Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

References to the "Company," "our," "us" or "we" refer to Berto Acquisition Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this quarterly report on Form 10-Q (this "Report"). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Report includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to "Risk Factors" in our final prospectus for the Initial Public Offering (the "Final Prospectus"), filed with the U.S. Securities and Exchange Commission (the "SEC") on May 1, 2025. The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company incorporated as a Cayman Islands exempted company on July 15, 2024 and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. While we will consider opportunities in any industry, we are strategically positioned to capitalize on transformative opportunities, focusing on sectors that are pivotal to advancing sustainability and innovation. Our investment thesis prioritizes target businesses primarily in North America and Europe, with a keen interest in new energy businesses, circular economy initiatives, and innovative agricultural and food technologies. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.

Our sponsor is Berto Acquisition Sponsor LLC, a Cayman Islands limited liability company (the "Sponsor").

Financing Activities

Our registration statement for the initial public offering (the "Initial Public Offering") was declared effective on April 29, 2025. On May 1, 2025, we consummated our Initial Public Offering of 30,015,000 units (the "Units" and, with respect to the ordinary shares included in the Units being offered, the "Public Shares"), including the issuance of 3,915,000 Units as a result of the underwriters' full exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $300.15 million, and incurring offering costs of approximately $17.8 million, of which approximately $11.7 million was for deferred underwriting commissions.

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement ("Private Placement") of 3,500,000 warrants (the "Sponsor Private Placement Warrants") to our Sponsor at a purchase price of $1.00 per Sponsor Private Placement Warrant, generating gross proceeds to the Company of $3.5 million.

Additionally, simultaneously with the closing of the Initial Public Offering, we issued an aggregate of 3,750,000 warrants (the "Underwriter Private Placement Warrants", and together with the Sponsor Private Placement Warrants, the "Private Placement Warrants") to designees of the Representatives.

The Trust Account

Upon the closing of the Initial Public Offering and the Private Placement, we deposited $300.15 million ($10.00 per share) of net proceeds, including the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement in a trust account ("Trust Account") located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and would be held only (i) uninvested as cash, (ii) in an interest bearing or non-interest bearing demand deposit account at a U.S. chartered commercial bank with consolidated assets of $100 billion or more selected by the trustee that is reasonably satisfactory to the Company, or (iii) invested only in U.S. government securities, within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 (the "Investment Company Act"), with a maturity of one hundred eighty-five (185) days or less, or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government treasury obligations. To mitigate the risk that the Company might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer the Company holds investments in the Trust Account, it may, at any time, instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account uninvested in cash or in an interest-bearing or non-interest-bearing demand deposit account. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below.

Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our taxes, if any, none of the funds held in the Trust Account will be released until the earlier of (i) the completion of the Initial Business Combination in connection with a general meeting called to approve the Initial Business Combination or without a shareholder vote by means of a tender offer; (ii) the redemption of any Public Shares if we were unable to complete the Initial Business Combination within the completion window (as defined below), subject to applicable law or (y) if we extend the completion window and such extension is conditioned upon depositing additional funds into the Trust Account, upon the end of a 30-day cure period after the date any such funds were required to be deposited but were not so deposited or (iii) the redemption of Public Shares properly submitted in connection with a shareholder vote to amend our articles not for the purpose of approving, or in conjunction with the consummation of, an Initial Business Combination, (A) to modify the substance or timing of our obligation to allow redemption in connection with the Initial Business Combination or to redeem 100% of Public Shares if we have not consummated an Initial Business Combination within the completion window or (B) with respect to any other material provisions relating to the rights of holders of ordinary shares or pre-Initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of the holders of the Public Shares (the "Public Shareholders").

Initial Business Combination

Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Sponsor Private Placement Warrants, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more businesses having an aggregate fair market value of at least 80% of the value of the Trust Account (excluding any deferred underwriters fees and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the Initial Business Combination. However, we will only complete an Initial Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Furthermore, there is no assurance that we will be able to successfully effect an Initial Business Combination.

We provide Public Shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of an Initial Business Combination either (i) in connection with a shareholders' meeting called to approve the Initial Business Combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of an Initial Business Combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval under applicable law or stock exchange listing requirement. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account calculated as of two business days prior to the consummation of the Initial Business Combination including interest earned on the funds held in the Trust Account (which interest shall be net of taxes paid or payable), divided by the number of then issued and outstanding Public Shares.

