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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,

Washington, D.C. 20549

_____________________

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 2024
OR
For the fiscal year ended December 31, 2018

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________to ______________  FOR THE TRANSITION PERIOD FROM                  TO

Commission File Number001-38417

OPES ACQUISITION CORP.

BurgerFi International, Inc.
(Exact Namename of Registrant as Specifiedspecified in Itsits Charter)

Delaware82-2418815
(State or Other Jurisdictionother jurisdiction of Incorporation
incorporation
or Organization)organization)

(I.R.S. Employer
Identification Number) 

Park Plaza Torre I

Javier Barros Sierra 540, Of. 103

Col. Santa Fe

01210 Mexico City, Mexico

No.)
200 West Cypress Creek Rd., Suite 220 Fort Lauderdale, FL33309
(Address of Principal Executive Offices)principal executive offices)(Zip Code)

+52 (55) 5992-8300

(

Registrant’s Telephone Number, Including Area Code)telephone number, including area code: (954) 618-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0001 per shareBFI
Units, each consisting of one share of common stock and one redeemable warrantThe Nasdaq Stock Market LLC
Common stock, par value $0.0001 per shareThe Nasdaq Stock Market LLC
Redeemable warrants, each exercisable for one share of common
stock at an exercise price of $11.50 per share
BFIIWThe Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrantRegistrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No

Indicate by check mark if the registrantRegistrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes o No

Indicate by check mark whether the registrantRegistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrantRegistrant was required to file such reports), and (2) has been subject to such filing requirementrequirements for the past 90 days.days Yes No ☐ 

o

Indicate by check mark whether the registrantRegistrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrantRegistrant was required to submit such files). Yes No ☐ 

Indicate by check mark if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company”,company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated fileroAccelerated filero
Non-accelerated filerSmaller reporting company
Emerging growth companyo

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).



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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No   No

As of June 30, 2018 (the Registrant’s most recently completed second fiscal quarter), the

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock held by non-affiliateson The NASDAQ Stock Market on July 3, 2023, was approximately $111,550,000 (based on a closing price$29,524,449.
The number of $9.70 per share).

As of March 29, 2019, there were 14,820,000 shares of Registrant’s common stock $0.0001 par value per share, outstanding.

outstanding as of April 5, 2024 was 27,042,213.

OPES ACQUISITION CORP.

FORM 10-K

TABLE OF CONTENTS

[PRINTER TO UPDATE PAGE NUMBERS]

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement for its 2024 annual meeting of stockholders (when it is filed) will be incorporated by reference into Part III of this Annual Report on Form 10-K.
Table of Contents
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Item 1.5
Item 1.Business.5
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Item 1B.41
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Item 9C.
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Unless otherwise stated in this annual report




PART I
Forward-Looking and Cautionary Statements

This Annual Report on Form 10-K (this “annual report”), references to:

“we,” “us,” “company” or “our company” are to Opes Acquisition Corp.;

“EarlyBirdCapital” are to EarlyBirdCapital, Inc., the representative of the underwriters of our initial public offering;

“units” are to the 11,500,000 units sold in the initial public offering, including 1,500,000 units that were issued pursuant to the exercise in full of the underwriters’ over-allotment option, each unit consisting of one share of common stock and one warrant;

“common stock” are to our shares of common stock, par value $0.0001 per share;

“warrants” are to our redeemable warrants, each warrant entitling the holder to purchase one share of Common Stock at a price of $11.50 per share commencing 30 days after the completion of our initial business combination;

“public shares” are to shares of our common stock sold as part of the units in our initial public offering, including shares purchased as a result of the exercise of the over-allotment option by the underwriters (whether they were purchased in our initial public offering or thereafter in the open market);

“public stockholders” are to the holders of our public shares, including, without limitation, our sponsor, initial stockholders, EarlyBirdCapital, and members of our management team to the extent that they have purchased public shares, provided that such holder’s status as a “public stockholder” shall exist only with respect to such public shares;

“management” or our “management team” are to our executive officers and directors;

“initial stockholders” are the holders of the founder shares;

“sponsor” are to Axis Capital Management

“Axis Public Ventures” are to Axis Public Ventures S. de R.L. de C.V., an affiliate of our sponsor and an initial stockholder;

“Lion Point” are to Lion Point Capital, one of our initial stockholders that is not otherwise affiliated with us or our sponsor;

“founder shares” are the 2,875,000 shares of our common stock sold by us to our sponsor prior to our initial public offering;

“private placement” are to the private placement of 445,000 private placement units purchased by our initial stockholders simultaneously with the completion of our initial public offering, at a purchase price of $10.00 per private placement unit;

“private placement shares” are to the shares of common stock underlying the private placement units;

“private placement warrants” are to the warrants underlying the private placement units;

“private placement units” are to the 445,000 units purchased by our initial stockholders in the private placement, each private placement unit consisting of one share of common stock and one warrant;


“unit purchase option” are to the option to purchase 750,000 units at an initial exercise price of $10.00 per unit, that we sold to EarlyBirdCapital and its designees simultaneously with the completion of our initial public offering, at a purchase price of $100;

“forward purchase contract” are to Lion Point’s agreement to purchase 3,000,000 units at $10.00 per unit, for aggregate gross proceeds of $30,000,000, in a private placement to occur concurrently with the consummation of our initial business combination, subject to the conditions contained in such agreement.


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report,contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may appear throughout this Annual Report on Form 10-K, including without limitation, statements under the heading “Management’sfollowing sections: Item 1 "Business," Item 1A "Risk Factors," and Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-lookingOperations." Forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These forward-looking statementsgenerally can be identified by the use ofwords such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will be," "will continue," "will likely result," and similar expressions. These forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to our:

ability to complete our initial business combination;

success in retaining or recruiting, or changes required in, our officers, key employees or directors following an initial business combination;

officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements;

potential ability to obtain additional financing to complete an initial business combination;

pool of prospective target businesses;

failure to maintain the listing on, or the delisting of our securities from, Nasdaq or an inability to have our securities listed on Nasdaq or another national securities exchange following our initial business combination;

the ability of our officers and directors to generate a number of potential investment opportunities;

potential change in control if we acquire one or more target businesses for stock;

public securities’ potential liquidity and trading;

lack of a market for our securities;

use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or

our financial performance.

The forward-looking statements contained in this annual report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performanceare subject to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those factors describeddiscussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may varycaption "Risk Factors" in material respects fromItem 1A and those projecteddiscussed in these forward-looking statements.other documents we file with the Securities and Exchange Commission (the “SEC”). We undertake no obligation to updaterevise or revisepublicly release the results of any revision to these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” may not be exhaustive.


By their nature, forward-looking statements involveby law. Given these risks and uncertainties, because they relatereaders are cautioned not to events and dependplace undue reliance on circumstances that may or may not occur in the future. We caution you thatsuch forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this annual report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this annual report, those results or developments may not be indicative of results or developments in subsequent periods.

statements.


PART I

ITEMItem 1. Business.


BUSINESS

Introduction

We are OF THE COMPANY


Opes Acquisition Corp. (“OPES”) was formed as a blank check company incorporated in Delaware on July 24, 2017 for the purpose of entering into a merger, stockshare exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combinationtransaction with one or more operating businesses or entities (a “business combination”Business Combination Transaction). BurgerFi International, LLC was formed in Delaware on January 27, 2011. On December 16, 2020, to effectuate a Business Combination Transaction, OPES purchased 100% of the membership interests of BurgerFi International, LLC from the members of BurgerFi International, LLC (“Members”), resulting in BurgerFi International, LLC becoming a wholly owned subsidiary of OPES. Subsequently, in connection with this Business Combination Transaction (the "BurgerFi acquisition"), OPES changed its name to “BurgerFi International, Inc.”

On November 3, 2021, BurgerFi International, Inc. acquired 100% of the outstanding shares (the Anthony's Acquisition”) of Hot Air, Inc., a Delaware corporation ("Hot Air") from Cardboard Box LLC, a Delaware limited liability company ("Cardboard"). Hot Air, through its subsidiaries, owns the business of operating upscale casual dining restaurants in the specialty pizza and wings segment under the name "Anthony's Coal Fired Pizza & Wings" ("Anthony's").

Unless the context otherwise requires, all references to “we,” “us,” “our,” and the “Company” and other similar references refer to BurgerFi International, Inc. after consummation of the BurgerFi acquisition and, unless otherwise stated, all its subsidiaries. The term “BurgerFi” refers to the system-wide fast casual “better burger” concept. The term “Anthony’s” refers to the upscale casual, “well-done” premium pizza and wing concept.

Overview

We are a leading multi-brand restaurant company that develops, markets and acquires fast-casual and premium-casual dining restaurant concepts around the world, including corporate-owned stores and franchises. As of January 1, 2024, we were the owner, operator and franchisor of the two following brands:

BurgerFi. BurgerFi is a fast-casual “better burger” concept, renowned for delivering an exceptional, all-natural premium “better burger” experience in a refined, contemporary environment. BurgerFi’s chef-driven menu offerings and eco-friendly restaurant design drive our brand communication. It offers a classic American menu of premium burgers, hot dogs, crispy chicken, frozen custard, hand-cut fries, shakes, beer, wine and more. Originally founded in 2011 in Lauderdale-by-the-Sea, Florida, the purpose was simple – “RedeFining” the way the world eats burgers by providing an upscale burger offering, at a fast-casual price point. BurgerFi is committed to an uncompromising and rewarding dining experience that promises fresh food of transparent quality. Since its inception, BurgerFi has grown to 108 BurgerFi locations, and as of January 1, 2024, is comprised of 28 corporate-owned restaurants and 80 franchised restaurants in 19 states, one foreign country, and Puerto Rico.

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BurgerFi was named "The Very Best Burger" at the 2023 edition of the nationally acclaimed SOBE Wine and Food Festival, "Best Fast Casual Restaurant" in USA Today's 10Best 2022 Readers' Choice Awards for the second consecutive year, QSR Magazine's Breakout Brand of 2020 and Fast Casual's 2021 #1 Brand of the Year. In 2021, Consumer Report praised BurgerFi for serving "no antibiotic beef" across all its restaurants, and Consumer Reports awarded BurgerFi an “A-Grade Angus Beef” rating for the third consecutive year.

Anthony’s. Anthony’sis a premium pizza and wing brand, which prides itself on serving fresh, never frozen, high-quality ingredients. The concept is centered around a 900-degree coal fired oven, and its menu offers “well-done” pizza, coal fired chicken wings, homemade meatballs, and a variety of handcrafted sandwiches and salads. The restaurants also feature a deep wine and craft beer selection to round out the menu. The pizzas are prepared using a unique coal fired oven to quickly seal in natural flavors while creating a lightly charred crust. Anthony’s provides a differentiated offering among its casual dining peers driven by its coal fired oven, which enables the use of fresh, high-quality ingredients with quicker ticket times.

