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Agriculture & Natural Solutions 10-K Analysis & Summary – 2025-03-28

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Agriculture & Natural Solutions

Filing date:

03/28/2025

TLDR:

Agriculture & Natural Solutions Acquisition Corporation is a blank check company formed to acquire a business in the agriculture sector. The company reported a net income of $8,363,892 for the year ended December 31, 2024, and is currently discussing the best path forward for its business combination with Australian Food & Agriculture Company Limited, including potentially mutually terminating the Business Combination Agreement.

ELI5:

This company is like a treasure chest looking for a business to buy, specifically in farming or natural resources. They made some money this year, but they’re still trying to find the right company to merge with, and there’s a chance the deal might not happen.

Accession #:

0000950170-25-046444

Published on

Analyst Summary

  • The company is a blank check company seeking a business combination in the agriculture sector.
  • Net income for the year ended December 31, 2024 was $8,363,892, primarily driven by interest income on the Trust Account.
  • The company is currently in discussions regarding its business combination with Australian Food & Agriculture Company Limited (AFA), including the possibility of terminating the agreement.
  • The company has until November 13, 2025, to complete a business combination.
  • The company has entered into a Business Combination Agreement with Australian Food & Agriculture Company Limited (AFA) on August 28, 2024.
  • The company is dependent on the ability to raise equity and debt financing which may be impacted by certain events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.

SEC Filing Report: Agriculture & Natural Solutions Acquisition Corp (10-K)

Filing Date: 2025-03-28

Reporting Period End Date: 2024-12-31

Executive Summary

This report analyzes Agriculture & Natural Solutions Acquisition Corp’s (ANSC) 10-K filing for the fiscal year ended December 31, 2024. ANSC is a blank check company (SPAC) focused on acquiring a business in the agriculture sector. The company reported net income primarily due to interest earned on its trust account. However, the company has a working capital deficit and a limited operating history. A proposed business combination with Australian Food & Agriculture Company Limited (AFA) is currently under discussion, with potential for termination. Given the uncertainty surrounding the business combination, the limited operating history, and the working capital deficit, a HOLD rating is recommended. Investors should closely monitor developments regarding the proposed business combination and the company’s ability to secure a suitable target within the allotted timeframe.

Company Overview

Agriculture & Natural Solutions Acquisition Corp (ANSC) is a special purpose acquisition company (SPAC) formed to acquire a business, primarily in the agriculture sector, that can benefit from decarbonization and enhancement of natural capital. The company completed its IPO in November 2023. The sponsor is affiliated with Riverstone and Impact Ag. The company is currently pursuing a business combination with Australian Food & Agriculture Company Limited (AFA).

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management’s discussion highlights the company’s focus on identifying and completing a business combination within the agriculture sector. The MD&A notes the proposed business combination with AFA, but also acknowledges that the parties are discussing the best path forward, including potential termination of the agreement due to volatile equity market conditions. This uncertainty is a significant risk factor.

Financial Statement Analysis

Income Statement

Key observations from the income statement:

  • Net Income: The company reported net income of $8,363,892 for 2024, compared to $1,305,390 in 2023.
  • Interest Income: The primary driver of net income is interest earned on the trust account, which increased significantly from $2,456,838 in 2023 to $18,605,323 in 2024. This increase is likely due to higher interest rates.
  • General and Administrative Expenses: General and administrative expenses increased significantly from $1,151,448 in 2023 to $10,241,431 in 2024, reflecting increased activity related to the proposed business combination.

Balance Sheet

Key observations from the balance sheet:

  • Cash: The company’s cash balance outside of the trust account is minimal ($1).
  • Trust Account: The trust account holds a substantial amount ($366,062,161 in 2024, $347,456,838 in 2023).
  • Working Capital Deficit: The company has a significant working capital deficit of $3,350,028.
  • Liabilities: The company has significant liabilities, including deferred underwriting fees ($12,075,000) and deferred legal fees ($6,949,253).
  • Ordinary Shares Subject to Possible Redemption: A large portion of the company’s equity is classified as temporary equity due to the redemption rights of public shareholders.

Key Ratios

Given the nature of a SPAC, traditional financial ratios are not particularly meaningful at this stage. However, the following are noteworthy:

  • Liquidity: The minimal cash balance outside the trust account and the working capital deficit raise concerns about the company’s ability to cover operating expenses if the business combination is delayed or terminated.

Red Flags and Uncommon Metrics

  • Going Concern: The auditor’s report includes a going concern paragraph due to the mandatory liquidation date of November 13, 2025.
  • Proposed Business Combination Uncertainty: The MD&A acknowledges that the proposed business combination with AFA may be terminated.
  • Related Party Transactions: The company has significant related party transactions, including administrative support fees and a promissory note with the sponsor.

