Beard Energy Transition Acquisition (BRD) - 2022 Q1 - Quarterly Report

Report Information This section provides an overview of the document as a Quarterly Report on Form 10-Q, detailing the company's classification and outstanding securities - The document is a Quarterly Report on Form 10-Q for the period ended March 31, 2022, filed by Beard Energy Transition Acquisition Corp., a Delaware-incorporated blank check company[1][2] - The registrant is an Emerging Growth Company, a Non-accelerated filer, and a shell company[2] | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |:----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|:------------------|:------------------------------------------| | Units, each consisting of one share of Class A Common Stock and one-half of one warrant Class A common stock, par value $0.0001 per share | BRD.U BRD | The New York Stock Exchange The New York Stock Exchange | | Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | BRD.WS | The New York Stock Exchange | | Stock Type | Shares Issued and Outstanding (as of May 5, 2022) | |:-----------------------|:--------------------------------------------------| | Class A Common Stock | 23,001,250 shares | | Class V Common Stock | 5,751,250 shares | PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related disclosures for the reporting period Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes on accounting policies and related transactions Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and stockholders' deficit at specific reporting dates | Metric | March 31, 2022 (Unaudited) | December 31, 2021 (Unaudited) | |:----------------------------------------|:---------------------------|:------------------------------| | Cash | $1,525,893 | $1,732,774 | | Prepaid expenses | $692,215 | $708,821 | | Total current assets | $2,218,108 | $2,441,595 | | Investments held in Trust Account | $234,642,103 | $234,626,959 | | Total assets | $236,860,211 | $237,068,554 | | Accounts payable | $49,393 | $4,129 | | Accrued expenses and other liabilities | $102,067 | $1,790 | | Franchise tax payable | $228,142 | $178,142 | | Total current liabilities | $554,602 | $359,061 | | Deferred underwriting fee payable | $8,050,000 | $8,050,000 | | Total liabilities | $8,604,602 | $8,409,061 | | Class A common stock subject to redemption | $234,642,103 | $234,626,959 | | Total stockholders' deficit | $(6,386,494) | $(5,967,466) | Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net loss for the specified reporting periods | Metric | Three Months Ended March 31, 2022 | Period from Feb 8, 2021 (inception) through March 31, 2021 | |:--------------------------------------------------------------------|:----------------------------------|:-----------------------------------------------------------| | Operating and formation costs | $369,028 | $4,066 | | Franchise tax | $50,000 | — | | Loss from operations | $(419,028) | $(4,066) | | Interest and dividend income on investments held in Trust Account | $15,144 | — | | Net loss | $(403,884) | $(4,066) | | Net loss attributable to Beard Energy Transition Acquisition Corp. | $(403,862) | $(2,033) | | Basic and diluted net income per share, Class A common stock | $(0.01) per share | $(1.63) per share | | Basic and diluted net loss per share, Class V common stock | $(0.01) per share | — | Condensed Consolidated Statements of Changes in Stockholders' (Deficit) Equity This statement tracks changes in the company's equity components, including redeemable common shares and accumulated deficit | Metric | Balance – December 31, 2021 | Accretion of Class A common stock subject to redemption | Net loss | Balance – March 31, 2022 | |:---------------------------------------------------------------------------------------------------|:----------------------------|:--------------------------------------------------------|:------------|:-------------------------| | Redeemable Common Shares (Class A) | 23,001,250 shares | — | — | 23,001,250 shares | | Class A Stock Amount | $234,626,959 | $15,144 | — | $234,642,103 | | Class V Shares | 5,751,250 shares | — | — | 5,751,250 shares | | Class V Stock Amount | $575 | — | — | $575 | | Additional Paid-in Capital | — | — | — | — | | Accumulated Deficit | $(5,887,803) | $(15,144) | $(403,862) | $(6,306,809) | | Noncontrolling Interest in Subsidiary | $(80,238) | — | $(22) | $(80,260) | | Total Stockholders' Deficit | $(5,967,466) | $(15,144) | $(403,884) | $(6,386,494) | Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2022 | Period from Feb 8, 2021 (inception) through March 31, 2021 | |:---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|:----------------------------------|:-----------------------------------------------------------| | Net loss | $(403,884) | $(4,066) | | Interest and dividend income on investments held in Trust Account | $(15,144) | — | | Payment of formation and operating costs through due to affiliate | — | $2,696 | | Prepaid expenses | $16,606 | $27 | | Accounts payable | $45,295 | $32 | | Accrued expenses | $100,257 | $1,311 | | Franchise tax payable | $50,000 | — | | Net cash used in operating activities | $(206,870) | — | | Advance from related party | $198 | — | | Repayment