Purchase Agreement"), we completed the private sale (the "Private
Placement") of 8,000,000 warrants (the "Private Placement Warrants") at a
purchase price of $1.00 per Private Placement Warrant to the Sponsor, generating
gross proceeds of $8,000,000. On September 27, 2021, simultaneously with the
sale of the Over-allotment Units, we completed a private placement with the
Sponsor for an additional 210,000 warrants at a price of $1.00 per warrant (the
"Additional Private Placement Warrants"), generating gross proceeds to the
Company of $210,000. The total gross proceeds following the sale of the
Additional Private Placement Warrants is $8,210,000.
A total of $158,570,000, comprised of $153,860,000 of the net proceeds from the
Initial Public Offering (including the Over-allotment Units) and $4,710,000 of
the proceeds of the sale of the Private Placement Warrants (including the
Additional Private Placement Warrants) has been deposited in a U.S. based trust
account (the "Trust Account") maintained by American Stock Transfer & Trust
Company, LLC, acting as trustee.
Further, we expect to incur significant costs in the pursuit of our initial
Business Combination plans. We cannot assure you that we will identify any
suitable target candidates or, if identified, that we will be able to complete
the acquisition of such candidates on favorable terms or at all.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities and
those necessary to effectuate the Initial Public Offering. We will not generate
any operating revenues until after completion of our initial Business
Combination. We will generate non-operating revenue in the form of interest
income on cash and cash equivalents. There has been no significant change in our
financial or trading position and no material adverse change has occurred since
the date of our audited financial statements. We expect to incur increased
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as expenses as we conduct due
diligence on prospective Business Combination candidates.
For the three months ended March 31, 2022, we had a net loss of approximately
$497,832, which consisted of $462,908 in general and administrative expenses,
and $50,000 in franchise tax expense, offset by a $15,076 gain on marketable
securities held in the Trust Account.
Liquidity and Capital Resources
As of March 31, 2022 we had cash of $962,557 outside of the Trust Account, and
working capital of approximately $988,981. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, and structure,
negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial Business Combination, our Sponsor or an
affiliate of our Sponsor or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required. If we complete our initial
Business Combination, we would repay such loaned amounts. In the event that our
initial Business Combination does not close, we may use a portion of the working
capital held outside the Trust Account to repay such loaned amounts, but no
proceeds from our Trust Account would be used for such repayment. Up to
$1,500,000 of such loans may be convertible into warrants, at a price of $1.00
per warrant at the option of the lender. The warrants would be identical to the
Private Placement Warrants, including as to exercise price, exercisability and
exercise period. The terms of such loans by our Sponsor, officers and directors,
if any, have not been determined and no written agreements exist with respect to
such loans. We do not expect to seek loans from parties other than our Sponsor
or an affiliate of our Sponsor as we do not believe third parties will be
willing to loan such funds and provide a waiver against any and all rights to
seek access to funds in our Trust Account.
19
Table of Contents
We do not currently believe we will need to raise additional funds in order to
meet the expenditures required for operating our business. However, if our
estimate of the costs of identifying a target business, undertaking due
diligence and negotiating a Business Combination are more than we estimate, we
may have insufficient funds available to operate our business prior to our
initial Business Combination. Moreover, we may need to obtain additional
financing either to complete our initial Business Combination or because we
become obligated to redeem a significant number of our issued and outstanding
Class A Common Stock sold in the Initial Public Offering upon consummation of
our initial Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination. Subject
to compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our initial Business
Combination. If we are unable to complete our initial Business Combination
because we do not have sufficient funds available to us, we will be forced to
cease operations and liquidate the Trust Account. In addition, following our
initial Business Combination, if cash on hand is insufficient, we may need to
obtain additional financing in order to meet our obligations.
For the three months ended March 31, 2022, cash used in operating activities was
$426,817. Net loss of $497,832 was affected by $86,091 in changes in operating
assets and liabilities, offset by a $15,076 gain on marketable securities held
in the Trust Account.