Since its inception in 2002 in Ft. Lauderdale, Florida, the Anthony’s brand has grown to60 restaurants including 59 corporate-owned and one franchised location co-branded with BurgerFi as of January 1, 2024, primarily located along the East coast and has restaurants in eight states, including Florida (28 corporate and one co-branded franchised), Pennsylvania (11), New Jersey (7), New York (5), Massachusetts (4), Delaware (2), Maryland (1), and Rhode Island (1).

Anthony’s was named “The Best Pizza Chain in America" by USA Today's Great American Bites and “Top 3 Best Major Pizza Chain” by Mashed in 2021 and “The Absolute Best Wings in the U.S.” by Mashed in 2022. And named in “America's Favorite Restaurant Chains of 2022” by Newsweek.

Beyond our current brand portfolio, we intend to acquire other restaurant concepts that will allow us to grow and also offer additional food categories. In evaluating potential acquisitions, we specifically seek concepts with, among others, the following characteristics:

established, recognized brands;
long-term, sustainable operating performance;
consistent cash flows; and
growth potential, both geographically and through co-branding initiatives across our portfolio.

We intend to leverage our developing management platform and as a result, expect to achieve cost synergies post-acquisition by reducing the corporate overhead of the acquired company. We also plan to grow the top line revenues of newly acquired brands through support from our management and systems platform, franchising, marketing and advertising, supply chain assistance, site selection analysis, staff training and operational oversight and support.

Corporate-owned restaurants

For the years ended January 1, 2024 and January 2, 2023, average sales for our matured corporate-owned restaurants (stores open for greater than 2 years) were approximately $1.3 million and $1.7 million, respectively, at BurgerFi, and $2.1 million for both years at Anthony’s. At BurgerFi, we typically operate in a 2,200 to 2,400 square foot leased endcap and, to a lesser extent, free-standing or in-line space. For Anthony’s, we operate in an approximately 3,200 square foot leased endcap and, to a lesser extent, free-standing or in-line space. We do not own any real estate; we lease all our corporate-owned restaurant locations. Our efforts in identifying a prospective target businesslease term is generally ten plus two to four five-year options. Our build-out costs for BurgerFi have historically ranged from $0.8 million to $1.3 million but typically average approximately $1.1 million. Our build-out costs consist of leasehold improvements, kitchen equipment, furniture, point of sale and computer equipment, security equipment and signage. Our build-out costs for Anthony’s have historically ranged from $0.9 million to $1.2 million but typically average approximately $1.1 million. Our build out costs include, but are not limited to, leasehold improvements, kitchen equipment, furniture, point of sale and computer equipment, security equipment and signage.

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Franchised restaurants

With respect to the BurgerFi brand, we currently use a franchising strategy to drive new restaurant growth in new and established markets, allowing for brand expansion without significant capital investment. The Company continues to evaluate its BurgerFi portfolio to determine the proper balance between corporate-owned restaurants and franchises and from time to time may sell and transfer corporate-owned restaurants to franchisees. Moreover, the Company launched Anthony’s franchising in 2022 with the first Anthony’s franchise co-branded with BurgerFi opening on December 18, 2023 in Kissimmee, Florida.. As of January 1, 2024, there were a total of 80 BurgerFi franchised restaurants. Franchisees range in size from single restaurant operators to multi-unit operators. For each of the years ended January 1, 2024 and January 2, 2023, average sales for our matured franchised restaurants (stores open for greater than 2 years) were approximately $1.4 million for BurgerFi franchises. As of January 1, 2024, franchisees owned an average of two locations, although several own between three and eight.

We believe that franchise revenue provides stable and recurring cash flows to us and, as such, we plan to continue growing our brands primarily through expanding our base of franchised restaurants and are not planning to build any new corporate owned restaurants in the near future. In established markets, we encourage continued growth from current franchisees and assist them in identifying and securing new locations. In emerging and new markets, we intend to source qualified and experienced new franchisees for multi-unit development opportunities. We generally seek franchisees from successful, non-competitive brands operating within the expansion markets.

The BurgerFi Brands Difference

The overall success of the Company and its brands is tied to consistent delivery by our corporate-owned restaurants and franchise operators of freshly prepared, better-for-you, high-quality menu items that our customers desire. With the input of our customers and franchisees, we continually strive to keep an updated perspective on our brands, including by strengthening our existing menu offerings and introducing new items. When updating our menu items and other offerings, we strive to ensure that changes are consistent with the core identity and attributes of our brands. In conjunction with our franchised restaurant operators, we are committed to delivering authentic, consistent experiences that have strong brand identity with customers.

In addition, the Company is committed to creating an inclusive and equitable environment that supports the growth and success of our team members from diverse socioeconomic backgrounds, genders, races, experiences, and more. These beliefs are an integral part of sharing and promoting a culture of inclusion within the organization and beyond.

In pursuing acquisitions and entering new restaurant brands, we intend to ensure consistent values with new restaurant concepts. As our restaurant portfolio continues to grow, we believe that both our franchisees and customers will recognize and support this ongoing commitment as they enjoy differing brand offerings.

In particular, industrya summary of the purpose and belief of each of the BurgerFi and Anthony’s brands is as follows:

BurgerFi Brand. At BurgerFi, we are a Better Burger Brand featuring premium, quality ingredients and chef-crafted sensationally indulgent burgers, chicken, fresh-cut french fries and hand-battered onion rings, salads, custard shakes and plant-based burger options to meet the changing needs our guests. BurgerFi uses only the best ingredients: our domestically served freshly-angus ground beef comes from farms where cattle are humanely raised, vegetarian fed, and never exposed to steroids, antibiotics, or geographic regiongrowth hormones – ever. In addition, we have developed our proprietary VegeFi burger and specialty made sauces. We are committed to the local communities where we serve and have our Give Back charity program where we donate a portion of proceeds from the restaurant’s sales as local fundraisers.

Anthony’s Brand. At Anthony’s, we are an authentic Italian restaurant committed to quality by using fresh ingredients – never frozen - and making our dough fresh daily for our pizzas. Anthony’s prides itself on importing our products from Italy, including our tomatoes, pasta and pecorino romano cheese. We are committed to responsible sourcing to obtain the freshest foods so we can deliver high-quality products, including premium pizzas and roasted jumbo wings – from the most flavorful canned Italian tomatoes for our handmade sauce to mozzarella cheese from Wisconsin. In serving the freshest ingredients, as well as helping support the local communities in which we serve, we source our fresh tomatoes locally.

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At Anthony’s we honor our Italian heritage by serving family recipes as well as our signature hospitality. We live by the mottos “made with love” and “made with care.”. We serve our guests by hand, with heart and soul. This is one of the reasons why Anthony’s has the “first-slice” mentality – always serving the customer the first slice of pizza as if they are home with their family.

Executive Leadership

In July 2023, BurgerFi International had executive leadership changes. Our new Chief Executive Officer is an award-winning career restaurant professional with nearly 30 years of experience growing brands and helping them remain competitive. He most recently served as President of Smashburger, the Denver-based chain that specializes in custom burgers. In this role, he retooled the entire organization including rebuilding the leadership team, bringing back high quality food products, redefining the real estate portfolio, launching new food safety, service and cleanliness and restaurant condition initiatives, and relaunching the brand with a new marketing team and direction. Under his leadership, Smashburger experienced four years of system-wide same store sales growth along with expansion of both the corporate and franchise footprint.
Our new Chief Financial Officer, joins us with more than 17 years of experience specializing in equity research and serving as an analyst for various organizations, including The Buckingham Group, Jefferies Asset Management, Lehman Brothers, Oppenheimer & Co. Inc., Telsey Advisory Group, and Union Gaming Securities. He also has experience as a consumer analyst with over 15 years covering the consumer discretionary sector. Prior to joining us, he served as Chief Financial Officer of Odyssey Marine Exploration (Nasdaq: OMEX) in Tampa, Florida, where he directed the company’s overall finance function and provided specialized focus in financial negotiations, financial analysis and modeling, funding transactions, business/financial reporting and investor relations. Prior to joining Odyssey, he was Vice President of Corporate Finance and Development at Mohegan Gaming & Entertainment where he led International Financial Development and Investor Relations.

Winning Culture

The franchise and corporate leaderships teams have been reorganized to report directly to our CEO who provides strong support and focus on operations. The “Win” culture framework is built on three principles: Is it a ‘win’ for the guest? Is it a ‘win’ for the restaurant team members? Is it a ‘win” for Stockholders and Franchisees? These are the strategic filters used for daily decisions at the restaurant and Restaurant Support Center.

Five Point Strategic Plan

The business plan for both brands is built on the Five Point Strategic Plan.

1.Infrastructure – The plan starts with people. At both BurgerFi and Anthony’s, we have promoted from within for the field team leadership roles, we have made significant improvements in reducing turnover at the restaurant level and we have empowered our General Managers to hire the best people. Improving our training, communications and systems for our franchisees ensures that they are able to hire and train the best people which ultimately translates into improved guest experience. By placing the guest first, we strive to lead the Fast Casual Better Burger category.
2.Taste and Quality Superiority – this has been a key differentiator for both brands since they were founded and upholding that quality – or bringing it back – has been a key focus. At BurgerFi, we have improved the quality of hand-cut French fries through an improved cooking process, we have improved the temperature and overall taste of the burger sandwiches with improved to-go packaging and have improved the quality of our buns with a new, clean ingredient product. When introducing new products and menu innovation, new items must meet our high quality standards, such as the introduction of new pasta entrees at Anthony’s with imported Italian pasta and the new jumbo wings at BurgerFi. We strive to not sacrifice quality for the sake of cost-cutting.
3.Defining the Portfolio – we are constantly re-examining our current locations as well as looking at our development portfolio. The world is changing and the way consumers travel, shop and eat is constantly changing. Therefore, we aim to meet customers while they are out rather than waiting for them to come to us. Non-traditional partnerships, such as airports, movie-theaters and entertainment parks are an accelerated development path and one that brings our brand in front of thousands of people for BurgerFi. With prominence along the East Coast, we strive to continue to fortress our franchise presence along this corridor along with the re-opening of the new flagship BurgerFi in New York City, as well as new restaurant openings. The first Anthony’s franchise as a co-brand with BurgerFi in the vacation home capital of the world thoughof Kissimmee, Florida marked a new chapter for the brand and is expected to be followed by a second franchisee location in Miami located at the premiere Miami World Center.
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4.Standards and Processes – creating and maintaining gold standards is critical to ensure consistent, excellent execution and to encourage adherence to food safety protocols by all restaurants. Technology and innovation plays a critical role and upgrading POS systems, mobile apps, online training and scheduling enables efficiencies while improving performance and, reducing labor and waste.
5.Marketing – creating awareness through both earned and owned media channels is critical to allow a ‘challenger’ brand to “punch above our weight.” Strategic media placement in digital and social channels with target audience segmentation, and a refined search and optimized website is the first pillar of our omnichannel marketing strategy. This combined with leveraging relevant social cultural currency trends and holidays and improving loyalty through app downloads and building the first party database for both brands has resulted in an improved full funnel marketing approach and improved NPS scores as well record sales and traffic promotional days.

