Breeze Acquisition (BREZ) - 2021 Q1 - Quarterly Report

Part I. Financial Information This section provides the unaudited condensed financial statements and management's discussion and analysis for the quarter ended March 31, 2021 Item 1. Financial Statements This section presents the unaudited condensed financial statements for Q1 2021, including balance sheets, operations, equity, cash flows, and comprehensive notes Condensed Balance Sheets This table presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2021 | Metric | March 31, 2021 (Unaudited) ($) | December 31, 2020 ($) | | :--------------------------------------- | :------------------------- | :---------------- | | Cash | $345,852 | $693,818 | | Total Current Assets | $597,302 | $830,767 | | Cash & Marketable Securities held in Trust Account | $116,752,668 | $116,734,480 | | TOTAL ASSETS | $117,349,970 | $117,588,539 | | Total Current Liabilities | $213,774 | $227,369 | | Warrant Liabilities | $11,509,000 | $17,487,000 | | Total Liabilities | $11,722,774 | $17,737,661 | | Common Stock Subject to Possible Redemption | $100,627,190 | $94,850,876 | Condensed Statement of Operations This table details the company's revenues, expenses, and net income for the quarter ended March 31, 2021 | Metric | Amount ($) | | :------------------------------------------ | :---------- | | Operating and formation costs | $220,348 | | Loss from operations | $220,348 | | Interest income | $478 | | Unrealized gain on marketable securities held in Trust Account | $18,188 | | Change in fair value of warrant liabilities | $5,978,000 | | Total other income | $5,996,666 | | Net Income | $5,776,318 | | Basic and diluted net earnings per share, Redeemable Common Stock | $0.00 | | Basic and diluted net loss per share, Non-Redeemable Common Stock | $(0.04) | Condensed Statement of Changes in Stockholders' Equity This table outlines changes in the company's equity, including common stock and retained earnings, for the period | Item | Common Shares | Common Stock ($) | Additional Paid Capital ($) | Retained Earnings ($) | Total Stockholders' Equity ($) | | :------------------------------------------ | :------------ | :--------------- | :-------------------------- | :-------------------- | :----------------------------- | | Balance – January 1, 2021 | 5,280,087 | 529 | 583,698 | 4,415,775 | 5,000,002 | | Common stock subject to possible redemption | (569,096) | (58) | (5,776,256) | — | (5,776,314) | | Reclassify negative portion of additional paid-in capital | — | — | 5,192,558 | (5,192,558) | — | | Net income | — | — | — | 5,776,318 | 5,776,318 | | Balance – March 31, 2021 | 4,710,991 | 471 | — | 4,999,535 | 5,000,006 | Condensed Statement of Cash Flows This table summarizes cash flows from operating, investing, and financing activities for the period | Metric | Amount ($) | | :---------------------------------------------------------------- | :---------- | | Net income | $5,776,318 | | Unrealized gain on marketable securities held in Trust Account | $(18,188) | | Change in fair value of warrant liabilities | $(5,978,000) | | Net cash used in operating activities | $(347,966) | | Cash – Beginning of period | $693,818 | | Cash – End of period | $345,852 | | Non-Cash: Change in value of common stock subject to possible redemption | $5,776,314 | Notes to Unaudited Condensed Financial Statements This section provides detailed explanations of the company's business, accounting policies, and financial instruments Note 1 — Description of Organization and Business Operations This note describes the company's formation as a blank check company, its IPO, and its business combination objective - Breeze Holdings Acquisition Corp. is a blank check company incorporated on June 11, 2020, for the purpose of effecting a business combination[18] - The company consummated its Initial Public Offering (IPO) of 11,500,000 units on November 25, 2020, generating gross proceeds of $115,000,000[21] - Simultaneously with the IPO, 5,425,000 private placement warrants were sold to the Sponsor for $5,425,000[22] - A total of $116,725,000 from the IPO and private placement was placed in a Trust Account, invested in U.S. government securities[23] - Transaction costs for the IPO amounted to $2,777,557, including $2,300,000 in underwriting fees[24] - As of March 31, 2021, the company had $345,852 in cash held outside the Trust Account for working capital[24] - The company must complete a Business Combination by November 25, 2021, with a possible 6-month extension[31] - As of March 31, 2021, the Company had $345,852 in cash outside the Trust Account and working capital of $383,528[35] Note 2 — Summary of Significant Accounting Policies This note outlines key accounting principles applied, including policies for warrants and common stock - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations[40] - The company is an 'emerging growth company' and has elected not to opt out of the extended transition period for new accounting standards[42][43] - Common stock subject to possible redemption is classified as temporary equity and presented at redemption value[49] - Warrants are recorded as derivative liabilities at fair value, with changes recognized in the Statement of Operations[51] - Net earnings (loss) per share is computed using the two-class method for redeemable and non-redeemable common stock[56] Net Earnings (Loss) Per Share | Metric | Redeemable Common Stock ($) | Non-Redeemable Common Stock ($) | | :---------------------------------------------------------------- | :---------------------- | :-------------------------- | | Net earnings (loss) | $0 | $(201,682) | | Weighted average shares outstanding | 9,914,009 | 4,710,991 | | Basic and diluted net earnings (loss) per share | $(0.00) | $(0.04) | Note 3 — Initial Public Offering This note details the terms and proceeds of the company's IPO, including units, common stock, and public warrants - The Company sold 11,500,000 Units at $10.00 per Unit, with each Unit consisting of one share of common stock, one right, and one Public Warrant[63] - Each whole