Benson Hill(US:BHIL)2021-05-23 16:00markdown [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Star Peak Corp II, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with comprehensive notes explaining the company's organization, accounting policies, IPO details, related party transactions, commitments, warrant liabilities, and fair value measurements [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | March 31, 2021 ($) | December 31, 2020 ($) | | :-------------------------------- | :------------- | :---------------- | | Cash | $2,292,424 | $45,156 | | Prepaid expenses | $1,934,200 | — | | Total current assets | $4,226,624 | $45,156 | | Investments held in Trust Account | $402,615,204 | — | | Total Assets | $406,841,828 | $495,307 | | Accounts payable | $41,200 | $28,499 | | Accrued expenses | $1,600,004 | $295,368 | | Franchise tax payable | $91,882 | $2,075 | | Total current liabilities | $1,733,086 | $475,942 | | Deferred underwriting commissions | $14,087,500 | — | | Derivative warrant liabilities | $30,066,070 | — | | Total Liabilities | $45,886,656 | $475,942 | | Total Stockholders' Equity | $5,000,002 | $19,365 | | Total Liabilities and Stockholders' Equity | $406,841,828 | $495,307 | [Unaudited Condensed Statement of Operations](index=5&type=section&id=Unaudited%20Condensed%20Statement%20of%20Operations) This section details the company's revenues, expenses, and net loss for the reporting period | Metric | Three Months Ended March 31, 2021 ($) | | :------------------------------------------ | :-------------------------------- | | General and administrative expenses | $1,734,871 | | General and administrative expenses - related party | $30,000 | | Franchise tax expense | $92,271 | | Total operating expenses | $(1,857,142) | | Change in fair value of derivative warrant liabilities | $(3,622,990) | | Financing costs - derivative warrant liabilities | $(827,601) | | Investment income on Trust Account | $115,204 | | Net loss | $(6,192,529) | | Basic and diluted net loss per share, Class B | $(0.62) | [Unaudited Condensed Statement of Changes in Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines the changes in the company's equity due to transactions and net loss over the period | Item | Amount (March 31, 2021) ($) | | :---------------------------------------------------------------- | :---------------------- | | Balance - December 31, 2020 | $19,365 | | Sale of units in initial public offering, net of fair value of public warrants | $388,311,879 | | Offering costs | $(22,035,492) | | Excess of cash received over fair value of the private placement warrants | $851,949 | | Class A common stock subject to possible redemption | $(355,955,170) | | Net loss | $(6,192,529) | | Balance - March 31, 2021 (unaudited) | $5,000,002 | [Unaudited Condensed Statement of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Statement%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2021 ($) | | :------------------------------------------ | :-------------------------------- | | Net cash used in operating activities | $(2,573,830) | | Net cash used in investing activities | $(402,500,000) | | Net cash provided by financing activities | $407,321,098 | | Net change in cash | $2,247,268 | | Cash - beginning of the period | $45,156 | | Cash - end of the period | $2,292,424 | [Notes to Unaudited Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed financial statements [Note 1 — Description of Organization and Business Operations](index=8&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Organization%20and%20Business%20Operations) This note describes Star Peak Corp II's formation as a blank check company, its IPO, private placement, trust account, and proposed merger with Benson Hill, Inc - Star Peak Corp II was incorporated on **October 8, 2020**, as a blank check company to effect a business combination[12](index=12&type=chunk) - The company consummated its Initial Public Offering (IPO) on **January 8, 2021**, selling **40,250,000 units** at **$10.00 per unit**, generating gross proceeds of **$402.5 million**[15](index=15&type=chunk) - Simultaneously with the IPO, a private placement of **6,553,454 warrants** generated approximately **$13.1 million**[16](index=16&type=chunk) - An amount of **$402.5 million** from the IPO and private placement proceeds was placed in a Trust Account[17](index=17&type=chunk) - The company entered into a Merger Agreement with Benson Hill, Inc. on **May 8, 2021**, with the merger expected to close in the **third quarter of 2021**[29](index=29&type=chunk)[31](index=31&type=chunk) - The company must complete a Business Combination within **24 months** from the closing of the Initial Public Offering (**January 8, 2023**), or it will liquidate and redeem public shares[23](index=23&type=chunk) [Note 2 — Basis of Presentation and Summary of Significant Accounting Policies](index=16&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of financial statement presentation, significant accounting policies, and the company's status as an emerging growth company - The unaudited condensed consolidated financial statements are presented in conformity with **GAAP** and **SEC rules**[37](index=37&type=chunk) - The company is an '**emerging growth company**' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards under the **JOBS Act**[39](index=39&type=chunk)[40](index=40&type=chunk) - Investments