BurgerFi(BFI) - 2021 Q1 - Quarterly Report

Part I. Financial Information This section provides an overview of the company's financial performance and position, including detailed statements, management analysis, market risk disclosures, and internal controls Financial Statements This section presents the unaudited condensed financial statements for OPES Acquisition Corp. as of March 31, 2020, reflecting its status as a blank check company with assets primarily in a trust account and operations focused on identifying a business combination Condensed Balance Sheets The balance sheet as of March 31, 2020, shows a significant reduction in total assets to $48.5 million from $94.7 million, primarily due to common stock redemptions from the Trust Account Condensed Balance Sheet Data (in USD) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash | $8,306 | $17,862 | | Marketable securities held in Trust Account | $48,348,785 | $94,541,286 | | Total Assets | $48,524,165 | $94,688,739 | | Liabilities & Equity | | | | Total Liabilities | $2,750,943 | $1,736,445 | | Common stock subject to possible redemption | $40,773,214 | $87,952,287 | | Total Stockholders' Equity | $5,000,008 | $5,000,007 | Condensed Statements of Operations For Q1 2020, the company reported a net loss of $15,852, a shift from net income in Q1 2019, driven by lower interest income and higher operating costs Q1 Operating Results (Unaudited, in USD) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Loss from operations | $(343,592) | $(181,150) | | Interest income | $321,864 | $685,649 | | Net (loss) income | $(15,852) | $380,241 | | Basic and diluted net loss per common share | $(0.06) | $(0.03) | Condensed Statements of Changes in Stockholders' Equity Total stockholders' equity remained stable at approximately $5.0 million in Q1 2020, impacted by net loss and adjustments for common stock subject to redemption Changes in Stockholders' Equity (Q1 2020, Unaudited) | Item | Amount (USD) | | :--- | :--- | | Balance – January 1, 2020 | $5,000,007 | | Net loss | $(15,852) | | Change in value of common stock subject to possible redemption | $15,853 | | Balance – March 31, 2020 | $5,000,008 | Condensed Statements of Cash Flows Net cash used in operating activities was $218,440 in Q1 2020, with investing activities providing $46.5 million and financing activities using $46.3 million, primarily for stock redemptions Q1 2020 Cash Flow Summary (Unaudited, in USD) | Cash Flow Activity | Three Months Ended March 31, 2020 | | :--- | :--- | | Net cash used in operating activities | $(218,440) | | Net cash provided by investing activities | $46,514,855 | | Net cash (used in) financing activities | $(46,305,971) | | Net Change in Cash | $(9,556) | - The company paid $47,163,220 for the redemption of common stock during the quarter, which was the primary driver of cash flows from investing and financing activities[15] Notes to Unaudited Condensed Financial Statements The notes detail the company's nature as a blank check company, extensions of the business combination period, significant stockholder redemptions, and substantial doubt about its going concern ability - The company is a blank check company formed to pursue a Business Combination, with a current focus on businesses in Mexico. The deadline to consummate a transaction has been extended to June 18, 2020[17][27] - On March 16, 2020, stockholders approved a fourth extension for the Business Combination deadline to June 18, 2020. In connection with this, 4,428,044 shares were redeemed for approximately $47.0 million[33] - The company has a working capital deficit of $442,314 and limited cash of $8,306 as of March 31, 2020. These conditions raise substantial doubt about the company's ability to continue as a going concern[35][38] - To fund the extensions, the company has taken on several non-interest bearing loans from related parties (Lion Point, Lionheart, EarlyBirdCapital) and an unrelated third party, which are forgivable if a Business Combination is not consummated. As of March 31, 2020, outstanding related-party promissory notes totaled $1,084,817 and convertible promissory notes totaled $1,123,131[31][32][33] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, business combination efforts, financial condition, and operational results, highlighting liquidity concerns and the need for additional capital - The company has extended its deadline to complete a Business Combination to June 18, 2020, through four separate stockholder-approved extensions. These extensions were accompanied by significant redemptions, with 4,428,044 shares redeemed for $47.0 million in the most recent extension[101][102][104] Q1 Operating Results Comparison (in USD) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net (loss) income | $(15,852) | $380,241 | | Reason for change | Lower interest income and higher operating costs | - | - As of March 31, 2020, the company had only $8,306 in cash and a working capital deficit of $442,314. Management states these conditions raise substantial doubt about the company's ability to continue as a going concern and that it will need to raise additional capital[116][121] - The company has a contingent forward purchase agreement with Lion Point for up to $30 million in units, which could provide funding for a Business Combination, but Lion Point's consent is discretionary[114] Quantitative and Qualitative Disclosures Regarding Market Risk The company reports no material market or interest rate risk due to its investment of IPO proceeds in short-term U.S. government treasury securities - The company's funds in the Trust Account are invested in U.S. government treasury bills with maturities of 180 days or less, or in money market funds investing solely in U.S. treasuries. Due to the short-term nature of these investments, management believes there is no material exposure to interest rate risk[130] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting during Q1 2020 - Management, including the CEO and CFO, concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective at a reasonable assurance level[132] - There were no changes in internal control over financial reporting during the first quarter of 2020 that materially affected, or are reasonably likely to materially affect, internal controls[133] Part II. Other Information This section covers unregistered equity sales, use of IPO proceeds, and a list of exhibits filed with the Form 10-Q Unregistered Sales of Equity Securities and Use of Proceeds This section details equity sales exempt from registration, including founder shares and private placement units, and the allocation of IPO proceeds to the trust account - In October 2017, the company issued 2,875,000 shares of common stock (founder shares) for $25,000, an issuance made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act[133] - Simultaneously with the IPO, the company sold an aggregate of 445,000 Private Units to initial stockholders at $10.00 per unit, generating $4,450,000 in gross proceeds via a private placement[135] - From the gross proceeds of the IPO and private placements, $116,150,000 was deposited into the Trust Account. The company paid $2,300,000 in underwriting commissions and $431,946 in other offering costs[137] Exhibits This section lists exhibits filed with the Form 10-Q, including amendments to the certificate of incorporation, CEO/CFO certifications, and XBRL data files - The report includes several exhibits, such as amendments to the company's certificate of incorporation, CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[138] Signatures This section contains the required signatures for the filing