Growth Strategies

Our long-term strategy is focused on profitably building our base brands and growing new distribution channels, including franchised locations and acquiring new concepts.We believe the Company’s growth strategies primarily include the following:

Opportunistically Acquire New Brands. We are developing a management platform to cost-effectively scale new restaurant concept acquisitions. Our acquisition of Anthony’s is the first example of this growth strategy. We seek concepts with established, widely recognized brands; steady cash flows; stable relationships with franchisees; sustainable operating performance; and growth potential, both geographically and through co-branding initiatives across our portfolio. We are also actively focused on tuck-in acquisitions of smaller better burger operations or franchise brand conversions, which we expect would expand our overall footprint as the better burger space.

Enhance Existing Markets. We anticipate that our new and existing franchisees will continue to expand further as we focus our efforts on the franchise business, including the launch of the Anthony’s franchise brand in 2022. We plan to leverage our position as a leading “better burger” and “premium pizza and wings” concept in Florida, as well as along the Eastern seaboard and other important markets in the Southeast, Mid-Atlantic, and Northeast. Many of our franchisees have grown their businesses over time, increasing the number of stores operated in their organizations. To capitalize on these relationships, we also hope to be able to cross-sell concepts across the Company’s brands.

Increasing Same-Store Sales. In addition to opening new corporate-owned and franchise locations, we continue to focus on driving increases in same-store sales performance by providing exciting guest experiences that include new seasonal and other specific offerings, including loyalty rewards and our growing customer databases; continued service of freshly prepared, better-for-you, high-quality menu items; and technological upgrades like the BurgerFi-owned app and web, as well as third-party ordering and delivery services.

Non-Traditional Partnerships and International Expansion.In recent years BurgerFi has had success targeting non-traditional venues for restaurant locations, such as airports, transportation hubs, toll roads, higher education, military bases, and sporting venues and plans to continue to grow in these areas. The Company also intends to continue modestly growing its international market with established franchisees, including in Saudi Arabia.


Franchise Program

Overview

The Company launched the Anthony’s franchise program in 2022 and expects to leverage the BurgerFi brand franchise program, systems, and knowledge, and while most of the operating franchises are with the BurgerFi brand, Anthony’s opened its first franchise, cobranded with BurgerFi, in December 2023. As a result, most of the following is an overview of the BurgerFi franchise program; however, Anthony’s intends to follow similar guidelines.

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BurgerFi uses a franchising strategy to augment new restaurant growth in new and established markets, allowing for brand expansion without significant internal capital investment. BurgerFi’s first franchise location opened in 2012. As of January 1, 2024, there were a total of 80 franchised restaurants in the United States and Saudi Arabia. Franchisees range in size from single restaurant operators to multi-unit operators, the largest of which owns eight locations. For a BurgerFi location, the current franchise agreement reflects a 10 year term and provides for an initial franchise fee per store of $45,000 and a royalty fee of 5.5% of net sales and an advertising fee of 2.5% of net sales.

We believe that franchise revenue provides stable and recurring cash flows to us and, as such, we plan to continue expanding the base of franchise operated restaurants. In established markets, we intend to encourage continued growth from current franchisees and assist them in identifying and securing new locations. In emerging and new markets, we intend to source qualified and experienced new franchisees for multi-unit development opportunities. Although historically we’ve had a significant blend of one to two store franchise operators in our system, in expansion markets we will strive to seek franchisees from successful, non-competitive brands operating within those markets. We market franchise opportunities through strategic networking, participation in select industry conferences, high profile sales campaigns, our existing website, printed materials, and geo-targeted digital ads.

BurgerFi has several forums to enhance participation and engagement with our franchise community, including a Franchise Advisory Council (“FAC”) to enhance participation and engagement with the franchise community. The FAC provides input and feedback on operating and marketing strategy and initiatives. FAC works with its group of franchise constituents to communicate and collaborate with the Company, providing input, feedback, and marketing strategy and system wide initiatives. Cross-functional teams comprised of company operators, franchise operators and executive team members collaborate to enhance vendor relationships and negotiate favorable scenarios for both the BurgerFi system and our vendors.

Anthony’s uses a franchising strategy to augment new restaurant growth in new and established markets, allowing for brand expansion without significant internal capital investment. Anthony’s first franchise location, cobranded with BurgerFi, opened in 2023. As of January 1, 2024, there was a total of one franchised restaurant located in Kissimmee, Florida. For an Anthony’s location, the current franchise agreement reflects a 10 year term and provides for an initial franchise fee per store of $50,000, a royalty fee of 5.5% of net sales and an advertising fee of 2.5% net sales.

Franchise Owner Support

We have structured our corporate staff, training programs, operational systems, and communication systems to ensure we are currently focusing on prospective target businesses in Mexico.

All activity through December 31, 2018 relatesdelivering strong, effective support to our formation, initial public offering,franchisees. We assist franchisees with the site selection process, and searchevery new franchise location is scrutinized by our corporate real estate team. We provide template plans franchisees may use for new restaurant construction and work with franchisees and their design and construction vendors to ensure compliance with brand specifications. A training program is required for all franchisees, operating partners, and management staff. Training materials introduce new franchisees to our operational performance standards and the metrics that help maintain these high standards.


For the first two restaurant openings for a new franchisee, we typically provide significant on-site support, with more modest support for subsequent openings for that franchisee. On an ongoing basis, we collect and disseminate customer experience feedback on a real time basis through a third-party vendor. We also conduct regular on-site audits at each franchise location. Our regional operations leaders are dedicated to ongoing franchise support and oversight, regularly visiting each franchise territory. Our marketing department assists franchisees with local marketing programs and guidance with our national marketing campaigns. We typically communicate with franchisees through our company newsletter, which is published monthly and hold weekly inter-active webinar meetings to update our franchisee teams and conduct additional training. Periodically, we also hold a summit for franchisees, vendors, and company operations leaders to review overall performance, celebrate shared success, communicate best practices, and plan for the year ahead.

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Site Selection

Our strategy regarding site selection is to cluster multiple locations in a demographic market area. We believe this clustering allows efficiencies in labor, including knowledge base, “pro-teams,” cross-training and developing and training new managers. Additionally, we believe this clustering allows better leverage in media buying, brand awareness, and culture. We target businessdemographics with whichhigh concentrations of well-educated consumers, with above average income levels, who care about what they eat. Beyond our great food, BurgerFi offers our target consumers a contemporary restaurant design with eco-friendly fixtures and upcycled furniture. Our wholesome atmosphere is thoughtfully designed to completeenhance the guest experience and to complement shopping centers and communities as well.

Construction & Design

Once a prospective initial business combination.

Initial Public Offering

On March 16, 2018,site is successfully permitted, a BurgerFi restaurant can be built generally in approximately a 90-working day period. During these approximately 90 working days, all construction is completed, and the space is then turned over to the operational team. We team up with several general contractors regionally throughout the country and strive to effectively manage the bidding process of each project to ensure quality standards are kept up to par.


BurgerFi restaurants feature an inviting, next-gen look and feel, appealing to consumers of all ages seeking an engaging, high-quality dining experience. There are many fixtures and furnishings inside that tell a story of sustainability like recycled and/or upcyled furniture items, such as our 111 Navy Coca-Cola chairs, or our energy efficient Macro Air fans and LED lighting that reduce our overall carbon footprint. These products and materials are sourced through our preferred vendors to meet the needs of the restaurants.

The main design goal at BurgerFi is to provide an updated, sleek look that is practical for our customers and provides them with a warm inviting feel. Over the years we closedhave gone through small design evolutions within the restaurant walls to not only better suit the needs of our initial public offeringguests but also the needs of 10,000,000 unitsour team members. We strive to please our guests and in doing so need to create an open space with each unit consistinggreat quality materials that can be easily cleaned and will withstand the wear and tear of onetime.

Supply Chain

Sourcing.The Company’s philosophy is to work with best-in-class suppliers across our supply chain so that we can always provide top quality, better-for-you food for our guests.

For BurgerFi’s meat, we source currently from some of best ranches in the United States who share in our commitment to all-natural food, with no hormones or antibiotics, that is humanely raised and source verified. In 2021, in Consumer Report’s Chain Reaction Report, BurgerFi was praised for serving “no antibiotic beef” across all its restaurants, and Consumer Reports awarded BurgerFi an "A-Grade Angus Beef" rating for the third consecutive year. In addition, our bread is free of common stocksynthetic chemicals, our ketchup is free of corn syrup, and one warrant. Simultaneouslywe use cage-free eggs. At BurgerFi we ensure that our beef is always freshly ground at all domestic locations.

At Anthony’s, we are also committed to using fresh ingredients and take pride in our sourcing. We use only the highest quality ingredients, including hand-picked Italian tomatoes for our sauce, vine-ripened plum tomatoes for our salads, Pecorino Romano grated in house, fresh vegetables and herbs and homemade dough. We do not use freezers for any of our products to ensure the best quality food for the customer. In addition, by sourcing locally where available, such as our fresh tomatoes and our sausage, we strive to bring the freshest ingredients so we can deliver high-quality products.

Distribution.Currently the Company contracts with several national distributors to provide its food distribution services in the United States for both of the Anthony’s and BurgerFi brands. The Company intends to continue leveraging the increased scale of the Company to consolidate distributors and obtain more favorable optimization and costs.

For BurgerFi, we utilize 22 affiliated distribution centers to supply our domestic corporate-owned and franchised restaurants. For Anthony’s, we utilize 11 affiliated distribution centers to supply our corporate-owned restaurants. We regularly assess our broadline distributor to ensure our strict safety and quality standards are met and that the prices they offer are competitive.

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Food Safety.Food safety is of the utmost importance. Within our restaurants we have stringent food safety and quality protocols that help our teams ensure they are providing a safe place to eat for our guests and team members alike. Utilizing in-house temperature and quality audits throughout the day, we strive to verify that all products are safe and of highest quality. Additionally, we use third-party auditing systems, designed to ensure we meet or exceed local health standards. These audits are completed periodically and without notice with the consummationgoal of ensuring that our restaurants maintain our high standards at all hours of the initial public offering, we consummatedday.