held in the Trust Account are classified as **trading securities** and measured at **fair value**, with gains/losses recognized in investment income[43](index=43&type=chunk) - Derivative warrant liabilities are recognized at **fair value** and re-measured each reporting period, with changes in fair value recognized in the statement of operations[49](index=49&type=chunk) - Class A common stock subject to possible redemption is classified as **temporary equity** at redemption value[51](index=51&type=chunk) - The company early adopted **ASU No. 2020-06** in the first quarter of 2021, with no impact upon adoption[57](index=57&type=chunk) [Note 3 — Initial Public Offering](index=21&type=section&id=Note%203%20%E2%80%94%20Initial%20Public%20Offering) This note details the company's Initial Public Offering, including the number of units sold and warrant exercise terms - On **January 8, 2021**, the company consummated its Initial Public Offering of **40,250,000 Units**, including **5,250,000 Over-Allotment Units**, at **$10.00 per Unit**, generating gross proceeds of **$402.5 million**[59](index=59&type=chunk) - Each Unit consists of **one share of Class A common stock** and **one-fourth of one Public Warrant**, with an exercise price of **$11.50 per share** for the warrants[60](index=60&type=chunk) [Note 4 — Related Party Transactions](index=22&type=section&id=Note%204%20%E2%80%94%20Related%20Party%20Transactions) This note discloses transactions between the company and its Sponsor, including founder shares, private placement warrants, and administrative service fees - The Sponsor paid **$25,000** for the issuance of **10,062,500 Founder Shares**, which are no longer subject to forfeiture[61](index=61&type=chunk) - The company consummated a Private Placement of **6,553,454 Private Placement Warrants** to the Sponsor for approximately **$13.1 million**[63](index=63&type=chunk) - The Sponsor loaned the company **$150,000**, which was repaid in full on **January 8, 2021**[66](index=66&type=chunk) - The company pays the Sponsor **$10,000 per month** for administrative services[68](index=68&type=chunk) [Note 5 — Commitments and Contingencies](index=23&type=section&id=Note%205%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines the company's registration rights obligations and deferred underwriting commissions payable upon business combination - Holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans are entitled to **registration rights**[71](index=71&type=chunk) - The underwriters received an **$8.1 million discount** upon IPO closing and are entitled to a deferred fee of **$14.1 million**, payable upon completion of a Business Combination[73](index=73&type=chunk) [Note 6 — Derivative Warrant Liabilities](index=25&type=section&id=Note%206%20%E2%80%94%20Derivative%20Warrant%20Liabilities) This note details the outstanding public and private placement warrants, their exercise price, expiration, and redemption conditions - As of **March 31, 2021**, the company had **10,062,500 Public Warrants** and **6,553,454 Private Placement Warrants** outstanding[74](index=74&type=chunk) - Warrants have an exercise price of **$11.50 per share** and expire **five years** after the completion of a Business Combination or earlier upon redemption or liquidation[77](index=77&type=chunk) - The company may redeem outstanding warrants at **$0.01 per warrant** if the Class A common stock closing price equals or exceeds **$18.00** for **20 trading days** within a **30-day period**[79](index=79&type=chunk) - The company may also redeem outstanding warrants at **$0.10 per warrant** (with cashless exercise) if the Class A common stock closing price equals or exceeds **$10.00** for **20 trading days** within a **30-day period**, provided Private Placement Warrants are concurrently called[81](index=81&type=chunk) [Note 7 — Stockholders' Equity](index=28&type=section&id=Note%207%20%E2%80%94%20Stockholders'%20Equity) This note describes the composition of the company's Class A and Class B common stock, including voting rights and conversion terms - As of **March 31, 2021**, there were **4,654,483 shares of Class A common stock** issued or outstanding (excluding **35,595,517 shares** subject to possible redemption)[84](index=84&type=chunk) - As of **March 31, 2021**, there were **10,062,500 shares of Class B common stock (Founder Shares)** issued and outstanding[85](index=85&type=chunk) - Prior to the initial Business Combination, only holders of **Class B common stock** have the right to vote on the election of directors[86](index=86&type=chunk) - Class B common stock will automatically convert into Class A common stock on a **one-for-one basis** at the time of the initial Business Combination, subject to adjustment[87](index=87&type=chunk) [Note 8 — Fair Value Measurements](index=29&type=section&id=Note%208%20%E2%80%94%20Fair%20Value%20Measurements) This note provides fair value measurements for investments in the Trust Account and derivative warrant liabilities, including valuation inputs | Asset/Liability | Level 1 (March 31, 2021) ($) | Level 3 (March 31, 2021) ($) | Total (March 31, 2021) ($) | | :-------------------------------- | :----------------------- | :----------------------- | :--------------------- | | Investments held in Trust Account | $402,615,204 | — | $402,615,204 | | Derivative