F-1: Above Food Ingredients Files for Resale of Common Shares and Warrants After Business Combination

Above Food Ingredients Inc. files an F-1 registration statement for the resale of up to 20,622,598 common shares and 350,000 common shares issuable upon exercise of warrants by selling securityholders following its recent business combination with Bite Acquisition Corp.

Summary

• Above Food Ingredients Inc. has filed a registration statement for the resale of its common shares and warrants by selling securityholders.
• The filing follows the company's recent business combination with Bite Acquisition Corp.
• The registration covers up to 20,622,598 common shares, including shares previously issued in private placements and as incentive shares.
• It also includes 350,000 common shares issuable upon the exercise of warrants.
• Selling securityholders may sell their shares publicly or privately at prevailing market or negotiated prices.
• Above Food will not receive any proceeds from the sale of these securities, except upon the exercise of the warrants.
• The exercise of warrants depends on the trading price of the common shares exceeding the exercise price of $11.50.
• The last reported sales price for the Common Shares on Nasdaq on July 9, 2024 was $2.33 per share.
• The total resale shares represent approximately 71% of the company's current total outstanding Common Shares.
• Approximately ninety (90%) percent of those Common Shares are subject to transfer restrictions set forth in the Plan of Arrangement, and the Company Warrants are subject to the Stock Escrow Agreement that expire on December 28, 2024 for non-affiliates and June 28, 2025 for affiliates of the Company.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While the business combination is a positive step, the company's financial performance shows declining revenue and increasing losses. The reliance on future events for warrant exercises and the potential for share price decline contribute to a cautious outlook.

Positives

• The registration statement allows selling securityholders to liquidate their positions in the public market.
• The company has a railway infrastructure, grain storage terminals, private railcar fleet, and strategic farm acres.

Negatives

• The sale of a substantial number of shares could significantly depress the market price of the company's common shares.
• The company will not receive any proceeds from the sale of common shares or company warrants, except with respect to amounts received upon the exercise of the company warrants.
• The company warrants may expire worthless and the company may receive minimal proceeds, if any, from the exercise of company warrants.
• The total resale shares represent approximately 71% of the company's current total outstanding Common Shares.

Risks

• Sales of a substantial number of common shares in the public market by the selling securityholders could cause the price of common shares to fall.
• The company may not be able to sustain or increase the value of an investment in New Above Foods securities.
• The price of New Above Food Common Shares may be volatile in the future, which could lead to losses by investors and costly securities litigation.
• The rights of holders of New Above Food Common Shares may be impaired by the possible future issuance of preferred stock.
• The Company may identify internal control weaknesses in the future or otherwise fail to develop and maintain an effective system of internal controls, which may result in material misstatements of financial statements and/or the Companys inability to meet periodic reporting obligations.

Future Outlook

The Company believes that the proceeds from the Business Combination, together with current available funds, will provide sufficient liquidity to fully fund future operations and any potential planned expansion of the business.

Industry Context

The document indicates Above Food operates in the regenerative ingredient and consumer packaged goods sectors, which are experiencing increased consumer demand for sustainable and healthy food options.

Related Party Transactions

• During the fiscal years ended January 31, 2024, and January 31, 2023, KF Farms provided grain handling services and commodities to PCFC for $12,879,861 and $19,224,028, respectively.
• As of January 31, 2024 and January 31, 2023, PCFC had an account payable to KF Farms of $5,907,681 and $8,302,016, respectively, for commodity purchases, rent, general and administrative expenses and advertising.
• KF Farms purchased commodities from PCFC during the fiscal year ended January 31, 2024 and January 31, 2023, for $689,283 and $271,170, respectively.
• As of January 31, 2024 and January 31, 2023, PCFC had amounts receivable of $nil and $159,960, respectively, from KF Farms, which has no set repayment term on the amount due from KF Farms.
• As of January 31, 2024 and January 31, 2023, PCFC had an account payable to PCTC of $459,152.81 and $nil, respectively, for rent and general and administrative services.
• As of January 31, 2024 and January 31, 2023, PCFC had an account receivable from AFBI of $11,315,598.68 and $5,283,387.97, respectively, for commodity purchases and general and administrative services.
• In 2021, PCFC returned inventory previously purchased from KF Hemp Corp. (KF Hemp) in the amount of $159,960.
• As of January 31, 2024 and January 31, 2023, PCFC had outstanding accounts receivable of $159,960 from KF Hemp.
• Pursuant to a Lease agreement, dated April 1, 2019, between Agri and PCFC, PCFC leased office space at NE-Sec 8-Twp 15-Rge 16 near Lajord Saskatchewan for consideration of $5,197.50 per month until April 1, 2023.
• Pursuant to a Lease Agreement by and among PCFC and PCTC, dated April 1, 2023, PCFC leases office space at 1 Railway Avenue, Lajord, SK, from PCTC for consideration of $4,106.67 per month.
• Pursuant to an Agreement to Lease by and between Above Food and KF Capital, dated as of January 15, 2023, Above Food leases an executive suite at #001-2305 Victoria Avenue, Regina, Saskatchewan for consideration of $6,439.18 per month, inclusive of GST.
• Pursuant to an Agreement to Lease by and between Above Food and KF Capital, dated as of December 1, 2022, Above Food leases an executive suite at Unit #101, 2305 Victoria Avenue, Regina, Saskatchewan for consideration of $33,500 annually, plus GST.

Stakeholder Impact

• Shareholders may experience a decline in the value of their investment due to potential sales by selling securityholders.
• Employees may be affected by the company's efforts to manage costs and improve efficiency.
• Customers may benefit from the company's focus on traceability, sustainability, and nutrient density in its products.

Next Steps

• The Selling Securityholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices.

Key Dates

Keywords

common shares, warrants, selling securityholders, resale, business combination, above food ingredients, bite acquisition corp, registration statement, private placement, securities