Management Information Systems. Our traditional corporate-owned and franchised restaurants use computerized point-of-sale and back-office systems that are designed specifically for the private placement of 400,000 private placement unitsrestaurant industry. In addition, as discussed further below, some BurgerFi locations also offer guest facing self-ordering kiosk technology. Both point-of-sales systems provide touch screen interfaces, order confirmation displays, kitchen displays and integrated, high-speed credit card, gift card and loyalty program processing. The information collected from the point-of-sale system includes daily transaction data, which generates information about sales, average transaction size as well as product mix information. This system allows our management teams to run various reports and access vital information to assist them in controlling food and labor costs daily.

Technology-Enhanced Brand

Integral to our purpose, the Company harnesses innovation and technology to offer our guests opportunities to enjoy our food when and where they want. In addition to ordering in-restaurant at the counter, guests can enjoy BurgerFi or Anthony’s currently by ordering through six different digital platforms:

Pick-Up: Customers can order for pick-up through the BurgerFi app, ACFP.com, BurgerFi.com or through marketplace pick-up platforms, such as, DoorDash, Uber Eats and GrubHub.

First Party Delivery: Customers can order through the BurgerFi app, ACFP.com, or BurgerFi.com for delivery through our delivery affiliations, which generally offers lower pricing than through marketplace delivery;

Marketplace: Our third-party delivery affiliations include Uber Eats, DoorDash, and Grubhub, with several smaller regional associations;

Ghost Kitchen Delivery: Licensees operate kitchens to BurgerFi food specifications and delivery through marketplaces. This allows for a price of $10.00 per private placement unit, generating gross proceeds of $4,000,000. The private placement units were purchased by Axis Public Ventures, Lion Point,broader BurgerFi footprint and delivery further away from traditional stores;

Virtual Brands: We have launched and continue to explore virtual brands that offer select food options through marketplace offerings. This broadens our horizontal reach within the other initial stockholders.

marketplace; and


In-Store: We allow digital purchases at the register using a QR code. We also soldhave select stores with next-generation kiosks, which have indicated higher check average versus the traditional person-to-person interaction.

We believe these different platforms allow us to connect with guests in intuitive, customizable, and meaningful ways, including through a unit purchase optioncustom loyalty program tailored to purchase upreward users with offers based on their preferences, frequency, and order history.

Other technology and innovation ideas that the Company is testing include an in-car voice-activated ordering system available in certain 5G enabled vehicles, as well as new gas-assisted pizza ovens at Anthony’s.

Competition

The restaurant industry is highly competitive with respect to 750,000 unitsprice, service, location, and food quality. It is often affected by changes in consumer trends, economic conditions, demographics, traffic patterns, and concern about the nutritional content of fast-casual and casual foods. Furthermore, there are many well-established competitors with substantially greater financial resources, including several national, regional, and local fast casual and casual dining restaurants. The restaurant industry also has few barriers to EarlyBirdCapitalentry and new competitors may emerge at any time.

We believe that, among others, product quality and taste, convenience of location, and brand differentiation and recognition are among the most important competitive factors in the fast-casual and casual restaurant segment and that our two brands compete effectively. Our brand voice, derived from our commitment to fresh, better-for-you food, emphasizes the Company Purpose and Beliefs to team members, guests and stakeholders alike. The Company remains committed to these values, and we believe our guests understand our dedication to the values and causes that are important to them.
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Seasonality

Outside of our Florida locations where we experience some higher seasonality based on increased tourism from approximately November through April, our corporate-owned stores and franchisees have not historically experienced significant seasonal variability in their financial performance.

Intellectual Property

We own, domestically and internationally, valuable intellectual property including trademarks, service marks, trade secrets and other proprietary information related to our restaurant and corporate brands. This intellectual property includes logos and trademarks which are of material importance to our business. Depending on the jurisdiction, trademarks and service marks generally are valid as long as they are used and/or registered. We seek to actively protect and defend our intellectual property from infringement and misuse.

Employees

As of January 1, 2024, our team members consisted of 2,484 employees, including 1,015 full-time employees. We believe that we have good relations with our employees.

Government Regulation

The Company and its franchisees are subject to extensive government regulation at the federal, state, and local government levels. These include, but are not limited to, regulations relating to the preparation and sale of food, zoning and building codes, franchising, land use and employee, health, sanitation, and safety matters. The Company and its franchisees are required to obtain and maintain a wide variety of governmental licenses, permits and approvals. Difficulty or failure in obtaining them in the future could result in delaying or canceling the opening of new restaurants. Local authorities may suspend or deny renewal of our governmental licenses if they determine that the Company’s operations do not meet the standards for initial grant or renewal. Our restaurants outside the U.S. are subject to national and local laws and regulations which are similar to those affecting U.S. restaurants. The restaurants outside the U.S. are also subject to tariffs and regulations on imported commodities and equipment and laws regulating foreign investment, as well as anti-bribery and anti-corruption laws.

The Company is also subject to regulation by the Federal Trade Commission and subject to state laws that govern the offer, sale, renewal and termination of franchises and its relationship with its franchisees. The failure to comply with these laws and regulations in any jurisdiction or to obtain required approvals could result in a ban or temporary suspension on franchise sales, fines or the requirement that the Company make a rescission offer to franchisees, any of which could affect our ability to open new restaurants in the future and thus could materially adversely affect its business and operating results. Any such failure could also subject the Company to liability to its franchisees.

See “Risk Factors” for a purchase pricediscussion of $100. The unit purchase option is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummationrisks relating to federal, state, local and international regulation of our initial business combination.business.

Our Corporate Information

Our corporate headquarters are located at 200 West Cypress Creek Drive, Suite 220, Fort Lauderdale, Florida 33309. Our main telephone number is (954) 618-2000. Our principal Internet website address is www.burgerfi.com. The unit purchase option may be exercised for cashinformation on our website is not incorporated by reference into, or a part of, this Annual Report on a cashless basis, atForm 10-K.

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Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the holder’s option, and expires on March 17, 2023. We also entered into a contingent forward purchase contract with Lion Point, wherein Lion Point agreed to purchase in a private placement to occur concurrentlySecurities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the consummationSEC. We are subject to the informational requirements of our initial business combination 3,000,000 units at $10.00 per unit, for aggregate gross proceeds of $30,000,000.

On March 20, 2018, in connectionthe Exchange Act and file or furnish reports, proxy statements and other information with the underwriters’ exerciseSEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of their overallotment option in full, we consummated the sale of an additional 1,500,000 units and the sale of an additional 45,000 private placement units, each at a purchase price of $10.00 per unit, generating additional gross proceeds of $15,450,000.

The initial public offering, including the exercise in full of the underwriters’ overallotment option, and the simultaneous private placement, generated gross proceeds of $119,450,000. An amount of $116,150,000 ($10.10 per Unit) from the net proceeds of the sale of the units and private placement units was placed in trust.

Our focus after the initial public offering has been to search for target businesses.


Effecting a Business Combination

General

Wethese websites are not presently engaged in, and we will not engage in, any operations until afterincorporated into this Annual Report. Further, our references to the consummation of our initial business combination. We intend to utilize cash derived from the proceeds of our initial public offering and the private placement of private placement units, our capital stock, debt or a combination ofURLs for these in effecting a business combination. Although substantially all of the net proceeds of the initial public offering and the private placement of private placement unitswebsites are intended to be applied generally toward effecting ainactive textual references only. We also make the documents listed above available without charge through the Investor Relations Section of our website at www.burgerfi.com.



SUMMARY RISK FACTORS

Our business combination,is subject to numerous risks. In addition to the proceedssummary below, carefully review the “Risk Factors” section of this Annual Report. We may be subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. These risks should be read in conjunction with the other information in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and in our other public disclosures. Some of the principal risks relating to our business include:

We have significant outstanding indebtedness and due to event of default on our credit agreement we are not otherwise being designatedforecasted to have the readily available funds to repay the debt if called by the lenders, which raises substantial doubt about the Company’s ability to continue as a going concern.;
The combination of the BurgerFi and Anthony's businesses may not lead to the growth and success of the combined business that we believe will occur;
Integrating the businesses of BurgerFi and Anthony's may disrupt or have a negative impact on the combined business;
The market price of our Common Stock after the Anthony's acquisition has been and may continue to be affected by factors different from those that affected the shares of BurgerFi prior to the Anthony's acquisition;
Our growth strategy for any more specific purposes.

If we payopening new restaurants is highly dependent on the availability of suitable locations and our ability to develop and open new restaurants on a timely basis, on attractive terms;

Our failure to effectively manage our growth could harm our business and operating results;
New restaurants, once opened, may not be profitable and may negatively affect restaurant sales at our existing restaurants;
We have a limited number of suppliers for our initialmajor products and rely on a limited number of suppliers for the majority of our domestic distribution needs;
Our marketing strategies and channels will evolve and may not be successful;
Our franchise business combination using stock or debt securities, or we do not use allmodel presents a number of risks, including launching of the funds released fromrecent Anthony's franchise brand. We rely on a limited number of franchisees for the trust accountoperation of our franchised restaurants, and we have limited control with respect to the operations of our franchised restaurants, which could have a negative impact on our reputation and business;
Incidents involving food safety and food-borne illnesses could adversely affect guests’ perception of our brand, result in lower sales and increase operating costs;
Increased food commodity and energy costs could decrease our restaurant-level operating profit margins or cause us to limit or otherwise modify our menu, which could adversely affect our business;
The digital and delivery business, and expansion thereof, is uncertain and subject to risk;
We face significant competition for paymentguests, and if we are unable to compete effectively, our business could be adversely affected;
Security breaches of the purchase priceeither confidential guest information in connection with, among other things, our electronic processing of credit and debit card transactions or mobile ordering app, or confidential employee information may adversely affect our business;
If we experience a material failure or interruption in our systems, our business combinationcould be adversely impacted;
We depend on key members of our executive management team;
We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brands and adversely affect our business;
Our insurance coverage may not provide adequate levels of coverage against claims;
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Failure to comply with privacy and cybersecurity laws and regulations could cause us to face litigation and penalties that could adversely affect our business, financial conditions and results of operations;
If we fail to maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial information or for redemptionscomply with Section 404 of the Sarbanes-Oxley Act could be impaired, which could have a material adverse effect on our business and stock price;
If we identify a material weaknesses in the future or purchasesotherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business, investor confidence and our stock price;
We have significant stockholders whose interests may differ from those of our public stockholders;
Our anti-takeover provisions could prevent or delay a change in control of the Company, even if such change in control would be beneficial to our stockholders;
We may be unable to maintain the listing of our securities in the future;
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline;
A significant number of shares of our common stock we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the purchase of other companies or for working capital.

A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.

