20-F: Above Food Ingredients Inc. Completes Business Combination, Lists on Nasdaq

Above Food Ingredients Inc. finalized its business combination with Bite Acquisition Corp. and began trading on the Nasdaq Global Market under the symbols ABVE and ABVE.W.

Summary

• Above Food Ingredients Inc. (New Above Food) completed its business combination with Bite Acquisition Corp. on June 28, 2024.
• The combined company, New Above Food, is now listed on the Nasdaq Global Market under the ticker symbols ABVE (common shares) and ABVE.W (warrants).
• Prior to the business combination, Above Food continued from the laws of Saskatchewan to a corporation under the laws of the Province of Alberta.
• Above Foods shareholders contributed all of the issued and outstanding equity of Above Food to New Above Food in exchange for newly issued New Above Food Common Shares, New Above Food Class A Earnout Shares and New Above Food Class B Earnout Shares.
• Merger Sub merged with and into Bite, with Bite surviving as a direct, wholly owned subsidiary of New Above Food.
• Each issued and outstanding share of Bites common stock was automatically converted into and exchanged for one New Above Food Common Share.
• Each issued and outstanding warrant to purchase shares of Bites common stock was automatically converted into one warrant to purchase New Above Food Common Shares.
• On June 13, 2024, Above Food Cop, acquired all the shares of Brotalia, S.L. from Grupo Empresarial Enhol, S.L. and Mr. Gonzalo Agorreta Preciado for USD $13,000,000.
• Above Food entered into PIPE Subscription Agreements, under which the investors agreed to purchase 550,000 units of Above Food at a purchase price of $10.00 per unit for a total purchase price of $5,500,000, which units included one Above Food common share and one additional Above Food common share provided from the Sponsor or from treasury (the Advantage Shares), which Above Food common shares, besides the Advantage Shares, converted into 530,000 New Above Food Common Shares.
• The company had 27,804,607 common shares outstanding as of June 28, 2024.
• The company had an accumulated deficit of $103.9 million as of January 31, 2024 compared to an accumulated deficit of $50.6 million as at January 31, 2023.
• As of January 31, 2024, Above Food had $1.0 million in cash and cash equivalents and a deficit in working capital of $85.4 million.
• As of January 31, 2024, the Company was in violation of restrictive covenants related to approximately $66 million of its aggregate borrowings.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the business combination is a positive step, the company's financial performance and existing debt raise concerns.

Positives

• New Above Food Common Shares and New Above Food Listed Warrants are currently listed on the Nasdaq Global Market under the symbols ABVE and ABVE.W, respectively.
• The Business Combination is expected to provide sufficient liquidity to fully fund future operations and any potential planned expansion of the business.

Negatives

• The company had an accumulated deficit of $103.9 million as of January 31, 2024 compared to an accumulated deficit of $50.6 million as at January 31, 2023.
• As of January 31, 2024, Above Food had $1.0 million in cash and cash equivalents and a deficit in working capital of $85.4 million.
• As of January 31, 2024, the Company was in violation of restrictive covenants related to approximately $66 million of its aggregate borrowings.
• There can be no assurance the Company will be successful in obtaining further equity and debt financing.
• There can be no assurance that the Company will be able to maintain the support of these lenders, particularly as it relates to the indebtedness currently in default of restrictive covenants.
• The Company also expects to continue to incur recurring losses as it continues to grow its business and incurred significant costs in preparation for the go public transaction with Bite.

Risks

• Failure to realize the anticipated benefits of the Business Combination.
• Difficulty in integrating the businesses of Bite and Above Food.
• The risk that the Business Combination disrupts current plans and operations or the ability of New Above Food to grow and manage growth profitably and retain its key employees including its executive team.
• Costs related to the Business Combination.
• The overall level of demand for New Above Foods services.
• General economic conditions and other factors affecting New Above Foods business.
• New Above Foods ability to implement its business strategy.
• New Above Foods ability to manage expenses.
• Changes in applicable laws and governmental regulation and the impact of such changes on New Above Foods business.
• New Above Foods exposure to litigation claims and other loss contingencies.
• The risks associated with negative press or reputational harm.
• New Above Foods ability to protect patents, trademarks and other intellectual property rights.
• Any breaches of, or interruptions in, New Above Foods technology infrastructure.
• Changes in tax laws and liabilities.

Future Outlook

Above Food is poised to expand its platform through innovation and organic growth along with acquisition opportunities in the regenerative ingredient space.

Industry Context

The announcement reflects a trend of food companies seeking growth through strategic mergers and acquisitions, particularly in the innovative and plant-based food sectors. Listing on a major exchange like Nasdaq provides access to broader investor base and capital markets.

Comparison to Industry Standards

• Comparable companies in the food ingredients and plant-based sectors include Ingredion, Archer Daniels Midland (ADM), and Beyond Meat.
• Ingredion, a global ingredient solutions provider, reported net sales of $7.95 billion in 2023.
• ADM, a major agricultural processor, reported net sales of $93.95 billion in 2023.
• Beyond Meat, a plant-based meat alternative company, reported net revenues of $343.4 million in 2023.
• Above Foods revenue of $368.4 million in FY24 places it as a smaller player compared to established giants like Ingredion and ADM, but it is in a similar range to more focused plant-based companies like Beyond Meat.

Corporate Governance

Related Party Transactions

• Related party transactions include transactions with corporate investors who have representation on the Above Food Board.

Stakeholder Impact

• Shareholders: Listing on Nasdaq provides potential for increased liquidity and valuation.
• Employees: Business Combination may create new opportunities for growth and development.
• Customers: Continued focus on delivering differentiated ingredients and consumer products.
• Suppliers: Leveraging vertically integrated supply chain for reliability and agility.

Next Steps

• New Above Food will implement additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies.
• The Company also intends to expand its existing credit facility in order to accommodate the growth in its business and to provide additional liquidity.

Key Dates

Keywords

Business Combination, Above Food Ingredients, Bite Acquisition Corp, Nasdaq, Merger, Share Exchange, Common Shares, Warrants, Financial Results, Debt, Equity, Acquisition