BENESSERE CAPITAL ACQUISITION CORP. References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the 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. When used in this Report, words such as
"anticipate," "believe," "estimate," "expect," "intend" and similar expressions,
as they relate to us or the Company's management, identify forward-looking
statements. Such forward-looking statements are based on the beliefs of
management, as well as assumptions made by, and information currently available
to, the Company's management. Actual results could differ materially from those
contemplated by the forward- looking statements as a result of certain factors
detailed in our filings with the
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company formed under the laws of the
eCombustible Business Combination
On
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The Business Combination Agreement provides for two mergers: (i) the merger of
Purchaser Merger Sub with and into Benessere, with Benessere continuing as the
surviving entity (the "Purchaser Merger"), and (ii) the merger of Company Merger
Sub with and into eCombustible, with eCombustible continuing as the surviving
entity (the "Company Merger", and together and collectively, with the Purchaser
Merger, the "Mergers"). As a result of the Mergers, Benessere and eCombustible
will become wholly-owned subsidiaries of
Subject to the terms and conditions set forth in the Business Combination
Agreement, at the effective time of the Mergers (the "Effective Time"), among
other things, the following will occur: (a) the holder of each issued and
outstanding Benessere unit shall be deemed to hold one (1) share of Benessere
common stock and three-fourths (3/4) of one (1) Benessere warrant, and all such
Benessere securities shall be converted as provided below; (b) each issued and
outstanding share of Benessere common stock will be converted automatically into
the right to receive one (1) share of
The aggregate merger consideration to be paid pursuant to the Business Combination Agreement to the eCombustible Securityholders as of the Effective Time will be an amount equal to$805,000,000 , subject to adjustments for eCombustible's closing debt, net of adjustments for working capital, net debt and transaction expenses (the "Merger Consideration"), plus the additional contingent right to receive the Earnout Shares (as defined below) after the Closing, as described below. The Merger Consideration to be paid to the eCombustible Securityholders will be paid solely by the delivery of new shares ofPubco common stock, with each valued at the price per share (the "Redemption Price") at which each share of Benessere common stock is redeemed or converted pursuant to the redemption by Benessere of its public stockholders in connection with Benessere's initial business combination, as required by Benessere's amended and restated certificate of incorporation and by-laws and Benessere's initial public offering prospectus (the "Redemption"). The Merger Consideration will be subject to a true-up adjustment procedure commencing within 90 days after the Closing.
The Merger Consideration will be allocated among the eCombustible Securityholders pro rata based on the number of combustible Units owned by each such holder; provided, however, that the Merger Consideration otherwise payable to the eCombustible Securityholders is subject to purchase price adjustments and also to reduction for indemnification obligations.
In addition to the Merger Consideration set forth above, the eCombustible
Securityholders will also have a contingent right to receive up to an additional
59,000,000 shares of
• if the dollar volume-weighted average price ("VWAP") of Pubco's common
stock equals or exceeds $12.50 per share for any 20 out of any 30
consecutive trading days, Pubco shall issue to the eCombustible
Securityholders Holders an aggregate of 29,500,000 Earnout Shares; and
• if the VWAP of Pubco's common stock equals or exceeds $15.00 per share
for any 20 out of any 30 consecutive trading days, the Pubco shall
issue to the eCombustible Securityholders an aggregate of an
additional 29,500,000 Earnout Shares.
If there is a determination that the eCombustible Securityholders are entitled
to receive Earnout Shares pursuant to the Business Combination Agreement, such
Earnout Shares will be allocated pro rata among the eCombustible
Securityholders. The number of shares of
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Ancillary Agreements
Simultaneously with the execution of the Business Combination Agreement, certain members of eCombustible entered into voting agreements with Benessere and eCombustible (the "Voting Agreement"). Under the Voting Agreement, such Company Unitholders of eCombustible agreed to vote all of their eCombustible Units in favor of the Business Combination Agreement and related transactions. These eCombustible members also agreed to take certain other actions in support of the Business Combination Agreement and related transactions, including cooperation with respect to the Pubco Registration Statement, and to refrain from taking such actions that would adversely impede the ability of the parties to perform the Business Combination Agreement.
The Voting Agreement also prevents transfers, except for certain permitted transfers, of the eCombustible Units held by the eCombustible member party thereto between the date of the Voting Agreement and the date of the Closing or earlier termination of the Mergers.
