S-1: Pinstripes Holdings Files for Secondary Offering of Class A Common Stock Issuable Upon Warrant Exercises

Pinstripes Holdings is offering for resale up to 204,042 shares of its Class A common stock issuable upon the exercise of warrants held by Oaktree and Silverview.

Summary

• Pinstripes Holdings has filed a registration statement for a secondary offering of up to 204,042 shares of Class A common stock.
• These shares are issuable upon the exercise of warrants held by Oaktree and Silverview.
• The offering includes up to 174,750 shares issuable upon exercise of Oaktree Tranche 2 Warrants and up to 29,292 shares issuable upon exercise of Silverview Tranche 3 Warrants.
• The warrants have an exercise price of $0.01 per share.
• The shares being offered represent approximately 0.51% of the outstanding Class A common stock as of December 16, 2024, and 0.28% assuming full exercise of all warrants and conversion of Series B common stock.
• Pinstripes will not receive any proceeds from the sale of shares by the selling securityholders, but will receive proceeds from the exercise of the warrants if exercised for cash.
• The company is an emerging growth company and a smaller reporting company, which allows for certain reduced reporting requirements.

Sentiment

Score: 3

Explanation: The document presents a mixed picture, with some positive aspects of the business model but significant concerns about financial stability and future growth. The risks and negatives outweigh the positives, leading to a low sentiment score.

Positives

• The company has a disciplined site selection process for new locations.
• Pinstripes offers a unique combination of dining and entertainment.
• The company has strategic partnerships with real estate developers.
• Pinstripes has a strong management team with relevant industry experience.

Negatives

• The company has a substantial amount of indebtedness.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company is subject to many federal, state and local laws with which compliance is both costly and complex.
• A liquid and established trading market may not develop for the Pinstripes Holdings Class A Common Stock.
• Future investors in the company may not experience a rate of return similar to certain existing stockholders that purchased securities in the company at a price below the current trading price.

Risks

• The experiential dining and entertainment market is highly competitive.
• The company's success depends on identifying and securing appropriate locations and expanding operations.
• The company has a substantial amount of indebtedness.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company may encounter disruptions or delays in the construction of its facilities.
• The company may not be able to renew real property leases on favorable terms.
• The company's business may be adversely impacted by changes in consumer discretionary spending and general economic conditions.
• The company may experience shortages or interruptions in the supply or delivery of food products.
• The company may face increased labor costs or shortages.
• Future pandemics or natural disasters may disrupt the company's business.
• The company may not achieve its target development goals.
• Food safety and food-borne illness concerns may have an adverse effect on the company's business.
• Damage to the company's reputation could negatively impact its business.
• The company is dependent on a small number of suppliers for the majority of its food ingredients.
• The company depends on key executive management.
• The company is subject to many federal, state and local laws with which compliance is both costly and complex.
• A liquid and established trading market may not develop for the Pinstripes Holdings Class A Common Stock.
• The sales of shares being offered in this prospectus could cause the market price of the Pinstripes Holdings Class A Common Stock to decline significantly.
• Future investors in the company may not experience a rate of return similar to certain existing stockholders that purchased securities in the company at a price below the current trading price.
• The company's Chairman, President and Chief Executive Officer has the right to designate a specified number of directors to the Pinstripes Holdings Board and his interests may conflict with the company's or its stockholders in the future.
• If the company is unable to satisfy its obligations as a public company, it would face possible delisting.
• The company is an emerging growth company and a smaller reporting company, which could make its securities less attractive to investors.
• A portion of the company's total outstanding shares were restricted from immediate resale but may be now sold into the market in the near future.
• The company's business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism.

Future Outlook

The company expects future revenue growth to be primarily driven by new location openings and increases in same store sales.

Management Comments

• The company is exploring additional financing and a capital raise by the end of the fiscal third quarter.

Industry Context

The document highlights Pinstripes' position in the experiential dining and entertainment market, which is highly competitive and includes various national and regional chains, as well as local establishments. The company also faces competition from home-based entertainment options.

Comparison to Industry Standards

• The document references several industry reports, including the U.S. Corporate Event Market by Event Type report by Allied Market Research, the Global Full-Service Restaurants market trends report by Global Industry Analysts Inc., the Global Theme and Amusement Park Outlook Report by the International Association of Amusement Parks Attractions, and the Wedding Services in the US industry trends report by IBISWorld.
• These reports provide context for the size and trends of the markets in which Pinstripes operates.
• The document does not provide specific comparisons to individual competitors, but it does note that many competitors are larger and have greater financial resources.

Legal Proceedings

• The company is subject to various legal proceedings and claims that arise in the ordinary course of business.
• On November 6, 2023, Riveron Consulting, LLC filed a lawsuit against the Company for breach of contract and failure to receive compensation for services rendered.

Related Party Transactions

• The company has a vendor agreement with C. Rae Interiors, Ltd., which is owned by the sister of the company's CEO.
• The company has a design agreement with C. Rae Interiors, Ltd.
• The company issued convertible notes to Jeffrey Schwartz, the brother of Dale Schwartz.
• The company has lease agreements with affiliates of Westfield, Brookfield, Macerich, and Simon Property Group.
• The company has a director designation agreement with Dale Schwartz.
• The company has a security holder support agreement with certain security holders.
• The company has a lockup agreement with certain security holders.
• The company has an A&R Registration Rights Agreement with the Sponsor Holders and certain other equityholders.

Stakeholder Impact

• Shareholders may experience volatility in the market price of the Pinstripes Holdings Class A Common Stock.
• Future investors may not experience a rate of return similar to certain existing stockholders.
• Employees may be affected by potential cost reductions and changes in operations.
• Customers may be affected by changes in menu pricing or service offerings.
• Suppliers may be affected by changes in the company's purchasing practices.
• Creditors may be affected by the company's substantial indebtedness and potential financial instability.

Next Steps

• The company plans to open one additional new location in fiscal year 2025.
• The company is starting construction on three additional locations in fiscal 2025 and expects the locations to be opened by the end of fiscal 2026.
• Management is exploring additional financing and a capital raise by the end of the fiscal third quarter.

Key Dates

Keywords

Pinstripes Holdings, Class A Common Stock, secondary offering, warrants, Oaktree, Silverview, experiential dining, entertainment, restaurant, bowling, bocce, private events