The Public Shares will be recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 480, "Distinguishing Liabilities from Equity" ("ASC 480"). If we seek shareholder approval of an Initial Business Combination, we will complete the Initial Business Combination only if it is approved by an ordinary resolution under Cayman Islands law, which requires the affirmative vote of at least a majority of the votes cast by the shareholders of the issued shares present in person or represented by proxy and entitled to vote on such matter at a general meeting of our company.

Our Sponsor, Meteora Capital LLC (the "Consultant" or "Meteora"), and any other holder of the founder shares prior to the Initial Public Offering (the "Initial Shareholders"), officers and directors, have entered into a letter agreement with the Company, pursuant to which they agreed to vote in favor of the Initial Business Combination and waive their redemption rights with respect to any Founder Shares they hold and any Public Shares that our Sponsor, Sponsor's affiliates, officers and directors may acquire during or after this offering in connection with the completion of the Initial Business Combination.

Our articles also provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a "group" (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without our prior consent.

Pursuant to our amended and restated memorandum and articles of association (the "articles") if we are unable to complete the Initial Business Combination within 24 months from the closing of the Initial Public Offering, or May 1, 2027 (the "Completion Window"), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned held in the Trust Account (which interest shall be net of taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish the holders' rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. The Initial Shareholders have entered into agreements with our company pursuant to which they have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any founder shares held by them if we fail to complete the Initial Business Combination within the Completion Window. However, if the Initial Shareholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if we fail to complete the Initial Business Combination within the prescribed time period.

Liquidity and Capital Resources

As of March 31, 2025, we had approximately $11,000 in cash and a working capital deficit of approximately $1.1 million.

Our liquidity needs through March 31, 2025 were satisfied through the payment of $25,000 from our Sponsor, its affiliates, and the Consultant to purchase founder shares, and a loan under the Note in the amount of approximately $189,000. Following the closing of the Initial Public Offering, our liquidity was derived from the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. We fully repaid the Note balance on May 1, 2025, and the Note was no longer available after closing.

In addition, in order to finance transaction costs in connection with our Initial Business Combination, our Sponsor or an affiliate of the Sponsor, or our officers and directors may, but are not obligated to, provide the Working Capital Loans to us. If we complete our Initial Business Combination, we would repay the Working Capital Loans. In the event that the Initial Business Combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. If the Sponsor makes any Working Capital Loans, up to $1.5 million of such loans may be convertible into warrants of the post Initial Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants and their underlying securities would be identical to the Sponsor Private Placement Warrants. As of March 31, 2025, we had no borrowings under the Working Capital Loans.

In connection with the Company's assessment of going concern considerations in accordance with FASB ASC 205-40 - Presentation of Financial Statements - Going Concern, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern", as of March 31, 2025, our management has determined that our current liquidity including, our access to funds from the Sponsor entity and the fact that our Sponsor and/or its affiliates agrees to make those funds available and has the financial wherewithal to provide such funds and the net proceeds from the closing of the Initial Public Offering and the Private Placement held outside Trust once consummated, is sufficient to fund us the working capital needs through a minimum of one year from the date of issuance of these unaudited condensed financial statements.

Risks and Uncertainties

Various macroeconomic, geopolitical and regulatory uncertainties and challenges pose risks to economic conditions in the U.S. and globally, including, among others, any resurgence in inflation; changes to trade and tariffs, immigration, energy and other policies; changes in interest rate policies; the Russia-Ukraine war; conflicts in the Middle East; and economic conditions and tensions involving China.

These and other risks could negatively impact economic growth rates and unemployment levels in the U.S. and other countries and result in volatility and disruptions in financial markets. Such risks could also adversely affect our search for an Initial Business Combination and any target business with which we may ultimately consummate an Initial Business Combination.

Results of Operations

Our entire activity from July 15, 2024 (inception) through March 31, 2025 is related to our formation and the preparation for our Initial Public Offering. We will not generate any operating revenues until after the completion of our initial Business Combination. Following the closing of our Initial Public Offering, we generate non-operating income in the form of investment income from the Trust Account. We will continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. Additionally, we recognize non-cash gains and losses within other income (expense) related to changes in recurring fair value measurement of our derivative liabilities at each reporting period.

For the three months ended March 31, 2025, we had net loss of approximately $18,000, which consisted solely of general and administrative expenses.