Risk and Opportunity Assessment

Risks

  • Failure to Complete Business Combination: The company may be unable to complete a business combination within the allotted timeframe, leading to liquidation and a return of capital to shareholders.
  • Business Combination Uncertainty: The proposed business combination with AFA is uncertain and may be terminated.
  • Limited Operating History: As a blank check company, ANSC has no operating history and limited ability to generate revenue.
  • Working Capital Deficit: The company’s working capital deficit raises concerns about its ability to cover operating expenses.
  • Redemption Risk: High redemption rates by public shareholders could reduce the capital available for the business combination.
  • Regulatory Risks: The proposed business combination may be subject to regulatory review and approval, including CFIUS review.

Opportunities

  • Attractive Target Market: The agriculture sector presents opportunities for attractive risk-adjusted returns, particularly in areas related to decarbonization and natural capital enhancement.
  • Experienced Management Team: The management team has experience in identifying and executing acquisitions across the agriculture, renewable, infrastructure, upstream and industrial services sectors.

Conclusion and Actionable Insights

ANSC’s 10-K filing reveals a company in a transitional phase, with a proposed business combination that is currently uncertain. The company’s financial performance is largely driven by interest income on its trust account, and it faces challenges related to its working capital deficit and limited operating history. The auditor’s going concern opinion highlights the urgency to complete a business combination.

Recommendation: Given the uncertainty surrounding the business combination, the limited operating history, and the working capital deficit, a HOLD rating is recommended. Investors should closely monitor developments regarding the proposed business combination and the company’s ability to secure a suitable target within the allotted timeframe. Further due diligence is warranted if the business combination proceeds, focusing on the target’s financial performance, growth prospects, and integration plans.

Financial Analysis of Agriculture & Natural Solutions Acquisition Corporation

1. Commentary

Agriculture & Natural Solutions Acquisition Corporation (ANSC) reported a net income of $8.36 million for 2024, a significant increase compared to $1.31 million in 2023. This increase is primarily driven by interest earned on the Trust Account, which substantially outweighed the general and administrative expenses. However, the company has significant liabilities, including deferred legal fees, and a substantial amount of Class A ordinary shares subject to possible redemption. The company’s shareholders’ deficit also remains a concern, despite the net income.

2. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin: Not applicable, as the company does not have revenue or cost of goods sold.
  • Operating Profit Margin:

    • Metric: Loss from operations / Total Assets. 2024: (-$10,241,431 / $366,335,377) = -2.80%. 2023: (-$1,151,448 / $348,222,058) = -0.33%
    • Trend: Increased operating loss margin from -0.33% to -2.80%.
    • Industry: Difficult to benchmark precisely as a SPAC. However, compared to general investment management firms, this is significantly lower, as they typically aim for positive operating margins.
  • Net Profit Margin:

    • Metric: Net Income / Total Assets. 2024: ($8,363,892 / $366,335,377) = 2.28%. 2023: ($1,305,390 / $348,222,058) = 0.37%
    • Trend: Increased net profit margin from 0.37% to 2.28%.
    • Industry: The positive net profit margin is unusual for a SPAC pre-merger, driven by interest income. Post-merger, the target company’s industry would be the relevant benchmark.
  • Return on Assets (ROA):

    • Metric: Net Income / Total Assets. 2024: ($8,363,892 / $366,335,377) = 2.28%. 2023: ($1,305,390 / $348,222,058) = 0.37%
    • Trend: Increased ROA from 0.37% to 2.28%.
    • Industry: Low compared to established operating companies, but typical for a SPAC holding assets in a trust account.
  • Return on Equity (ROE):

    • Metric: Net Income / Total Shareholders’ Deficit. 2024: ($8,363,892 / -$22,374,281) = -37.38%. 2023: ($1,305,390 / -$12,132,850) = -10.76%
    • Trend: Decreased ROE from -10.76% to -37.38%.
    • Industry: Negative ROE is a concern, indicating the company is not generating profits relative to its equity.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Metric: Class A: 2024: $0.19, 2023: $0.11. Class B: 2024: $0.19, 2023: $0.11.
    • Trend: Increased EPS for both Class A and Class B shares from $0.11 to $0.19.
    • Industry: Difficult to compare as a SPAC. Post-merger, the target company’s EPS would be the relevant benchmark.