of advance from related party | $(209) | — | | Net cash used in financing activities | $(11) | — | | Net Change in Cash | $(206,881) | — | | Cash - Beginning of period | $1,732,774 | — | | Cash - End of period | $1,525,893 | — | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements NOTE 1. Description of Organization and Business Operations Beard Energy Transition Acquisition Corp. is a blank check company formed in February 2021, which completed its IPO in November 2021, raising $230 million for a business combination within 18-21 months - The Company is a blank check company incorporated in Delaware on February 8, 2021, formed for the purpose of effecting a business combination[22] - The Initial Public Offering (IPO) was consummated on November 29, 2021, generating gross proceeds of $230 million from 23 million units[24] - An amount of $234.6 million from the IPO and private placement warrants was placed in a Trust Account, to be invested in U.S. government treasury obligations or money market funds[26] - The Company has 18 months (or 21 months, as applicable) from the IPO closing to complete a Business Combination, after which it will redeem Public Shares and liquidate[33] NOTE 2. Summary of Significant Accounting Policies This note details accounting policies, including consolidation, warrant accounting, offering costs, fair value measurement, and classification of redeemable Class A common stock - The condensed consolidated financial statements include the accounts of the Company and its majority-owned operating subsidiary (Opco), with intercompany transactions eliminated[38] - Warrants are equity-classified based on ASC 480 and ASC 815, with initial fair value recorded as additional paid-in capital and no subsequent fair value changes recognized[47] - Offering costs totaling $13.3 million were incurred, with $12.5 million recorded as a reduction of temporary equity and $796,610 as a reduction of permanent equity[48] - Class A common stock subject to redemption is classified outside of permanent equity, with changes in redemption value recognized immediately and adjusted at each reporting period end[65][66] - The fair value hierarchy for investments uses Level 1 for quoted prices in active markets for identical investments[61] NOTE 3. Initial Public Offering This note details the Initial Public Offering, including units sold, gross proceeds, and Public Warrant terms - The IPO was declared effective on November 23, 2021, and consummated on November 29, 2021[72] - 23 million units were sold, including the full exercise of the underwriter's over-allotment option, generating gross proceeds of $230 million[72] - Each unit consisted of one share of Class A common stock and one-half of one redeemable Public Warrant, with each whole warrant exercisable at $11.50 per share[72] NOTE 4. Related Party Transactions This note outlines related party transactions, including Founder and Sponsor Shares, Private Placement Warrants, indemnity obligations, and administrative support agreements - Founder Shares and Sponsor Shares were issued to an affiliate of the Sponsor and the Sponsor, with 1,437,500 Class B Units of Opco and Class V common stock surrendered by the Sponsor in October 2021[73] - The Sponsor purchased 12.225 million Private Placement Warrants for $1.00 each, generating gross proceeds of $12.225 million, which were added to the Trust Account[80] - The Sponsor has agreed to indemnify the Company for claims reducing the Trust Account below $10.20 per Public Share, with certain exceptions[81] - The Company reimburses an affiliate of the Sponsor up to $25,000 per month for administrative support, ceasing upon completion of a business combination[86] - A $300,000 promissory note from the Sponsor to cover IPO expenses was fully repaid on November 30, 2021, with no outstanding balance as of March 31, 2022[85] NOTE 5. Warrants This note details Public and Private Placement Warrants, including exercisability, expiration, redemption features, and equity classification - Public Warrants become exercisable 30 days after a Business Combination and expire five years from completion, or earlier upon redemption or liquidation[91] - The Company may redeem outstanding Public Warrants for $0.01 per warrant if the Class A common stock price equals or exceeds $18.00 for 20 trading days within a 30-day period[92] - Private Placement Warrants are substantially identical to Public Warrants but are non-redeemable by the Company and may be exercised for cash or on a 'cashless basis' by the Sponsor or permitted transferees[97] - All 23.725 million warrants (Public and Private Placement) are equity-classified in accordance with ASC 480 and ASC 815[97] NOTE 6. Stockholders' (Deficit) Equity This note outlines authorized and outstanding shares for preferred, Class A, and Class V common stock, and Opco's Class A and Class B Units, including their rights and conversion - The Company is authorized to issue 1 million shares of preferred stock, but none are issued or outstanding[98] - 23,001,250 shares of Class A common stock are issued and outstanding, all subject to possible redemption[99] - 5,751,250 shares of Class V common stock are issued and