Sources of Target Businesses

We expect that our principal means of identifying potential target businesses will be through the extensive contacts and relationships of our sponsor, officers and directors. While our officers and directors are not required to commit any specific amount of time in identifying or performing due diligence on potential target businesses, our officers and directors believe that the relationships they have developed over their careers and their access to our sponsor’s contacts and resources will generate a number of potential business combination opportunities that will warrant further investigation. We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to other target businesses in which they think we may be interested on an unsolicited basis. Our sponsor, officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. They must present to us all target business opportunities that have a fair market value of at least 80% of the assets held in the trust account (excluding taxes payable on the income accrued in the trust account) at the time of the agreement to enter into the initial business combination, subject to any pre-existing fiduciary or contractual obligations.


We may determine to engage the services of professional firms or other individuals that specialize in business acquisitions on a formal basis. If we do, we may pay such firms a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however, will our sponsor or any of our existing officers, directors, special advisors or initial stockholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction). If we decide to enter into a business combination with a target business that is affiliated with our officers, directors or initial stockholders, we will do so only if we have obtained an opinion from an independent investment banking firm, another independent firm that commonly renders valuation opinions on the type of target business we are seeking to acquire, that the business combination is fair to our unaffiliated stockholders from a financial point of view.

Selection of a Target Business and Structuring of a Business Combination

Subject to our management team’s pre-existing fiduciary duties and the Nasdaq requirement that a target business have a fair market value of at least 80% of the balance in the trust account (excluding taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, and that we must acquire a controlling interest in the target business, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations. If our securities are not listed on Nasdaq at the time of our initial business combination, we will no longer be subject to the Nasdaq requirement. In any case, we intend to consummate our initial business combination only if we (or any entity that is a successor to us in a business combination) will acquire a majorityissuance upon exercise of the outstanding voting securities or assets of the target with the objective of making sure that we are not required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). We believe that, if we own a majority of the target’s outstanding voting securities, we will not be required to register as an investment company under the Investment Company Act since the securities of a majority owned subsidiary that is not itself deemed an investment company are not deemed to be “investment securities” as defined in the Investment Company Act, and since we expect that 60% or more of the value of our total assets (excluding government securities and cash) will be represented by the securities of our target businesswarrants, which we expect will be an operating business. We will seek to acquire established companies that have demonstrated sound historical financial performance. Although we are not restricted from doing so, we do not intend to acquire start-up companies. To the extent we effect a business combination with a company or business thatupon such exercise may be financially unstable or in its early stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

We have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following:

financial condition and results of operation;
growth potential;
brand recognition and potential;
experience and skill of management and availability of additional personnel;
capital requirements;
competitive position;


barriers to entry;
stage of development of its products, processes or services;
existing distribution and potential for expansion;
degree of current or potential market acceptance of the products, processes or services;
proprietary aspects of products and the extent of intellectual property or other protection for its products, processes, formulas or services;
impact of regulation on the business;
regulatory environment of the industry;
costs associated with effecting the business combination;
industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and
macro competitive dynamics in the industry within which the company competes.

We believe such factors will be important in evaluating prospective target businesses, regardless of the location or industry in which such target business operates. However, this list is not intended to be exhaustive. Furthermore, we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines.

Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage.

The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in dilution to our incurring losses and will reduce the funds we can use to complete another business combination. We will not pay any finders or consulting fees to members of our management team, or any of their respective affiliates, for services rendered to or in connection with a business combination.

Fair Market Value of Target Business

Pursuant to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding 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. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuancesecurity holders;

Sales of a substantial number of new shares our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities.


The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold.

Lack of Business Diversification

Our business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at the time of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating businesses at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike other entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity, our lack of diversification may:

subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and

cause us to depend on the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services.

If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.


Limited Ability to Evaluate the Target Business’ Management

Although we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. We cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior management or advisory positions with us following a business combination, it is unlikely that they will devote their full time efforts to our affairs subsequent to a business combination. Our key personnel would only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. Additionally, our officers and directors may not have significant experience or knowledge relating to the operations of the particular target business.

Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Stockholder Approval of Business Combination

We may not seek stockholder approval before we effect our initial business combination, since not all business combinations require stockholder approval under applicable state law. We will seek stockholder approval if it is required by law or Nasdaq rules, or we may decide to seek stockholder approval for business or other reasons. Presented in the table below are the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.

Type of TransactionWhether
Stockholder
Approval is
Required
Purchase of assetsNo
Purchase of stock of target not involving a merger with the companyNo
Merger of target into a subsidiary of the companyNo
Merger of the company with a targetYes

If we determine not to seek stockholder approval of our initial business combination, we will provide our public stockholders with the opportunity to sell their shares to us by means of a tender offer for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. Such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares.


The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in 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 otherwise require us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combination even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination.

Our sponsor and our officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed business combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve a proposed initial business combination and (3) not sell any shares of common stock in any tender in connection with a proposed initial business combination.

Permitted purchases of our securities

If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers or their respective affiliates may purchase shares in the openpublic market or in privately negotiated transactions either prior to or following the consummation of our initial business combination. If they do effect such purchases, we anticipate that they would approach a limited number of large holders of our securities that have voted against the business combination or sought redemption of their shares, or that have indicated an intention to do so, and engage in direct negotiations for the purchase of such holders’ positions. All holders approached in this manner would be institutional or sophisticated holders. There is no limit on the number of shares they may acquire. Our sponsor, initial stockholders, directors, officers, advisors or their affiliates will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act or in transactions that would violate Section 9(a)(2) or Rule 10(b)-5 under the Exchange Act. Although they do not currently anticipate paying any premium purchase price for such public shares, there is no limit on the price they may pay. They may also enter into transactions to provide such stockholders with incentives to acquire shares or vote their shares in favor of an initial business combination. We will notify stockholders of such material purchases or arrangements that would affect the vote on an initial business combination, if any, by press release, filing a Form 8-K or by means of a supplement to our proxy statement. No funds in the trust account may be used to effect purchases of shares in the open market or in privately negotiated transactions.

The purpose of such purchases would be to (i) increase the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met. This may result in the consummation of a business combination that may not otherwise have been possible.

As a consequence of any such purchases by our initialexisting stockholders directors, officers or their affiliates,could cause our stock price to decline;

Trading volatility and the public “float”price of our common stock may be reducedadversely affected by many factors, including its designation as a “penny stock;”
With the stock price under $1.00 we have received a Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard.
We and the number of beneficial holders of our securitiesfranchisees may be reduced, which may make it difficult to obtain the continued listing of our securities on Nasdaq or another national securities exchange in connection with our initial business combination.


Our sponsor initial stockholders, officers, directors and/or their respective affiliates anticipate that they will identify the public stockholders with whom they may pursue privately negotiated purchases through either direct contactadversely affected by the public stockholders or by our receipt of redemption requests or votes against the business combination submitted by such public stockholders following our mailing of proxy materials in connection with our initial business combination. The sellers of any shares so purchased by our sponsor, initial stockholders, officers, advisors, directors and/or their affiliates would, as part of the sale arrangement, revoke their election to redeem such sharesclimate change; and withdraw their vote against the business combination. The terms of such purchases would operate to facilitate our ability to consummate a proposed business combination by potentially reducing the number of shares redeemed for cash.

Redemption rights for public stockholders upon consummation of our initial business combination

We will provide our stockholders with the opportunity to redeem their shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares,are subject to the limitations described herein. As of December 31, 2018, the amount in the trust account is approximately $10.22 per public share. Our sponsor, officers,increasing and directors have each agreedevolving requirements and expectations with respect to their founder sharessocial, governance and private placement shares,environmental sustainability matters, which could expose us to numerous risks.


RISK FACTORS

Stockholders should carefully consider the following risk factors, together with all of the other information included in this Annual Report on Form 10-K and anyin our other public shares held by them,disclosures. The risks described below highlight potential events, trends or other circumstances that could adversely affect our business, financial condition, results of operations, cash flows, liquidity or access to waive their respective redemption rights in connection withsources of financing and could adversely affect the consummationtrading price of our initial business combination.

Mannersecurities. These risks could cause our future results to differ materially from historical results and from guidance we may provide regarding our expectations of Conducting Redemptions

We will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial businessfuture financial performance.


RISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

The combination either in connection with a stockholder meeting called to approve the business combination or by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed 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 transactionBurgerFi and whetherAnthony's businesses may not lead to the termsgrowth and success of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. combined business that we believe will occur.

We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rulesmay not realize all of the Securitiessynergies that we anticipated from the combination of the BurgerFi and Exchange Commission (“SEC”) unless stockholder approval is required by law or by a Nasdaq listing requirement or we choose to seek stockholder approval for business or other legal reasons.

If a stockholder vote is not requiredAnthony's businesses and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:

conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the proposed business combination, and

file tender offer documents with the SEC prior to consummating our initial business combination that will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.

If we conduct redemptions pursuant to the tender offer rules, our offer to redeem must remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we willmay not be permitted to consummatesuccessful in implementing our initialcommercialization strategy. Our combined business combination until the expiration of the tender offer period.

In connection with the consummation of our business combination, we may redeem pursuant to a tender offer up to that number of shares of common stock that would permit us to maintain net tangible assets of $5,000,001. However, the redemption threshold may be further limited by the terms and conditions of our proposed initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed business combination. If the aggregate cash consideration we would be required to pay for all shares of common stock that are validly tendered plus the amount of any cash payments required pursuant to the terms of the proposed business combination exceeds the aggregate amount of cash available to us, taking into consideration the requirement that we maintain net tangible assets of at least $5,000,001 or such greater amount depending on the terms of our potential business combination, we will not consummate the business combination, we will not purchase any shares of common stock pursuant to the tender offer and any shares of common stock tendered pursuant to the tender offer will be returned to the holders thereof following the expiration of the tender offer.


When we conduct a tender offer to redeem our public shares upon consummation of our initial business combination, in order to comply with the tender offer rules, the offer will be madeis subject to all of our stockholders, not just our public stockholders. In connection with any such tender offer, our sponsor, officers,the risks and directors have agreed to waive their redemption rights with respect to their founder shares, private placement shares and public shares.

If, however, stockholder approval of the transaction is required by law or Nasdaq rule, or we decide to obtain stockholder approval for business or other reasons, we will:

conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and

file proxy materials with the SEC.

If we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon consummation of the initial business combination.

Further, if we seek stockholder approval, we will consummate our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Our initial stockholders have agreed to vote their founder shares and private placement shares and any public shares held by them in favor of our initial business combination. Each public stockholder may elect to redeem its public shares, irrespective of whether it votes for or against the proposed transaction, for cash equal to its pro rata share of the aggregate amount then on deposituncertainties inherent in the trust account, including interest but less interest released to us to pay taxes, as described below. Our sponsor, officers,pursuit of growth in our industry, and directors have agreed to waive their redemption rights with respect to their founder shares, private placement shares and public shares in connection with the consummation of a business combination.

Many blank check companies wouldwe may not be able to consummatesuccessfully sell our products or realize the anticipated benefits from our distribution, collaboration and other commercial partners. If we are not able to grow the combined business of BurgerFi and Anthony's as a business combination ifcommercial enterprise, our financial condition will be negatively impacted.