warrant liabilities | $14,993,130 | $15,072,940 | $30,066,070 | | Level 3 Input | As of January 8, 2021 | As of March 31, 2021 | | :------------------------------------------ | :-------------------- | :------------------- | | Option term (in years) | 5 - 5.73 | 5.50 | | Volatility | 23.8% - 32.0% | 32.00% | | Risk-free interest rate | 0.38% - 0.48% | 1.04% | | Expected dividends | 0.00% | 0.00% | | Probability of successful initial business combination | 80.0% | 85.0% | - The change in the fair value of derivative warrant liabilities for the three months ended March 31, 2021, was **$3,622,990**[92](index=92&type=chunk) [Note 9 — Subsequent Events](index=30&type=section&id=Note%209%20%E2%80%94%20Subsequent%20Events) This note discloses subsequent events, primarily the merger agreement with Benson Hill, Inc, as detailed in Note 1 - No subsequent events requiring adjustments or disclosures were identified, other than those disclosed in **Note 1** regarding the Benson Hill merger agreement[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, detailing its status as a blank check company, the IPO and private placement, the proposed merger with Benson Hill, liquidity, and critical accounting policies. It also addresses the impact of the SEC Staff Statement on warrant accounting and the company's status as an emerging growth company [Overview](index=31&type=section&id=Overview) This section provides an overview of Star Peak Corp II's formation as a blank check company, its IPO, private placement, and trust account funding - Star Peak Corp II is a blank check company formed on **October 8, 2020**, for the purpose of effecting a business combination[97](index=97&type=chunk) - The company completed its Initial Public Offering (IPO) on **January 8, 2021**, raising **$402.5 million** from **40,250,000 units**[98](index=98&type=chunk) - A private placement of **6,553,454 warrants** to the Sponsor generated approximately **$13.1 million**[99](index=99&type=chunk) - An amount of **$402.5 million** from the IPO and private placement proceeds was placed in a Trust Account[100](index=100&type=chunk) [Proposed Business Combination](index=33&type=section&id=Proposed%20Business%20Combination) This section discusses the company's merger agreement with Benson Hill, Inc. and the deadline for completing a business combination - The company entered into a Merger Agreement with Benson Hill, Inc. on **May 8, 2021**[102](index=102&type=chunk) - The company must complete a business combination by **January 8, 2023** (**24 months** from IPO closing), or it will liquidate and redeem public shares[101](index=101&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash position, working capital, and sources of liquidity to meet operational needs | Metric | March 31, 2021 ($) | | :---------------- | :------------- | | Cash | $2.3 million | | Working Capital | $2.6 million | - Liquidity needs are satisfied through net proceeds from the **IPO** and **Private Placement** held outside the Trust Account[104](index=104&type=chunk) - Management believes the company has sufficient working capital and borrowing capacity to meet its needs through the earlier of a business combination or **one year** from the filing[105](index=105&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section details the company's financial performance, including operating expenses, non-operating income, and net loss for the period - The company has not generated any operating revenues to date; operating revenues will commence after the initial business combination[106](index=106&type=chunk) - Non-operating income is generated from **interest income** on investments in the Trust Account[106](index=106&type=chunk) | Metric | Three Months Ended March 31, 2021 ($) | | :------------------------------------------ | :-------------------------------- | | Net Loss | $(6.2 million) | | General and administrative expenses | $(1.8 million) | | Franchise tax expense | $(92,000) | | Change in fair value of derivative liabilities | $(3.6 million) | | Financing costs to derivative warrant liabilities | $(828,000) | | Investment income on Trust Account | $115,000 | [Contractual Obligations](index=35&type=section&id=Contractual%20Obligations) This section outlines the company's commitments, including registration rights and deferred underwriting fees payable upon business combination - The company has **registration rights obligations** for holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans[108](index=108&type=chunk) - Underwriters received an **$8.1 million discount** at IPO closing and are entitled to a deferred fee of **$14.1 million**, payable upon completion of a business combination[110](index=110&type=chunk) [Risks and Uncertainties](index=35&type=section&id=Risks%20and%20Uncertainties) This section addresses potential impacts of the COVID-19 pandemic on the company's financial position and business combination search - Management is evaluating the impact of the **COVID-19 pandemic**, noting a possible effect on financial position and target search, but the specific impact is not readily determinable[111](index=111&type=chunk) [Critical Accounting Policies](index=36&type=section&id=Critical%20Accounting%20Policies) This section describes the key accounting policies for investments, redeemable common stock, derivative warrant liabilities, and