The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Cautionary Note Regarding
Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in this
Annual Report on Form 10-K.
Our Business
We are a blank check company incorporated in Delaware on March 12, 2021 for the
purpose of effecting a Business Combination.
Our entire activity for the period from March 12, 2021 (inception) through
December 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 Over-allotment Units at a price of $10.00 per Unit, generating gross
proceeds to the Company of $7,000,000.
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.
As indicated in the accompanying financial statements, at December 31, 2022, we
had $248,035 in cash. 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 year ended December 31, 2022, we had a net loss of approximately
$145,576, which consisted of $1,738,986 in general and administrative expenses,
$200,051 in franchise tax expense, and $492,468 in income tax expense, offset by
a $2,285,929 gain on marketable securities (net), dividends and interest, held
in the Trust Account.
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For the period from March 12, 2021 (inception) through December 31, 2021, we had
a net loss of approximately $1,476,232, which consisted of $86,290 in formation
costs, $1,232,075 in general and administrative expenses, and $161,644 in
franchise tax expense, offset by a $3,777 gain on marketable securities (net),
dividends and interest, held in the Trust Account.
Liquidity and Capital Resources
As of December 31, 2022, we had cash of $248,035 outside of the Trust Account
and working capital deficit of $247,863. 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.
Given our working capital deficit, we may need to raise additional funds in
order to meet the expenditures required for operating our business. 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 still have insufficient funds available to operate our business prior to our
initial Business Combination. Moreover, we may need to obtain additional
financing either to complete our initial Business Combination or because we
become obligated to redeem a significant number of our Public Shares upon
consummation of our initial Business Combination or an extension vote, 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 year ended December 31, 2022, cash used in operating activities was
$1,430,335. Net loss of $145,576 was affected by $1,001,170 in changes in
operating assets and liabilities, offset by a $2,285,929 gain on marketable
securities (net), dividends and interest, held in the Trust Account.
As of December 31, 2022, we had $160,566,223 in marketable securities held in
the Trust Account. 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") Topic 205-40 "Presentation of Financial Statements - Going Concern". As
of December 31, 2022, we had $248,035 in our operating bank account, $247,863 of
working capital deficit, and $160,566,223 of Marketable securities 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 the date the Company is
required to liquidate, however, there is a risk that our liquidity may not be
sufficient, and the liquidity condition raises substantial doubt about the
Company's ability to continue as a going concern. The Sponsor intends, but is
not obligated to, provide us with Working Capital Loans to sustain operations in
the event of a liquidity deficiency.
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On or about March 7, 2023, we entered into multiple letters of intent with
target companies in the property services sector and intend to continue seeking
additional acquisition targets, as a result of which the date by which we must
complete a Business Combination was automatically extended to June 10, 2023 (21
months from the closing of the Initial Public Offering). If a Business
Combination is not consummated by this date and the Company's stockholders have
not amended the Certificate of Incorporation to further extend such Combination
Period, there will be a mandatory liquidation and subsequent dissolution of the
Company. While management expects to complete a Business Combination prior to
the date the Company is required to liquidate, the liquidity condition and 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 December 31, 2022 and 2021, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Contractual Obligations
As of December 31, 2022 and 2021, 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 12 months ended December 31, 2022 and period from March 12, 2021 (Inception)
through December 31, 2022, $180,000 and $60,000, respectively, were 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.
Risk and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic, the
ongoing war between Russia and Ukraine, inflation rates and the impacts of
associated monetary policy responses, including increased interest rates and the
resulting pressures on economic growth, and has concluded that while it is
reasonably possible that these factors 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 the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
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 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' deficit section of our balance sheet.
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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 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 has two classes of shares, which are referred to as Class A ordinary
shares and Class B ordinary shares (the "Founder Shares"). Income (losses) are
shared pro rata between the two classes of shares on the assumption that the
consummation of the Initial Business Combination is the most likely outcome.
Accretion associated with the redeemable shares of Class A ordinary shares is
excluded from net loss per share as the redemption value approximates fair
value.
Recent Accounting Pronouncements
In August 2020 the FASB issued a new standard (ASU 2020-06) to reduce the
complexity of accounting for convertible debt and other equity-linked
instruments. For certain convertible debt instruments with a cash conversion
feature, the changes are a trade-off between simplifications in the accounting
model (no separation of an "equity" component to impute a market interest rate,
and simpler analysis of embedded equity features) and a potentially adverse
impact to diluted EPS by requiring the use of the if-converted method. The new
standard will also impact other financial instruments commonly issued by both
public and private companies. For example, the separation model for beneficial
conversion features is eliminated, simplifying the analysis for issuers of
convertible debt and convertible preferred stock. Also, certain specific
requirements to achieve equity classification and/ or qualify for the derivative
scope exception for contracts indexed to an entity's own equity are removed,
enabling more freestanding instruments and embedded features to avoid
mark-to-market accounting. The new standard is effective for fiscal years
beginning after December 15, 2023 and interim periods within that year, and two
years later for other companies. Companies can early adopt the standard at the
start of a fiscal year beginning after December 15, 2020. The standard can
either be adopted on a modified retrospective or a full retrospective basis. The
Company is currently reviewing the newly issued standard and does not believe it
will materially impact the Company.
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