Our growth strategy includes pursuing opportunistic acquisitions of additional brands, and we may not find suitable acquisition candidates or successfully operate or integrate any brands that we may acquire.

As part of our growth strategy, we may opportunistically acquire new brands and restaurant concepts. Competition for acquisition candidates may exist or increase in the holdersfuture. Consequently, there may be fewer acquisition opportunities available to us as well as higher acquisition prices. There can be no assurance that we will be able to identify, acquire, manage or successfully integrate additional brands or restaurant concepts without substantial costs, delays or operational or financial problems.

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Our successful positioning of our brands depends in large part on the success of our advertising and promotional efforts and our ability to continue to provide products that are desirable by our customers. Accordingly, we intend to continue to pursue a brand enhancement strategy, which includes multimedia advertising, promotional programs and public relations activities. These initiatives may require significant expenditures. If our multi-brand strategy is unsuccessful, these expenses may never be recovered. Any failure of our other marketing efforts could also have an adverse impact on us.

The difficulties of integration include coordinating and consolidating geographically separated systems and facilities, integrating the management and personnel of the company’s public shares voted againstacquired brands, maintaining employee morale and retaining key employees, implementing our management information systems and financial accounting and reporting systems, establishing and maintaining effective internal control over financial reporting, and implementing operational procedures and disciplines to control costs and increase profitability.

In the event we are able to acquire additional brands or restaurant concepts, the integration and operation of such acquisitions may place significant demands on our management, which could adversely affect our ability to manage our existing restaurants. In addition, we may be required to obtain additional financing to fund future acquisitions, but there can be no assurance that we will be able to obtain additional financing on acceptable terms or at all.

An increase in food and labor costs could adversely affect our operating results.

Our profitability and operating margins are dependent in part on our ability to anticipate and react to changes in food and labor costs, which have increased, and may continue to increase, significantly, which may have a proposed business combinationnegative effect on the operations and elected to redeem or convert more than a specified maximum percentageprofitability of the shares soldCompany. Changes in such company’s initial public offering,the cost or availability of certain food products could affect our ability to offer a broad menu and maintain competitive prices and could materially adversely affect our profitability and reputation. The type, variety, quality and cost of produce, beef, poultry, cheese and other commodities can be subject to change and to factors beyond our control, including weather, climate change, governmental regulation, availability and seasonality, each of which percentage threshold has typically been between 19.99%may affect our food costs or cause a disruption in our supply. Although we attempt to mitigate the impact of these cost increases as they occur through increases in selling prices, there is no assurance that we will be able to do so without causing decreases in demand for our products from our customers.

We have significant outstanding indebtedness and 39.99%. due to event of default on our Credit Agreement, we are not forecasted to have the readily available funds to repay the debt if called by the lenders, which exposes us to lender remedies.

As of January 1, 2024, the principal balance of the indebtedness under our secured credit agreement, dated as of December 15, 2021 (as amended, the “Credit Agreement”) which expires on September 30, 2025 was $53.3 million. In addition, on February 24, 2023, the Company and its subsidiaries entered into a result, many blank check companies have been unable to complete business combinations because the numberSecured Promissory Note (the “Note”) with CP7 Warming Bag , L.P.(“CP7”), an affiliate of shares voted, against their initial business combination by their public stockholders electing conversion exceeded the maximum conversion thresholdL Catterton Fund L.P. (“L Catterton”), as lender (the “Junior Lender”), pursuant to which such company could proceed withthe Junior Lender continued, amended and restated that certain delayed draw term loan (the “Delayed Draw Term Loan”) of $10.0 million under the Credit Agreement, which is junior subordinated secured indebtedness, and also provided $5.1 million of new junior subordinated secured indebtedness, to the Company and its subsidiaries (collectively, the “Junior Indebtedness”), for a business combination. Since we have no such specified maximum redemption thresholdtotal of $15.1 million, which Junior Indebtedness was incurred outside of the Credit Agreement. We may incur additional indebtedness for various purposes, including to fund future acquisitions and since even those public stockholders who vote in favoroperational needs. The terms of our initial business combination will have the right to redeem their public shares, our structure is different in this respect from the structure that has been used by many blank check companies. This may make it easieroutstanding indebtedness provide for significant principal and interest payments, and subjects us to consummate our initial business combination. However,certain financial and non-financial covenants, including debt service leverage, coverage, and liquidity ratios, each as defined in no event willthe Credit Agreement. As of January 1, 2024, we redeem our public shareswere not in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination. Moreover, the redemption threshold may be further limited by the terms and conditions of our initial business combination. If the amount of redemptions plus any cash required by our initial business combination would cause our net tangible assets to fall below $5,000,001, we would not proceedcompliance with the redemptionminimum liquidity requirement of our public sharesthe Credit Agreement, which constitutes a breach of the Credit Agreement and an event of default, which may cause the indebtedness to become partially or fully due and payable on an accelerated schedule.

The obligations of the Credit Agreement and the relatedJunior Indebtedness are secured by substantially all the assets of the Company and its subsidiary guarantors. The Credit Agreement contains customary covenants that limit the Company’s and such subsidiaries' ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, make dividends and distributions, enter into burdensome agreements, use the proceeds of the loans in contravention to the Credit Agreement, change the nature of their businesses, make fundamental changes, make prepayments on subordinated debt, change their fiscal year, change their organizational documents and make payments of management fees, in each case subject to certain thresholds and exceptions.

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Our ability to meet the payment obligations under our debt depends on our ability to generate significant cash flow in the future. We cannot assure that our business combination,will generate cash flow from operations or that other capital will be available to us, in amounts sufficient to enable us to meet our payment obligations under our Credit Agreement and instead may search for an alternate business combination.


Tendering stock certificates in connection with redemption rights

Junior Indebtedness and to fund our other liquidity needs. If we hold a stockholder meetingare not able to approve a potential business combination,generate sufficient cash flow to service these obligations, we may requireneed to refinance or restructure our public stockholders seeking to exercise their redemption rights, whether they are record holdersdebt, sell unencumbered assets (if any) or hold their shares in “street name,” to either tender their certificates to our transfer agent up to two business days prior to the meeting date or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have until two days prior to the vote on the business combination to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.

The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him to deliver his certificate to verify ownership. As a result, the stockholder then had an “option window” after the consummation of the business combination during which he could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he could sell his shares in the open market before actually delivering his shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the consummation of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is approved.

Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivers its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of a business combination.

If the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.

If our initial proposed business combination is not consummated, we may continue to try to consummate a business combination with a different target until September 16, 2019 (or such later date as may be approved by our stockholders).


Redemption of public shares and liquidation if no initial business combination

Holders of founder shares, and our officers and directors, have agreed that we will have until September 16, 2019 (or such later date as may be approved by our stockholders, the “combination period”) to complete our initial business combination.raise additional capital. If we are unable to consummate our initial business combination during the combination period, we will distribute the aggregate amount then on deposit in the trust account (netimplement one or more of interest released for the payment of our tax obligations), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. If we have not consummated a business combination before the end of the combination period, or earlier, at the discretion of our board pursuant to the expiration of a tender offer conducted in connection with a failed business combination, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us for the payment of taxes, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

Our sponsor, officers, and directors have agreed to waive their redemption rights with respect to their founder shares and private placement shares (i) in connection with the consummation of a business combination, (ii) in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period and (iii) if we fail to consummate a business combination or liquidate on September 16, 2019 (or such later date as may be approved by our stockholders). Our sponsor, officers, and directors have also agreed to waive their redemption rights with respect to public shares in connection with the consummation of a business combination and in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period. However, if our sponsor or any of our officers, directors or their affiliates acquire public shares, they will be entitled to redemption rights with respect to such public shares if we fail to consummate our initial business combination or liquidate within the required time period.

Our sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares. However,these options, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules).

We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from the net proceeds from our initial public offering and the private placement held out of trust. If such funds are insufficient, our sponsor has contractually agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has contractually agreed not to seek repayment for such expenses.


The proceeds deposited in the trust account could become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be less than the $10.10 per public share initially on deposit in the trust account. Under Section 281(b) of the Delaware General Corporation Law (“DGCL”), our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution from the trust account to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.

Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, pursuant to a written agreement, our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a definitive transaction agreement, reduce the amounts in the trust account to below $10.10 per share, except as to any claims by a third party who executed a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We cannot assure you, however, that our sponsor will be able to satisfy those obligations.

Ifmeet these payment obligations, and the proceeds inimposition of lender remedies could materially and adversely affect our business, financial condition and liquidity.


At this time, our long-term liquidity requirements and the trust account are reduced below $10.10 per public share and our sponsor asserts that it is unable to satisfy any applicable obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce his indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in a particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.10 per public share.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portionadequacy of our trust account distributedcapital resources are difficult to our public stockholders upon the redemptionpredict. As of January 1, 2024 we were in breach of our public shares if we do not consummatecovenants under our initial business combination during the combination period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period duringCredit Agreement, which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.


Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business combination by during the combination period is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we have not consummated a business combination before the end of the combination period, or earlier at the discretion of our board, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following September 16, 2019 (or such later date as may be approved by our stockholders) and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.

Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation and our sponsor’s indemnification of the trust account against certain claims as previously described in this section, we believe that the claims that could be made against us will be significantly limited and that the likelihood that any claim that would result in any liability extending to the trust account is remote.

We anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after the end of the business combination period and anticipate it will take no more than 10 business days to effectuate such distribution. The holders of the founders’ shares and private shares have waived their rights to participate in any liquidation distribution from the trust account with respect to such shares. There will be no distribution from the trust account with respect to our warrants, which will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our sponsor has contractually agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has contractually agreed not to seek repayment for such expenses.


If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.10 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.

We cannot assure you that claims will not be brought against us for these reasons.

Our public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not consummate a business combination during the combination period, (ii) in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period or (iii) if they redeem their respective shares for cash upon the consummation of the initial business combination. Also, our management may cease to pursue a business combination prior to the end of the combination period (our board of directors may determine to liquidate the trust account prior to such expiration if it determines, in its business judgment, that it is improbable within the remaining time to identify an attractive business combination or satisfy regulatory and other business and legal requirements to consummate a business combination). In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.

Competition

In identifying, evaluating and selecting a target business for a business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash to our public stockholders who exercise their redemption rights may reduce the resources available to us for an initial business combination. In addition, the number of our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.


Facilities

We currently maintain our executive offices at Park Plaza Torre I, Javier Barros Sierra 540, Of. 103, Col. Santa Fe, 01210 México City, México. The cost for this space is included in the $10,000 per-month fee that an affiliate of our sponsor charges us for general and administrative services pursuant to a letter agreement between us and our sponsor. We believe, based on rents and fees for similar services in Mexico City, that the fee charged is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office space adequate for our operations.