Public Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per whole share[63] Note 4 — Private Placement This note describes the private placement of warrants to the Sponsor, including their terms and proceeds - The Sponsor purchased 5,425,000 Private Placement Warrants at $1.00 per warrant, totaling $5,425,000[64] - A portion of the proceeds from the Private Placement Warrants was added to the Trust Account[64] - Each Private Placement Warrant is exercisable to purchase one share of common stock at $11.50 per share[64] Note 5 — Related Party Transactions This note details transactions with related parties, including founder shares, administrative services, and potential loans - The Sponsor purchased 100 Founder Shares for $25,000 in June 2020, which became 2,875,000 shares after a stock split[65] - Founder Shares are subject to forfeiture to ensure the Sponsor owns 20% of outstanding shares post-IPO[66] - A $300,000 promissory note from the Sponsor to cover IPO expenses was repaid by November 25, 2020[70] - The Company pays an affiliate of the Sponsor $5,000 per month for administrative support services[71] - The Sponsor or affiliates may provide 'Working Capital Loans' convertible into warrants identical to Private Placement Warrants[72] Note 6 — Commitments This note outlines the company's contractual obligations, including registration rights and deferred underwriting fees - Holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans are entitled to registration and stockholder rights[73] - Underwriters are entitled to a deferred fee of $3,162,500, payable from the Trust Account only upon completion of a Business Combination[74] Note 7 – Warrant Liabilities This note details the terms, exercisability, and redemption conditions of public and private placement warrants - Public Warrants become exercisable on the later of 30 days after a Business Combination or 12 months from the IPO closing, expiring five years after a Business Combination[75][76] - The Company may redeem Public Warrants at $0.01 per warrant if the common stock price equals or exceeds $18.00 for 20 trading days within a 30-trading day period[79] - Private Placement Warrants are identical to Public Warrants but are non-transferable, non-assignable, and non-redeemable as long as held by initial purchasers or permitted transferees[83] - As of March 31, 2021, there were 11,500,000 Public Warrants and 5,425,000 Private Placement Warrants outstanding[84] - Warrants are recorded as derivative liabilities at fair value, with changes recognized in the statement of operations[85] Note 8 — Stockholder's Equity This note provides information on the company's authorized and outstanding shares of preferred and common stock - The Company is authorized to issue 1,000,000 shares of preferred stock ($0.0001 par value); no shares were issued or outstanding as of March 31, 2021[86] - The Company is authorized to issue 100,000,000 shares of common stock ($0.0001 par value)[87] - As of March 31, 2021, 4,710,991 shares of common stock were issued and outstanding, excluding 9,914,009 shares subject to possible redemption[87] Note 9 — Fair Value Measurements This note explains the company's fair value measurement methodology for assets and liabilities, especially warrant liabilities - The Company applies ASC Topic 820 for fair value measurement, classifying assets and liabilities into a three-level hierarchy based on observability of inputs[88][90][91] Fair Value Hierarchy | Description | March 31, 2021 ($) | December 31, 2020 ($) | Level | | :------------------------------------------ | :------------- | :---------------- | :---- | | Cash and marketable securities held in Trust Account | $116,752,668 | $116,734,480 | 1 | | Public Warrants | $7,820,000 | $11,845,000 | 1 | | Private Placement Warrants | $3,689,000 | $5,642,000 | 3 | | Total warrant liabilities | $11,509,000 | $17,487,000 | | - Public Warrants are classified as Level 1 due to observable market quotes, while Private Placement Warrants are Level 3, valued using a Modified Black-Scholes model[92][93] Valuation Inputs for Private Placement Warrants | Input | As of March 31, 2021 | As of December 31, 2020 | | :------------------------------------------ | :------------------- | :---------------------- | | Stock price | $9.95 | $10.15 | | Strike price | $11.50 | $11.50 | | Probability of completing a Business Combination | 90% | 88% | | Dividend yield | — | — | | Term (in years) | 5.34 | 5.98 | | Volatility | 12.3% | 15.9% | | Risk-free rate | 1.0% | 0.5% | | Fair value of warrants | $0.68 | $1.04 | Changes in Warrant Liabilities | Item | Private Placement ($) | Public ($) | Total Warrant Liabilities ($) | | :------------------------------------------ | :---------------- | :------------- | :------------------------ | | Fair value as of December 31, 2020 | $5,642,000 | $11,845,000 | $17,487,000 | | Change in valuation inputs or other assumptions | $(1,953,000) | $(4,025,000) | $(5,978,000) | | Fair value as of March 31, 2021 | $3,689,000 | $7,820,000 | $11,509,000 | Note 10 — Subsequent Events This note confirms no subsequent events requiring adjustment or disclosure were identified after the reporting period - The Company did not identify any subsequent events requiring adjustment or disclosure in the condensed financial statements[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and operations, focusing on its blank check status and key accounting policies Special Note Regarding Forward-Looking Statements This note advises that the report contains forward-looking statements subject to risks and uncertainties, with no update obligation - The Quarterly Report includes forward-looking statements that involve risks and uncertainties, and the Company disclaims any obligation to update or revise them[100] Overview This section describes the company as a blank check entity formed to effect a business combination - Breeze Holdings Acquisition Corp. is a blank check company formed on June 11, 2020, to effect a business combination using cash from IPO proceeds, capital stock, debt, or a combination[101] - Issuing additional shares