As of March 31, 2022, we had cash held in Trust Account of $158,584,366. We
intend to use substantially all of the funds held in the Trust Account (less
taxes paid and deferred underwriting commissions) to complete our initial
Business Combination. To the extent that our capital stock or debt is used, in
whole or in part, as consideration to complete our initial Business Combination,
the remaining proceeds held in the Trust Account will be used as working capital
to finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategies.
Going Concern
On a routine basis, we assess going concern considerations in accordance with
Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") 205-40 "Presentation of Financial Statements - Going Concern". As of
March 31, 2022, we had $962,557 in our operating bank account, $988,981 of
working capital and $158,584,366 of cash held in the Trust Account, to be used
for a Business Combination or to repurchase or redeem our common stock in
connection therewith. We believe that we will have sufficient working capital
and borrowing capacity to meet our needs through the earlier of the consummation
of a Business Combination or one year from this filing, however, there is a risk
that our liquidity may not be sufficient. The Sponsor intends, but is not
obligated to, loan us funds to sustain operations in the event of a liquidity
deficiency.
We have until March 10, 2023 to consummate a Business Combination. If a Business
Combination is not consummated by this date and an extension is not requested by
the Sponsor there will be a mandatory liquidation and subsequent dissolution of
the Company. While management expects to complete a Business Combination prior
to March 10, 2023, this date for mandatory liquidation and subsequent
dissolution raises substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
As of March 31, 2022, we did not have any off-balance sheet arrangements.
Contractual Obligations
As of March 31, 2022, we did not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities. The Company
has agreed to reimburse the Sponsor or an affiliate thereof in an amount equal
to $15,000 per month for office space, utilities and secretarial and
administrative support. Upon completion of the initial Business Combination or
the Company's liquidation, the Company will cease paying these monthly fees. For
the three months ended March 31, 2022, $45,000 was paid for the administrative
support, and no amounts were accrued for.
The underwriters of the Initial Public Offering were entitled to underwriting
discounts and commissions of 5.5%, of which 2% (approximately $3,140,000) was
paid at the closing of the Initial Public Offering and 3.5% (approximately
$5,495,000) was deferred. The deferred underwriting discounts and commissions
will become payable to the underwriters upon the consummation of the initial
Business Combination and will be paid from the amounts held in the Trust
Account. The underwriters are not entitled to any interest accrued on the
deferred underwriting discounts and commissions.
20
Table of Contents
Critical Accounting Policies and Estimates
The preparation of unaudited financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and expenses during the
period reported. Actual results could materially differ from those estimates. We
have identified the following critical accounting estimates effecting our
financial statements:
Class A Common Stock Subject to Possible Redemption
We account for our Class A Common Stock subject to possible redemption in
accordance with the guidance in FASB ASC Topic 480. Class A Common Stock subject
to mandatory redemption are classified as a liability instrument and are
measured at fair value. Conditionally redeemable common stock (including common
stock that feature redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) are classified as temporary equity. At all other
times, common stock is classified as stockholders' equity. Our Class A Common
Stock feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, the
Class A Common Stock subject to possible redemption are presented as temporary
equity, outside of the stockholders' equity section of our balance sheet.
Net Loss per Share
The Company complies with accounting and disclosure requirements of ASC Topic
260, "Earnings Per Share." Net loss per share is computed by dividing net loss
by the weighted-average number of shares of common stock outstanding during the
periods.
The shares of the Company's Class B common stock, par value $0.0001 per share
("Class B Common Stock") will automatically convert into shares of Class A
Common Stock at the time of the Company's initial Business Combination on a
one-for-one basis, subject to adjustment.
The Company's statement of operations includes a presentation of loss per share
for shares of common stock subject to possible redemption in a manner similar to
the two-class method of loss per share.
Adjustment associated with the redeemable shares of Class A Common Stock is
excluded from loss per share as the redemption value approximates fair value.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
our financial statements.
© Edgar Online, source Glimpses