Employees

We currently have two executive officers. These individuals are not obligated to devote any specific number of hours to our affairs but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the consummation of our initial business combination.


ITEM 1A. RISK FACTORS

An investment in our securities involves a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material risks related to our business and our securities, together with the other information contained in this annual report on Form 10-K, before making a decision to invest in our securities. This annual report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below.

We are a company with no operating history and no revenue and, accordingly, you have no basis on which to evaluate our ability to achieve our business objective.

We are a company with no operating history and no revenue. We will not commence operations until we consummate our initial business combination. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of acquiring one or more operating businesses or entities. If we fail to complete a business combination, we will never generate any operating revenues.

Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”

As of December 31, 2018, we had $205,638 in cash and working capital deficit of $199,734, which excludes franchise and income taxes payable, of which such amounts will be paid from interest earned on the trust account. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this need for capital are discussed in the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We cannot assure you that our plans to raise capital or to consummate an initial business combination will be successful. These factors, among others, raiseraises substantial doubt about our ability to continue as a going concern.


We face uncertainty regarding the adequacy of our liquidity and capital resources and have extremely limited, if any, access to additional financing beyond our Credit Agreement and Junior Indebtedness. The terms of our outstanding Credit Agreement provide for significant principal and interest payments, and subject us to certain financial statements contained elsewhereand non-financial covenants, including debt service leverage, coverage, and liquidity ratios, each as defined in the Credit Agreement. We cannot assure that cash on hand, cash flow from operations and any financing we are able to obtain through the Credit Agreement or Junior Indebtedness will be sufficient to continue to fund our operations and allow us to satisfy our obligations.

At this reporttime, our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict. As of January 1, 2024, we were not in compliance with the minimum liquidity requirement of the Credit Agreement, which constitutes a breach of the Credit Agreement and an event of default.

Such default entitles the lenders to call the debt sooner than its maturity date of September 30, 2025. In the event the lenders do call the debt, the Company is not include any adjustments that might result from our inabilityforecasted to have the readily available funds to repay the debt, which raises substantial doubt about the Company’s ability to continue as a going concern.

concern within one year after the date the consolidated financial statements are issued.


We have been actively engaged in discussions with our lenders to explore potential solutions regarding the default event and its resolution. We cannot, however, predict the results of any such negotiations.

Our public stockholdersfailure to effectively manage our growth could harm our business and operating results.

Our existing personnel, management systems, financial and management controls and information systems may not be afforded an opportunityadequate to vote onsupport our proposed business combination, unless such vote is required by law or Nasdaq rule, which means we may consummateplanned expansion. Our ability to manage our initial business combination even though a majority of our public stockholders do not support such a combination.

We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable state law or the rules of Nasdaq or if we decide to hold a stockholder vote for business or other reasons. For example, Nasdaq rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would stillgrowth effectively will require us to obtain stockholder approval if we were seekingcontinue to issue more than 20% of our outstanding sharesenhance these systems, procedures, and controls and to a target business as considerationlocate, hire, train and retain management and operating personnel, particularly in any business combination. Therefore, if we structure a business combination that requires us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except as required by law, the decision as to whether we will seek stockholder approval of a proposed business combination 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 otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the outstanding shares of our common stock do not approve of the business combination we consummate.


If we seek stockholder approval of our initial business combination, our sponsor, officers, and directors have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.

Our sponsor, officers, and directors have agreed to vote the founder shares and any private placement shares and public shares they hold in favor of our initial business combination. Our sponsor, officers, and directors own approximately 22.4% of our common stock as of the date of this annual report. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case if holders of founder shares agreed to vote their founder shares, private placement shares and public shares in accordance with the majority of the votes cast by our public stockholders.

Your ability to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.

At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Since our board of directors may consummate a business combination without seeking stockholder approval, public stockholders may not have the right to vote on the business combination unless we seek such stockholder vote. Accordingly, your ability to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights with respect to a proposed business combination.

The ability of our public stockholders to redeem their shares for cash may make us unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.

We may enter into a transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. Our amended and restated certificate of incorporation requires us to provide all of our stockholders with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination, although our sponsor, officers, and directors have each agreed to waive his, her or its respective redemption rights with respect to founder shares, private placement shares, and public shares, held by him, her or it in connection with the consummation of our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than the amount necessary to satisfy a closing condition as described above, or less than the $5,000,001 minimum of tangible net assets which we are required to maintain, we would not proceed with such redemption and the related business combination. Prospective targets would be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.

The ability of our stockholders to exercise redemption rights may not allow us to consummate the most desirable business combination or optimize our capital structure.

In connection with the consummation of our business combination, we may redeem up to that number of shares of common stock that would permit us to maintain net tangible assets of $5,000,001 upon consummation of our initial business combination. However, we may be required to maintain significantly larger amounts of cash depending upon the terms of the business combination. Accordingly, we may need to arrange third party financing to help fund our business combination in case a larger percentage of stockholders exercise their redemption rights than we expect. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.


If, pursuant to the terms of our proposed business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate the business combination, the ability of our public shareholders to cause us to redeem their shares in connection with such proposed transaction will increase the risk that we will not meet that condition and, accordingly, that we will not be able to complete the proposed transaction. If we do not complete a proposed business combination, you would not receive your pro rata portion of the trust account until we liquidate or you are able to sell your stock in the open market. If you were to attempt to sell your stock in the open market at that time, the price you receive could represent a discount to the pro rata amount in our trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate.

The requirement that we complete a business combination by September 16, 2019 (or such later date as may be approved by our stockholders) may give potential target businesses leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to consummate a business combination on terms that would produce value for our stockholders.

Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate a business combination on or before September 16, 2019 (or such later date as may be approved by our stockholders). Consequently, such target businesses may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with it, we may be unable to identify another target business and complete a business combination with any target business. This risk will increase as we get closer to the end of the combination period. Depending upon when we identify a potential target business, we may have only a limited time to conduct due diligence and may enter into a business combination on terms that we might have rejected upon a more comprehensive investigation.

new markets. We may not be able to consummaterespond on a timely basis to all of the changing demands that our planned expansion will impose on management and on our existing infrastructure or be able to hire or retain the necessary management and operating personnel, which could harm our business, combination duringfinancial condition or results of operations. These demands could cause us to operate our existing business less effectively, which in turn could cause a deterioration in the combinationfinancial performance of our existing restaurants, which could lead to, among other negative financial and operational effects, an impairment of our assets. If we experience a decline in financial performance, we may decrease the number of or discontinue restaurant openings, or we may decide to close restaurants that we are unable to operate in a profitable manner.


New restaurants, once opened, may not be profitable and may negatively affect restaurant sales at our existing restaurants.

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Our results have been, and in the future may continue to be, significantly impacted by the timing of new restaurant openings (often dictated by factors outside of our control). Our experience has been that labor and operating costs associated with a newly opened restaurant for the first several months of operation are materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of restaurant sales. Our new restaurants take a period of time to reach target operating levels due to inefficiencies typically associated with new restaurants, including the training of new personnel, new market learning curves, inability to hire sufficient qualified staff, lack of brand awareness in new markets, and other factors. We may incur additional costs in new markets, particularly for transportation and distribution, which may impact the profitability of those restaurants. New restaurants may not meet our targets for operating and financial metrics or may take longer than anticipated to do so. Any new restaurants we open may not be profitable or achieve operating results similar to those of our existing restaurants, which could adversely affect our business, financial condition or results of operations.

If we are unable to grow restaurant sales at existing restaurants, our financial performance could be adversely affected.

The level of same-store sales, which has experienced declines in the BurgerFi brand and represents the change in year-over-year revenue for domestic corporate-owned restaurants open for 14 full months or longer, could affect our restaurant sales. Our ability to increase same-store sales depends, in part, on our ability to successfully implement our initiatives to re-build restaurant sales. It is possible such initiatives will not be successful, that we will not achieve our target same-store sales growth or that same-store sales growth could be negative, which may cause a decrease in restaurant sales and profit growth that would adversely affect our business, financial condition or results of operations, including an impairment of our assets.

Our mission of being natural may subject us to risks.

Our mission is a significant part of our business strategy and what we are as a company. We face, however, many challenges in carrying out our mission. We incur higher costs and other risks associated with purchasing high quality ingredients grown or raised with an emphasis on quality and responsible practices. As a result, our food and labor costs may be significantly higher than other companies who do not source high quality ingredients or pay above minimum wage. Additionally, the supply for high quality ingredients may be limited and it may take us longer to identify and secure relationships with suppliers that are able to meet our quality standards and have sufficient quantities to support our growing business. If we are unable to obtain a sufficient and consistent supply for our ingredients on a cost-effective basis, our food costs could increase or we may experience supply interruptions which could have an adverse effect on our operating margins. Additionally, some of our competitors also offer better quality ingredients, such as antibiotic-free meat. If this trend continues, it could further limit our supply for certain ingredients and we may lose our competitive advantage because it will be more difficult for our business to differentiate itself.

We have a limited number of suppliers for our major products and rely on a limited number of suppliers for the majority of our domestic distribution needs.

We have a limited number of suppliers for our major ingredients, including a sole supplier with respect to the BurgerFi brand buns. Due to this concentration of suppliers, the cancellation of our supply arrangements with any one of these suppliers or the disruption, delay, or inability of these suppliers to deliver these major products to our restaurants may materially and adversely affect our results of operations while we establish alternate distribution channels. In addition, if our suppliers fail to comply with food safety or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted. We cannot assure that we would be able to find replacement suppliers on commercially reasonable terms or a timely basis, if at all.

There can be no assurance that we will continue to be able to identify or negotiate with alternative supply and distribution sources on terms that are commercially reasonable to us. If our suppliers or distributors are unable to fulfill their obligations under their contracts or we are unable to identify alternative sources, we could encounter supply shortages and incur higher costs, each of which could have a material adverse effect on our results of operations.

Our marketing strategies and channels will evolve and may not be successful.

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We incur costs and expend other resources in our marketing efforts to attract and retain guests. Our strategy includes public relations, digital and social media, promotions and in-store messaging, which require less marketing spend as compared to traditional marketing programs. As the number of restaurants increases, and as we expand into new markets, we expect to increase our investment in advertising and consider additional promotional activities. Accordingly, in the future, we expect to incur greater marketing expenditures, resulting in greater financial risk and a greater impact on our financial results.

We rely heavily on social media for many of our marketing efforts. If consumer sentiment towards social media changes or a new medium of communication becomes more mainstream, we may be required to fundamentally change our current marketing strategies, which could require us to incur significantly more costs. Some of our marketing initiatives have not been and may continue to not be successful, resulting in expenses incurred without the benefit of higher revenue. Additionally, some of our competitors have greater financial resources, which enable them to spend significantly more on marketing and advertising than we can at this time. Should our competitors increase spending on marketing and advertising or our marketing funds decrease for any reason, or should our advertising and promotions be less effective than those of our competitors, there could be a material adverse effect on our business, financial condition and results of operations.