Simultaneously with the execution of the Business Combination Agreement, Benessere,Pubco , eCombustible and the sponsor, entered into a Sponsor Support Agreement (the "Sponsor Support Agreement") pursuant to which the sponsor agreed to support the Mergers and to vote all of its shares of Class A common stock (and all other Benessere securities owned by the Sponsor, including founder shares consisting of Class B common stock, private rights and private warrants) in favor of the Business Combination Agreement and related transactions. The sponsor also agreed to take certain other actions in support of the Business Combination Agreement and related transactions and to refrain from taking such actions that would adversely impede the ability of the parties to perform the Business Combination Agreement. The Sponsor Support Agreement also prevents transfers, except for certain permitted transfers, between the date of the Sponsor Support Agreement and the date of the Closing or earlier termination of the Mergers. The sponsor also agreed to a lock-up provision whereby, subject to limited specified exceptions, the sponsor will not for six months from the Closing (or, if earlier, (i) the date on which the closing sale price of a share ofPubco common stock equals or exceeds$12.00 per share for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing or (ii) the date post-Closing on whichPubco consummates a liquidation, merger, capital stock exchange, reorganization or other similar transaction with an unaffiliated third party resulting in all ofPubco's stockholders having the right to exchange their equity holdings inPubco for cash, securities or other property) engage in any direct or indirect transfer or disposition ofPubco securities or Benessere securities or publicly disclose the intention to do so. Prior to the Closing, certain persons and entities who will be affiliates ofPubco upon the Closing and certain other stockholders ofPubco are expected to enter into a Registration Rights Agreement and a Lock-Up Agreement. Pursuant to the terms of such agreements,Pubco will be obligated to file a registration statement to register the resale of certain securities held by such holders, subject to certain requirements and customary conditions. In addition, Significant Company Holders will be required to enter into a Lock-Up Agreement as a condition to the Closing, providing that the securities ofPubco held by such holders will be locked-up for a period of time following the Closing.
Qualified Summary
The sections above describing the Business Combination Agreement, the Voting Agreement, the Sponsor Support Agreement do not purport, and are not intended, to describe all of the terms and conditions thereof. The foregoing summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, the Voting Agreement and the Sponsor Support Agreement, copies of each of which are attached hereto as Exhibits 2.1, 10.9 and 10.10, respectively.
For more information relating to the eCombustible Business Combination and the agreements described above, please see the Form 8-K filed by the Company onNovember 30, 2021 and the Registration Statement on Form S-4, filed with theSEC byPubco onFebruary 11, 2022 , as amended onApril 22, 2022 and onMay 16, 2022 , and as may be further amended from time to time;.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
Recent Developments
Extensions and Extension Notes
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OnJuly 7, 2022 , the Company held a stockholder meeting (the "July Extension Meeting") to extend the date by which the Company has to consummate a business combination fromJuly 7, 2022 toJanuary 7, 2023 . As part of the meeting, stockholders redeemed 3,408,684 shares of the Company's Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company's trust account. As a result, approximately$35,279,879 (approximately$10.35 per share) was removed from the Company's trust account to pay such holders. As part of the extension meeting to extend the liquidation date toJanuary 7, 2023 , onJuly 15, 2022 , the Sponsor agreed to loan to the Company an aggregate of up to$1,032,949 to deposit into the Company's trust account for each Public Share that was not redeemed (the "July Extension Note"). The July Extension Note is non-interest bearing and repayable on the earlier of the consummation of the Company's business combination or the Company's liquidation.
Regulatory Matters
As previously disclosed in the Company's Preliminary Proxy Statement on Schedule
14A filed on
Business Combination Agreement Amendment
OnJune 5, 2022 , Benessere,BCAC Holdings , eCombustible and the other parties to the Business Combination Agreement entered into the First Amendment to Agreement and Plan of Merger (the " Amendment "). The Amendment amends the Business Combination Agreement to, among other things, provide that the number of shares of BCAC Holdings Class A common stock to be issued to the equityholders of eCombustible as Merger Consideration (as such term is defined in the Businesss Combination Agreement) will be based on a per share price of$10.00 rather the price at which Benessere redeems it public stockholders upon the Redemption (as such term is defined in the Businesss Combination Agreement). The Amendment also adds a minimum cash closing condition requiring that, upon the closing of the transactions contemplated by the Business Combination Agreement (the " Closing "), Benessere shall have cash and cash equivalents, including funds remaining in its trust account (after giving effect to the completion and payment of the Redemption) and the proceeds of any PIPE investment, or any other alternative financing arrangement mutual agreed upon by the parties, after giving effect to the payment of unpaid expenses and liabilities, at least equal toTwenty-Five Million U.S. Dollars ($25,000,000 ). Further, the Amendment extends the date by which the closing of the transactions contemplated by the Business Combination Agreement must occur, fromMay 23, 2022 toOctober 7, 2022 (the " Outside Date "). If the Closing has not occurred on or prior to the Outside Date, the Business Combination Agreement may be terminated by written notice by either Benessere or eCombustible.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception throughJune 30, 2022 were organizational activities and those necessary to prepare for the initial public offering, described below and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities held after the initial public offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. F-23
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For the three months ended
For the three months ended
For the six months ended
For the six months ended
Liquidity, Capital Resources and Going Concern
Until the consummation of the initial public offering, our only source of liquidity was an initial purchase of Class B common stock by the Sponsor and loans from our Sponsor.