outstanding, with common stockholders of record entitled to one vote per share[100][101] - Class B Units of Opco convert into Class A Units upon a Business Combination, and Class A Unit holders (excluding the Company) can exchange them for Class A common stock or cash[103][104] NOTE 7. Commitments and Contingencies This note details commitments and contingencies, including registration rights for security holders and deferred underwriting commissions - Holders of Founder Shares, Sponsor Shares, Private Placement Warrants, and potential working capital loan warrants are entitled to registration rights[109] - A cash underwriting discount of $4.6 million was paid, and a deferred underwriting commission of $8.05 million is payable upon completion of the initial Business Combination[111] NOTE 8. Fair Value Measurements This note provides fair value information for financial assets, particularly Trust Account investments, and their classification within the fair value hierarchy - The fair value of the Company's assets and liabilities approximates their carrying amounts due to their short-term nature[56] - Investments held in the Trust Account, consisting of U.S. Treasury Securities Money Market Funds, are measured at fair value using Level 1 inputs (quoted prices in active markets)[114] | Asset | March 31, 2022 Fair Value | December 31, 2021 Fair Value | |:------------------------------------|:--------------------------|:-----------------------------| | Investments held in Trust Account | $234,642,103 | $234,626,959 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, operational results, liquidity, related party transactions, critical accounting policies, and JOBS Act impact Overview This overview describes the company's formation as a blank check company and its intended use of capital for business combinations - The Company is a blank check company formed on February 8, 2021, to effectuate a business combination[118] - The Company intends to use cash from its IPO, private placement warrants, capital stock, debt, or a combination thereof for its initial business combination[118] - Potential risks include significant dilution of equity interest, subordination of rights if preferred stock is issued, and adverse effects on market prices for Class A common stock and/or warrants[119] Results of Operations This section analyzes the company's financial performance, highlighting its net loss and operating expenses - The Company has not generated any operating revenues to date and does not expect to until after the completion of its initial business combination[122] | Metric | Three Months Ended March 31, 2022 | Period from Feb 8, 2021 (inception) through March 31, 2021 | |:--------------------------------------------------------------------|:----------------------------------|:-----------------------------------------------------------| | Net loss | $(403,884) | $(4,066) | | Operating and formation costs | $369,028 | $4,066 | | Franchise tax expense | $50,000 | — | | Interest income on investments held in trust account | $15,144 | — | Liquidity and Capital Resources This section discusses the company's cash position, funding sources, and planned use of capital for operations and business combinations - The Company consummated its Public Offering on November 29, 2021, generating $230 million, and simultaneously sold 12.225 million private placement warrants for $12.225 million[124][125] - Net cash used in operating activities was $206,870 for the three months ended March 31, 2022, primarily due to net loss and interest income, offset by changes in working capital[127] - The Company intends to use funds outside the trust account for identifying and evaluating target businesses, due diligence, and business combination expenses[130] - The Sponsor or affiliates may provide working capital loans, potentially convertible into warrants, to finance transaction costs or extension funding[131] | Metric | March 31, 2022 | December 31, 2021 | |:----------------------------------------|:---------------|:------------------| | Cash held outside the trust account | $1,525,893 | $1,732,774 | Related Party Transactions This section details ongoing financial arrangements and reimbursements with the Sponsor and its affiliates - The Company reimburses an affiliate of the Sponsor $25,000 per month for administrative support, which will cease upon completion of an initial business combination[135] - The Sponsor, officers, and directors are reimbursed for out-of-pocket expenses incurred on the Company's behalf, with no cap on reimbursement[136] - A $300,000 promissory note from the Sponsor to cover IPO expenses was fully repaid on November 30, 2021, with no outstanding balance as of March 31, 2022[137] - The Sponsor purchased 12.225 million private placement warrants for $12.225 million, which are non-redeemable and transferable to permitted transferees[139] Off-Balance Sheet Arrangements The company confirms it had no off-balance sheet arrangements as of the reporting dates - The Company did not have any off-balance sheet arrangements as of March 31, 2022, and December 31, 2021[142] Contractual Obligations This section outlines the company's contractual