offering costs - Investments held in the Trust Account are classified as **trading securities** and measured at **fair value**[114](index=114&type=chunk) - Class A common stock subject to possible redemption is accounted for as **temporary equity** at redemption value[115](index=115&type=chunk) - Derivative warrant liabilities are recognized at **fair value** and re-measured each reporting period, with changes in fair value recognized in the statement of operations[116](index=116&type=chunk)[117](index=117&type=chunk) - Offering costs associated with warrant liabilities are **expensed**, while those for Class A common stock are **charged to stockholders' equity**[120](index=120&type=chunk) - The company early adopted **ASU No. 2020-06** in the first quarter of 2021, with no impact upon adoption[124](index=124&type=chunk) [Off-Balance Sheet Arrangements](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of **March 31, 2021**, the company did not have any **off-balance sheet arrangements**[125](index=125&type=chunk) [JOBS Act](index=38&type=section&id=JOBS%20Act) This section explains the company's status as an emerging growth company and its election to delay adoption of new accounting standards - The company qualifies as an '**emerging growth company**' under the **JOBS Act**[126](index=126&type=chunk) - The company has elected to delay the adoption of new or revised accounting standards to align with **private company effective dates**[126](index=126&type=chunk) - The company is evaluating the benefits of relying on other **reduced reporting requirements** provided by the **JOBS Act**[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Star Peak Corp II is exempt from providing quantitative and qualitative disclosures about market risk - The company is a **smaller reporting company** and is not required to provide quantitative and qualitative disclosures about market risk[130](index=130&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2021, primarily due to the misapplication of accounting for warrants as liabilities. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were **not effective** as of **March 31, 2021**, solely due to the misapplication of accounting for the company's warrants as liabilities[131](index=131&type=chunk) - There was **no change** in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting during the three months ended March 31, 2021[133](index=133&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other disclosures relevant to the company's operations [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - **No legal proceedings** were reported[134](index=134&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section highlights a new material risk factor related to the accounting treatment of warrants. Following an SEC Staff Statement, the company reclassified its warrants as derivative liabilities, meaning changes in their fair value will be recognized in earnings and could materially affect financial results and the market price of securities - A new risk factor states that warrants are accounted for as **liabilities**, and changes in their fair value could materially affect financial results[136](index=136&type=chunk) - Following an **SEC Staff Statement**, the company reevaluated and reclassified its warrants as **derivative liabilities**, leading to recurring non-cash gains or losses in earnings[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20from%20Registered%20Securities) The company details the unregistered sale of 6,553,454 Private Placement Warrants to its Sponsor for approximately $13.1 million, conducted under the exemption of Section 4(a)(2) of the Securities Act. The proceeds from this sale, along with the IPO, were primarily placed in a Trust Account, with remaining net proceeds used for working capital - On **January 8, 2021**, **6,553,454 Private Placement Warrants** were sold to the Sponsor for approximately **$13.1 million** in an unregistered sale[139](index=139&type=chunk) - This issuance was made pursuant to the exemption from registration contained in **Section 4(a)(2) of the Securities Act**[140](index=140&type=chunk) - An amount of **$402.5 million** from the net proceeds of the IPO and certain private placement proceeds was placed in a Trust Account[141](index=141&type=chunk) - The remaining net proceeds from the IPO and Private Placement held outside the Trust Account are used for **working capital needs**[142](index=142&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **No defaults** upon senior securities were reported[142](index=142&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are **not applicable** to the company[142](index=142&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The company reported no other information - **No other information** was reported[142](index=142&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL-related documents - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer (**31.1, 31.2, 32.1, 32.2**) and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents (**101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE**)[143](index=143&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy and completeness of the financial report - The report was signed by **Eric Scheyer, Chief Executive Officer** of Star Peak Corp II, on **May 24, 2021**[144](index=144&type=chunk)