On
On
Following the initial public offering, the partial exercise of the
over-allotment option, and the sale of the private placement units, a total of
For the six months ended
As of
On
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In order to fund working capital deficiencies or finance transaction costs in
connection with a 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 a business combination, we may
repay such loaned amounts out of the proceeds of the trust account released to
us. In the event that a 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
On
On
On
The proceeds of the Extension Notes, along with the other funds in the trust account will be distributed either to: (i) all of the holders of Public Shares upon our liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of our initial Business Combination.
The Extension Notes bear no interest and are repayable in full upon the earlier of (a) the date of the consummation of our initial Business Combination, or (b) the date of our liquidation. The issuance of the Extension Notes was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
On
Other than as described above, the terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Additionally, we have the ability to draw on the Working Capital Loan (as defined below) from our sponsor. 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.
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 on a non-interest bring basis 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 units, at a price of$10.00 per unit at the option of the lender, upon consummation of our initial business combination. The units would be identical to the placement units. Other than as described above, the terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Additionally, we have the ability to draw on the Working Capital Loan from our sponsor. 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. The company has incurred and expects to incur significant costs in pursuit of its acquisition plans. We may need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses larger than we could acquire with the net proceeds of the IPO and the sale of the placement units, and may as a result be required to seek additional financing to complete such proposed initial 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. While the company intends to complete the proposed Business Combination beforeJuly 7, 2023 there are no assurances that this will happen. The date for mandatory liquidation and subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern.
Related Party Transactions
The Sponsor advanced the Company an aggregate of$108,200 to cover expenses related to the IPO. The advances were non-interest bearing and due on demand. The outstanding balance under the Promissory Note of$108,200 was fully repaid onJanuary 11, 2021 . F-25
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On
Until the earlier of the Company's consummation of a Business Combination and
its liquidation, we pay
Our sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
In addition, in order to 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
In January and July, 2022, we issued the Extension Notes, described below in Related Party Loans.
Upon the IPO, our sponsor purchased an aggregate of 360,000 placement units at a
price of
Our initial stockholders have agreed to waive their redemption rights with
respect to their founder shares and placement shares (i) in connection with the
consummation of a business combination, (ii) in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify
the substance or timing of our obligation to allow redemption in connection with
our initial business combination or certain amendments to our charter prior
thereto or to redeem 100% of our public shares if we do not complete our initial
business combination by
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Pursuant to a registration rights agreement entered into on
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as ofJune 30, 2022 .
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 our
Sponsor, and since
The underwriters are entitled to a deferred fee of
Related Party Loans
Working Capital Loan
On
Extension Notes
On
On
The proceeds of the Extension Notes, along with the other funds in the trust account will be distributed either to: (i) all of the holders of Public Shares upon our liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of our initial Business Combination.
The Extension Notes bear no interest and are repayable in full upon the earlier of (a) the date of the consummation of our initial Business Combination, or (b) the date of our liquidation.
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Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in
Net loss per common share
We apply the two-class method in calculating earnings per share. Common stock subject to possible redemption which is not currently redeemable and is not redeemable at fair value, has been excluded from the calculation of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.
Recent Accounting Standards
InAugust 2020 , the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current 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 afterDecember 15, 2023 , including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
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Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. In accordance with ASC 825-10 "Financial Instruments", offering costs attributable to the issuance of the derivative warrant liabilities have been allocated based on their relative fair value of total proceeds and are recognized in the statement of operations as incurred. We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of warrants were estimated using a Modified Monte Carlo Simulation.
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable stock (including stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, stock is classified as stockholders' equity. Our shares of 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, our Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders' equity section of our condensed interim balance sheets.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19
pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the
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