obligations, including registration rights and deferred underwriting commissions - Holders of founder shares, sponsor shares, private placement warrants, and potential working capital loan warrants are entitled to registration rights[143] - A deferred underwriting commission of $8.05 million is payable upon the completion of the initial business combination[145] Critical Accounting Policies This section highlights key accounting policies for warrants, redeemable Class A common stock, and net income per share calculation - Warrants are equity-classified, initially measured at fair value, with no subsequent changes in fair value recognized as long as they remain equity-classified[147][149] - Class A common stock subject to redemption is classified outside of permanent equity, and changes in redemption value are recognized immediately[150][151] - Net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of shares, with accretion to redemption value of Class A common stock considered as dividends[152] Recent Accounting Standards Management believes no recently issued accounting standards will materially affect the consolidated financial statements - Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the consolidated financial statements[153] JOBS Act The company qualifies as an 'emerging growth company' under the JOBS Act, allowing for certain reporting exemptions - The Company qualifies as an 'emerging growth company' under the JOBS Act, allowing it to comply with new or revised accounting pronouncements based on private company effective dates[154] - As an emerging growth company, the Company is exempt from certain reporting requirements, including auditor attestation on internal controls, full compensation disclosure, and PCAOB audit firm rotation[155] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Beard Energy Transition Acquisition Corp. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[158] Item 4. Controls and Procedures The CEO and CFO concluded the company's disclosure controls were effective as of March 31, 2022, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2022[160] - There has been no material change in the Company's internal control over financial reporting during the most recently completed fiscal quarter[161] PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and recent securities sales Item 1. Legal Proceedings There are no material legal proceedings, arbitration, or governmental proceedings currently pending against the company or its management - There is no material litigation, arbitration, or governmental proceeding currently pending against the Company or any members of its management team[164] Item 1A. Risk Factors The company refers to its Annual Report on Form 10-K for a comprehensive discussion of risk factors and confirms that there have been no material changes to these risks since the 2021 Annual Report - Readers should refer to Part I, Item 1A 'Risk Factors' in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, for a discussion of risks[165] - There have been no material changes in the risk factors discussed in the 2021 Annual Report[165] Item 2. Recent Sales of Securities; Use of Proceeds from Registered Offerings This section details recent securities sales, including founder shares and private placement warrants, and the use of IPO proceeds, including underwriting discounts and trust account allocation - On February 9, 2021, Mr. Beard purchased 1,250 shares of Class A common stock, 1,250 Class A Units of Opco, and 1,250 Class V common stock for $25,000[166] - On November 23, 2021, the sponsor purchased 12.225 million private placement warrants for $1.00 per warrant, totaling $12.225 million[167] - The Public Offering on November 29, 2021, generated gross proceeds of $230 million from 23 million units sold at $10.00 per unit[168] - Total net proceeds from the Public Offering and private placement warrants were $236.1 million, with $234.6 million placed in the trust account[173] - The Company paid $4.6 million in cash underwriting discounts and has $8.05 million in deferred underwriting commissions payable upon consummation of the initial business combination[171] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - There are no defaults upon senior securities[174] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[175] Item 5. Other Information The company has no other information to report in this section - There is no other information to report[176] Item 6. Exhibits. This section lists all exhibits filed with the Form 10-Q, including corporate documents, security certificates, warrant agreements, and CEO/CFO certifications - The exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), specimen certificates for Units, Class A Common Stock, Private Warrants, and Public Warrants[179] - Warrant Agreements (Private and Public) and certifications from the Chief Executive Officer and Chief Financial Officer are also filed as exhibits[179] SIGNATURE This section confirms the report's official signing by the Chief Executive Officer - The report was signed on May 5, 2022, by Gregory A. Beard, Chief Executive Officer (Principal Executive Officer) of Beard Energy Transition Acquisition Corp[184]