Breeze Acquisition (BREZ) - 2021 Q3 - Quarterly Report

Part I. Financial Information Condensed Financial Statements The unaudited interim financial statements detail the company's financial position, operations, and cash flows, emphasizing non-cash gains from warrant liabilities and restated prior financials Condensed Balance Sheets As of September 30, 2021, total assets were $117.0 million, liabilities decreased to $9.3 million, and stockholders' deficit improved to $7.4 million due to non-cash gains Condensed Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2021 | Dec 31, 2020 (Restated) | | :--- | :--- | :--- | | Assets | | | | Cash | $9,584 | $693,818 | | Cash and marketable securities held in Trust Account | $116,764,515 | $116,734,480 | | Total Assets | $116,951,547 | $117,588,539 | | Liabilities & Stockholders' Deficit | | | | Total Current Liabilities | $452,462 | $302,219 | | Warrant liabilities | $8,855,250 | $17,487,000 | | Total Liabilities | $9,307,712 | $17,812,511 | | Common stock subject to possible redemption | $115,000,000 | $115,000,000 | | Total Stockholders' Deficit | ($7,356,165) | ($15,223,972) | Unaudited Condensed Statements of Operations Net income for the three and nine months ended September 30, 2021, was $3.6 million and $7.8 million respectively, primarily driven by non-cash gains from warrant liabilities Statement of Operations Summary (Unaudited) | Description | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Operating and formation costs | ($190,570) | ($869,591) | | Loss from operations | ($190,570) | ($869,591) | | Change in fair value of warrant liabilities | $3,777,750 | $8,631,750 | | Other income (net) | $14,520 | $30,798 | | Net income | $3,601,700 | $7,792,957 | | Basic and diluted net income per share | $0.25 | $0.53 | Unaudited Condensed Statement of Cash Flows Net cash used in operating activities was $684,234 for the nine months ended September 30, 2021, with net income significantly adjusted for non-cash warrant liability gains Cash Flow Summary for Nine Months Ended Sep 30, 2021 (Unaudited) | Description | Amount | | :--- | :--- | | Net income | $7,792,957 | | Change in fair value of warrant liabilities | ($8,631,750) | | Net cash used in operating activities | ($684,234) | | Cash – Beginning of period | $693,818 | | Cash – End of period | $9,584 | Notes to Unaudited Condensed Financial Statements These notes detail the company's SPAC nature, IPO, related party transactions, financial statement restatement, warrant accounting, and a sponsor-funded business combination extension - The company is a blank check company formed for a business combination, with all activity related to its formation, IPO, and target search[19][20][21] - Financial statements were restated to classify redeemable common stock as temporary equity and correct offering cost accounting, significantly impacting stockholders' equity presentation[42][43] - The sponsor deposited $1,150,000 into the trust account as a non-interest-bearing loan to extend the business combination deadline to February 25, 2022[31][118] - A going concern uncertainty exists due to significant costs and dependence on completing a business combination, which management plans to address via the combination and potential sponsor loans[37][38] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, with financial results driven by non-operating activities like warrant liability changes, limited liquidity, and a going concern uncertainty related to business combination completion Results of Operations Summary | Period | Net Income | Key Drivers | | :--- | :--- | :--- | | Three months ended Sep 30, 2021 | $3.6 million | $3.8M gain on warrant liabilities, offset by $191k operating costs | | Nine months ended Sep 30, 2021 | $7.8 million | $8.6M gain on warrant liabilities, offset by $870k operating costs | - As of September 30, 2021, the company held $116,764,515 in the Trust Account and $9,584 in cash outside for working capital[128][134][138] - The sponsor or affiliates may provide non-obligatory loans, convertible into warrants, to fund working capital deficiencies[139] - Critical accounting policies include fair value accounting for warrants as liabilities and classifying public shares as common stock subject to possible redemption outside permanent equity[146][147] Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures regarding market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[152] Controls and Procedures Management concluded disclosure controls and procedures were ineffective due to a material weakness in accounting for complex financial instruments, leading to restatements, with remediation plans underway - Disclosure controls and procedures were ineffective as of September 30, 2021[153] - A material weakness in internal control over financial reporting was identified regarding complex financial instruments, leading to financial statement restatements[153][154] - The company plans to remediate the material weakness by enhancing accounting literature access and increasing communication with professionals[155] Part II. Other Information Legal Proceedings The company reported no legal proceedings during the period - There are no legal proceedings to report[160] Risk Factors No material changes to risk factors have occurred since the last annual report filing - No material changes to risk factors have occurred since the last annual report filing[161] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[163] Other Information The company reported no other information required to be disclosed under this item - None[168]