Liquidity

  • Current Ratio:

    • Metric: Total Current Assets / Total Current Liabilities. 2024: ($273,216 / $10,572,497) = 0.03. 2023: ($765,220 / $239,103) = 3.20.
    • Trend: Decreased significantly from 3.20 to 0.03.
    • Industry: A ratio below 1 indicates potential liquidity issues. The sharp decline is concerning.
  • Quick Ratio (Acid-Test Ratio):

    • Metric: (Total Current Assets – Inventory) / Total Current Liabilities. Assuming no inventory: 2024: ($273,216 / $10,572,497) = 0.03. 2023: ($765,220 / $239,103) = 3.20.
    • Trend: Decreased significantly from 3.20 to 0.03.
    • Industry: A very low quick ratio suggests the company may struggle to meet its short-term obligations.
  • Cash Ratio:

    • Metric: Cash / Total Current Liabilities. 2024: ($1 / $10,572,497) = 0.00. 2023: ($284,783 / $239,103) = 1.19.
    • Trend: Decreased significantly from 1.19 to 0.00.
    • Industry: The extremely low cash ratio indicates a very weak short-term liquidity position.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Metric: Total Liabilities / Total Shareholders’ Deficit. 2024: ($22,647,497 / -$22,374,281) = -1.01. 2023: ($12,898,070 / -$12,132,850) = -1.06.
    • Trend: Increased from -1.06 to -1.01.
    • Industry: The negative ratio is due to the negative equity. It indicates a highly leveraged situation relative to the negative equity.
  • Debt-to-Assets Ratio:

    • Metric: Total Liabilities / Total Assets. 2024: ($22,647,497 / $366,335,377) = 0.06. 2023: ($12,898,070 / $348,222,058) = 0.04.
    • Trend: Increased from 0.04 to 0.06.
    • Industry: Relatively low, suggesting the company’s assets are primarily funded by sources other than debt.
  • Interest Coverage Ratio (Times Interest Earned):

    • Metric: (Net Income + Interest Expense) / Interest Expense. Interest expense is not explicitly stated, so assuming it’s negligible: 2024: $8,363,892 / 0 = N/A. 2023: $1,305,390 / 0 = N/A.
    • Trend: N/A
    • Industry: N/A due to lack of interest expense.

Activity/Efficiency

  • Inventory Turnover: Not applicable, as the company is a SPAC and does not hold inventory.
  • Days Sales Outstanding (DSO): Not applicable, as the company does not have sales.
  • Days Payable Outstanding (DPO): Not applicable, as the company does not have cost of goods sold.
  • Asset Turnover:

    • Metric: Not applicable, as the company does not have revenue.
    • Trend: N/A
    • Industry: N/A

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Metric: Market Price per Share / EPS. Using the market price of public shares ($9.94) and the basic EPS for Class B shares ($0.19): $9.94 / $0.19 = 52.32. For 2023: Assuming the same market price, $9.94 / $0.11 = 90.36
    • Trend: Decreased from 90.36 to 52.32.
    • Industry: High P/E ratio, indicating investors have high expectations for future earnings growth.
  • Price-to-Book Ratio (P/B):

    • Metric: Market Price per Share / Book Value per Share. Book Value per Share = (Total Shareholders’ Equity / Total Shares Outstanding). 2024: $9.94 / (-$22,374,281 / 8,625,000) = -3.84. 2023: $9.94 / (-$12,132,850 / 8,625,000) = -7.06.
    • Trend: Decreased from -7.06 to -3.84.
    • Industry: The negative P/B ratio is due to the negative equity, making it difficult to interpret.
  • Price-to-Sales Ratio (P/S):

    • Metric: Not applicable, as the company does not have sales.
    • Trend: N/A
    • Industry: N/A
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Metric: Not enough information to calculate.
    • Trend: N/A
    • Industry: N/A

Growth Rates

  • Revenue Growth:

    • Metric: Not applicable, as the company does not have revenue.
    • Trend: N/A
    • Industry: N/A
  • Net Income Growth:

    • Metric: (Net Income 2024 – Net Income 2023) / Net Income 2023. ($8,363,892 – $1,305,390) / $1,305,390 = 540.72%.
    • Trend: Increased significantly from 2023 to 2024.
    • Industry: High growth rate, but primarily due to interest income on the trust account.
  • EPS Growth:

    • Metric: (EPS 2024 – EPS 2023) / EPS 2023. ($0.19 – $0.11) / $0.11 = 72.73%.
    • Trend: Increased significantly from 2023 to 2024.
    • Industry: High growth rate, but primarily due to interest income on the trust account.

Other Relevant Metrics

  • Cash Held in Trust Account: Increased from $347.46 million in 2023 to $366.06 million in 2024. This is a key asset for the SPAC, intended for the eventual business combination.
  • General and Administrative Expenses: Increased significantly from $1.15 million in 2023 to $10.24 million in 2024. This increase warrants further investigation to understand the specific drivers.
  • Interest Income: Increased significantly from $2.46 million in 2023 to $18.61 million in 2024. This is the primary driver of the company’s net income.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️