could significantly dilute equity, subordinate rights, or cause a change of control[102] - Issuing debt securities could lead to default, inability to pay dividends, or limitations on financial flexibility[103][105] - As of March 31, 2021, the Company had $345,852 in cash and working capital of $432,843[106] Results of Operations This section discusses financial performance, noting no operating revenues and net income primarily from warrant valuation changes - The Company has not generated operating revenues; activities are focused on formation, IPO, and identifying a target for a Business Combination[107] - Net income for the three months ended March 31, 2021, was $5,776,318, primarily due to a $5,978,000 change in the fair value of warrant liabilities[108] Liquidity and Capital Resources This section details the company's cash position, sources of funds from IPO and private placement, and capital allocation - The Initial Public Offering generated $115,000,000, and the private placement of warrants generated $5,425,000[109] - A total of $116,725,000 was placed in the Trust Account following the IPO and private placement[110] - As of March 31, 2021, $116,752,668 in cash and marketable securities were held in the Trust Account[111] - Cash used in operating activities for the three months ended March 31, 2021, was $347,966[112] - Funds in the Trust Account are primarily for the Business Combination, while $345,852 held outside is for identifying and evaluating target businesses[114][115] - Initial stockholders or affiliates may loan funds for working capital, with up to $1,000,000 convertible into warrants[116] Off-Balance Sheet Arrangements This section confirms that the company had no off-balance sheet arrangements as of the reporting date - The Company did not have any off-balance sheet arrangements as of March 31, 2021[118] Contractual obligations This section outlines the company's commitments, including administrative fees and deferred underwriting compensation - The Company has an agreement to pay an affiliate of the Sponsor $5,000 per month for office space and administrative support services[119] - Underwriters are entitled to a deferred fee of $3,162,500, payable from the Trust Account upon completion of a Business Combination[120] Critical Accounting Policies This section describes the most significant accounting policies, including those for warrants and common stock Warrant Liabilities This policy details the accounting treatment of warrants as derivative liabilities at fair value - Warrants are accounted for as derivative liabilities at fair value, with changes recognized in the Statement of Operations, as they do not meet equity classification criteria under ASC 815-40[123] Common stock subject to possible redemption This policy explains the classification of redeemable common stock as temporary equity at redemption value - Common stock subject to possible redemption is classified as temporary equity at redemption value, as redemption rights are outside the Company's control[124] Net income (loss) per share of common stock This policy describes the two-class method for calculating earnings per share, excluding redeemable common stock - The two-class method is applied for earnings per share calculation, excluding redeemable common stock from basic EPS as they only participate in Trust Account earnings[125] Recent accounting standards This policy states management's assessment that recent accounting pronouncements will not materially impact financial statements - Management does not believe that any recently issued, but not yet effective, accounting pronouncements would materially affect the condensed financial statements[126] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, Breeze Holdings Acquisition Corp. is not required to provide market risk disclosures - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[128] Item 4. Controls and Procedures Disclosure controls were ineffective due to a material weakness in warrant accounting, leading to restatement; remediation plans are underway - Disclosure controls and procedures were not effective as of March 31, 2021[130] - A material weakness in internal control over financial reporting existed, related to the accounting treatment for complex financial instruments (warrants)[131] - This material weakness resulted in the restatement of the Company's audited financial statements as of and for the period ended December 31, 2020[131] - The Company plans to enhance processes, access to accounting literature, and communication to remediate the material weakness[132] Part II. Other Information This section provides additional disclosures on legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings The company reported no legal proceedings during the period - No legal proceedings were reported[137] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the annual report on Form 10-K/A - No material changes to the risk factors disclosed in the annual report on Form 10-K/A filed on June 24, 2021[138] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - No unregistered sales of equity securities or use of proceeds were reported[140] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported[141] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company[143] Item 5. Other Information The company reported no other information for this section - No other information was reported[145] Item 6. Exhibits This section lists exhibits filed with this Quarterly Report on Form 10-Q, including certifications and XBRL documents - Exhibits include certifications (31.1, 32.1) and XBRL Instance, Taxonomy Extension Calculation, Schema, Definition, Labels, and Presentation Linkbase Documents (101.INS, 101.CAL, 101.SCH, 101.DEF, 101.LAB, 101.PRE)[147] Part III. Signatures This section contains the required signatures for the Form 10-Q, confirming its submission Signatures This section contains the required signatures for the Form 10-Q, confirming its submission - The report was signed by J. Douglas Ramsey, Chief Executive Officer and Chief Financial Officer, on July 2, 2021[150]