Contractual Obligations

Registration Rights

The holders of the (i) Founder Shares, (ii) Sponsor Private Placement Warrants and the ordinary shares underlying such warrants, (iii) Underwriter Private Placement Warrants and the ordinary shares underlying such warrants, and (iv) warrants that may be issued upon conversion of Working Capital Loans will have registration rights pursuant to a registration rights agreement dated April 29, 2025. The holders of Founder Shares, Sponsor Private Placement Warrants, and Working Capital Warrants are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders of founder shares, Sponsor Private Placement Warrants, and Working Capital Warrants have certain "piggy-back" registration rights with respect to registration statements filed subsequent to our completion of the Initial Business Combination. The Underwriter Private Placement Warrants (including the underlying shares) will be entitled to resale registration rights including one demand and unlimited "piggy-back" rights for periods of five and seven years, respectively, from the commencement of sales in the Initial Public Offering, in compliance with FINRA Rule 5510(g)(8). We will bear the expenses incurred in connection with the filing of any such registration statements.

Administrative Services and Indemnification Agreement

Commencing on May 1, 2025, we agreed to reimburse the Sponsor or an affiliate thereof in an amount equal to $15,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or our liquidation, we will cease paying these monthly fees. Payment for such administrative services to the Sponsor will be deferred and payable upon closing of an Initial Business Combination and will only be paid out of funds remaining outside of Trust Account.

Our Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable Initial Business Combinations. These individuals will be eligible to receive a transfer or reallocation of Founder Shares for any extraordinary services rendered in order to identify or effectuate the consummation of the Initial Business Combination. We may pay cash compensation to its independent directors for services rendered to us. Additionally, we may pay consulting, success, advisory, or finder's fees to our Sponsor, our officers or directors, advisors, or affiliates thereof in connection with the consummation of the Initial Business Combination. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, executive officers or directors, or our or their affiliates.

In addition, pursuant to the administrative services and indemnification agreement described above, we will indemnify our Sponsor from any claims arising out of or relating to the Initial Public Offering or our operations or conduct of our business or any claim against our Sponsor alleging any expressed or implied management or endorsement by our Sponsor of any of our activities or any express or implied association between our Sponsor and us or any of its affiliates, which agreement provides that the indemnified parties cannot access the funds held in the Trust Account.

Underwriting Agreement

We granted the underwriters a 45-day option to purchase up to 3,915,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On May 1, 2025, the underwriters fully exercised their over-allotment option.

The underwriters were entitled to (1) an upfront underwriting fee of an aggregate amount of approximately $1.5 million, paid upon the closing of the Initial Public Offering, (2) an aggregate of 3,750,000 Underwriter Private Placement Warrants issued upon the closing of the Initial Public Offering, and (3) a deferred underwriting fee of approximately $11.7 million (the "Deferred Fee"). The Deferred Fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an Initial Business Combination, subject to the terms of the underwriting agreement and will be based on the amount of funds remaining in the Trust Account after shareholder redemptions of Public Shares in connection with the consummation of an Initial Business Combination, less funds sourced by Initial Shareholders, or any cash remaining in the Trust Account pursuant to structured agreements such as forward purchase agreements, non-redemption agreements, any agreements or arrangements alike, or any other incentivization provided to the shareholders to not to redeem.

The Underwriter Private Placement Warrants are identical to the Public Warrants and Sponsor Private Placement Warrants, except that the Underwriter Private Placement Warrants held by the underwriters or their designees will not be exercisable more than five years after the commencement of sales in the Initial Public Offering.

Critical Accounting Estimates

The preparation of the financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, and the reported amounts of income and expenses during the period reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Deferred Offering Costs Associated with the Initial Public Offering

We comply with the requirements of the ASC 340-10-S99 - "Other Assets and Deferred Costs" - and SEC Staff Accounting Bulletin Topic 5A - "Expenses of Offering." Deferred offering costs consist principally of professional and registration fees that were related to the Initial Public Offering. Deferred offering costs associated with warrants will be charged to shareholders' deficit upon the completion of the Initial Public Offering. Deferred offering costs associated with the Public Shares will be charged against the carrying value of ordinary shares subject to possible redemption upon the completion of the Initial Public Offering.

Warrant Instruments

We will account for all of the Public Warrants and Private Placement Warrants in accordance with the guidance contained in FASB ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). Accordingly, we evaluated and will classify the warrant instruments under equity treatment at their assigned values. Such guidance provides that the Warrants will not be precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity in accordance with ASC 480 and ASC 815. There are no Public or Private Warrants currently outstanding as of March 31, 2025 and December 31, 2024.

Off-Balance Sheet Arrangements and Contractual Obligations

As of March 31, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(b)(1) of Regulation S-K and did not have any commitments or contractual obligations.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

As an "emerging growth company", we are not required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.