We rely on a limited number of franchisees for the operation of our franchised restaurants, and we have limited control with respect to the operations of our franchised restaurants, which could have a negative impact on our reputation and business.

We rely, in part, on our franchisees and the manner in which casethey operate their restaurants to develop and promote our business. As of January 1, 2024, 45 franchisees operated all of our domestic BurgerFi franchised restaurants, and 1 franchisee operated our international BurgerFi franchised restaurant. In 2022, we would ceaselaunched the Anthony’s franchise brand and have signed one multi-unit development agreement with one franchised location now open. Our franchisees are required to operate their restaurants according to the specific guidelines we set forth, which are essential to maintaining brand integrity and reputation, all laws and regulations applicable to us and our subsidiaries and all laws and regulations applicable in the jurisdictions in which we operate. We provide training to these franchisees to integrate them into our operating strategy and culture. Because we do not, however, have day-to-day control over all of these restaurants, we cannot give assurance that there will not be differences in product and service quality, operations, exceptlabor law enforcement or marketing or that there will be adherence to all of our guidelines and applicable laws at these restaurants. In addition, if our franchisees fail to make investments necessary to maintain or improve their restaurants, guest preference for the purposebrand could suffer. Failure of winding upthese restaurants to operate effectively, including temporary or permanent closures of the restaurant or terminations of the franchisee from our system, has adversely affected and could continue to adversely affect our cash flows from those operations or have a negative impact on our reputation or our business.

The success of our franchised operations depends on our ability to establish and maintain good relationships with our franchisees. The value of our brands and the rapport that we would redeemmaintain with our public shares and liquidate.

We must complete our initialfranchisees are important factors for potential franchisees considering doing business combination by September 16, 2019 (or such later date aswith us. If we are unable to maintain good relationships with franchisees, we may be approvedunable to renew franchise agreements and opportunities for developing new relationships with additional franchisees may be adversely affected. This, in turn, could have an adverse effect on our business, financial condition and results of operations. We cannot be certain that the developers and franchisees we select will have the business acumen necessary to open and operate successful franchised restaurants in their franchising areas.


Franchisees may not have access to the financial or management resources that they need to open and successfully operate the restaurants contemplated by our stockholders). Wetheir agreements with us or to be able to find suitable sites on which to develop them, or they may elect to cease development or operation for other reasons. Franchisees may not be able to findnegotiate acceptable lease or purchase terms for the sites, obtain the necessary permits and governmental approvals, or meet construction schedules. Additionally, financing from banks and other financial institutions may not always be available to franchisees to construct and open new restaurants. Any of these factors could slow our growth from franchised operations and reduce our franchising revenue.

Our franchise business model presents a suitable target business and consummate a business combination within that time period. If we have not consummated a business combination beforenumber of risks, including the endlaunch of the combination period, or earlier, atAnthony’s franchise brand.

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Our success as a franchised business relies, in part, on the discretionfinancial success and cooperation of our board pursuantfranchisees. Moreover, as we focus more of our business on growing the franchises, including the recent launch of the Anthony’s franchise, we may not be successful in growing the brands. We receive royalties based on a percentage of sales from our franchisees. Our franchisees manage their businesses independently, and, therefore, are responsible for the day-to-day operation of their restaurants. The revenue we realize from franchised restaurants is largely dependent on the ability of our franchisees to grow their sales.

Business risks affecting our operations also affect our franchisees. In particular, our franchisees have also been significantly impacted by labor shortages and inflation. If franchisee sales trends continue to decline or worsen, our financial results will continue to be negatively affected, which may be material. Additionally, a rise in minimum wages could adversely impact our and our franchisees’ financial performance. The impact of events such as boycotts or protests, labor strikes, and supply chain interruptions (including due to lack of supply or price increases) could also adversely affect both us and our franchisees.

Our success also relies on the willingness and ability of our independent franchisees to implement our initiatives, which may include financial investment, and to remain aligned with us on operating, value/promotional and capital-intensive reinvestment plans. The ability of franchisees to contribute to the expirationachievement of a tender offer conductedour plans is dependent in connection with a failed business combination, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earnedlarge part on the trust account, less anyavailability to them of funding at reasonable interest released to us for the payment of taxes, dividedrates and may be negatively impacted by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (includingfinancial markets in general, by the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approvalcreditworthiness of our remaining stockholders andfranchisees or the Company or by banks’ lending practices. If our board of directors, dissolve and liquidate, subjectfranchisees are unwilling or unable to invest in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

If wemajor initiatives or are unable to completeobtain financing at commercially-reasonable rates, or at all, our initialfuture growth and results of operations could be adversely affected.


Our operating performance could also be negatively affected if our franchisees experience food safety or other operational problems or project an image inconsistent with our brands and values, particularly if our contractual and other rights and remedies are limited, costly to exercise or subjected to litigation and potential delays. If franchisees do not successfully operate restaurants in a manner consistent with our required standards, our brands' image and reputation could be harmed, and we may elect to terminate the franchisee from our system, which in turn could hurt our business combination withinand operating results.

Our ownership mix, which we continually evaluate for potential changes to determine our preferred allocation of franchise to corporate-owned stores, also affects our results and financial condition. The decision to own restaurants or to operate under franchise agreements is driven by many factors whose interrelationship is complex. The benefits of our more heavily franchised structure depend on various factors, including whether we have effectively selected franchisees that meet our rigorous standards, whether we are able to successfully integrate them into our structure and whether their performance and the prescribed time frame,resulting ownership mix supports our warrants will expire worthless.

Our outstanding warrantsbrand and financial objectives.


An impairment in the carrying value of our goodwill or other intangible or long-lived assets could adversely affect our financial condition and results of operations.

We evaluate intangible assets and goodwill for impairment annually and whenever events or changes in circumstances indicate that its carrying value may not be exercised until afterrecoverable. We also evaluate long-lived assets on a quarterly basis or whenever events or changes in circumstances indicate that the completioncarrying value may not be recoverable. As part of our initial business combinationannual goodwill assessment during the fiscal year 2023, there was no goodwill impairment charge for the year ended January 1, 2024 related to the Anthony's and BurgerFi reporting units. We also recorded an asset impairment charge of $4.5 million related to property and equipment and right-of-use assets for certain underperforming stores for the year ended January 1, 2024, of which $3.3 million related to BurgerFi and $1.2 million related to Anthony’s.

We cannot predict the amount and timing of any further impairment of assets, if any. A significant amount of judgment is involved in determining if an indication of impairment exists. Should the value of goodwill or other intangible or long-lived assets become further impaired, there could be an adverse effect on our financial condition and consolidated results of operations.

RISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

Incidents involving food safety and food-borne illnesses could adversely affect guests’ perception of our brands, resulting in lower sales and increase operating costs.

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We face food safety risks, including the risk of food-borne illness and food contamination, which are not entitled to participatecommon both in the redemptionrestaurant industry and the food supply chain and cannot be completely eliminated. We rely on third-party food suppliers and distributors to properly handle, store and transport ingredients to our restaurants. Any failure by our suppliers, or their suppliers, could cause ingredients to be contaminated, which may be difficult to detect before the food is served. Additionally, the risk of food-borne illness may also increase whenever our food is served outside of our control, such as by third-party delivery services.

Regardless of the sharessource or cause, any report of food-borne illnesses or food safety issues, whether or not accurate, at one or more of our common stock conductedrestaurants, including restaurants operated by our franchisees, could adversely affect our brands and reputation, which in connection with the consummationturn could result in reduced guest traffic and lower sales. If any of our business combination. Accordingly, our warrants will expire worthlessguests become ill from food-borne illnesses, we could be liable for certain damages or forced to temporarily close one or more restaurants or choose to close as a preventative measure if we are unablesuspect there was a pathogen in our restaurants. Furthermore, any instances of food contamination, whether or not at our restaurants, could subject us or our suppliers to consummate avoluntary or involuntary food recalls and the costs to conduct such recalls could be significant and could interrupt supply to unaffected restaurants or increase the cost of ingredients. Any such material events or disruptions could adversely affect our business.

Increased food commodity and energy costs, as well as shortages or interruptions, could decrease our restaurant-level operating profit margins or cause us to limit or otherwise modify our menu, which could adversely affect our business.

Our profitability depends, in part, on our ability to anticipate and react to changes in the price and availability of food commodities, including, among other things: beef, poultry, grains, dairy, and produce. Prices have been, and may continue to be, affected due to market changes, increased competition, the general risk of inflation, shortages or interruptions in supply due to weather, climate change, international military conflicts, trade sanctions, economic embargoes or boycotts, disease or other conditions beyond our control, or other reasons. Our business combination beforeand margins have been negatively affected by, and we expect it to be continued to be negatively affected by, among other items, inflation, supply chain difficulties, labor shortages and other price increases.

This and other events could increase commodity prices, cause shortages that could affect the endcost and quality of the combination period,items we buy or earlier ifrequire us to further raise prices or limit our board resolves to liquidatemenu options. These events, combined with other more general economic and dissolve in connection with a failed business combination.


You will not have any rights to or interest in funds from the trust account, except under limited circumstances. To liquidate your investment, therefore, you maydemographic conditions, could impact our pricing and negatively affect our restaurant sales and restaurant-level operating profit margins. There can be forced to sell your shares or warrants, potentially at a loss.

Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the consummation of our initial business combination; (ii) the redemption of our public shares if we are unable to consummate a business combination during the combination period, subject to applicable law; (iii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period; or (iv) otherwise upon our liquidation or in the event our board of directors resolves to liquidate the trust account and ceases to pursue the consummation of a business combination before the end of the combination period (our board of directors may determine to liquidate the trust account prior to such expiration if it determines, in its business judgment, that it is improbable within the remaining timeno assurance that we will be able to identify an attractive business combination or satisfy regulatorycontinue to partially offset inflation and other changes in the costs of core operating resources as a result of gradually increased menu prices, more efficient purchasing practices, productivity improvements and greater economies of scale in the future.


From time to time, competitive conditions could limit our menu pricing flexibility. There can be no assurance that future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by our guests without any resulting change to their visit frequencies or purchasing patterns. In addition, there can be no assurance that we will generate same-store sales growth in an amount sufficient to offset inflationary or other cost pressures. We have implemented, and may continue to further implement price increases to mitigate the inflationary effects of food and labor costs; however, we cannot predict the long-term impact of these negative economic conditions on our restaurant profitability.

Shortages or interruptions in the supply of food products caused by problems in production or distribution, inclement weather, unanticipated demand or other conditions could adversely affect the availability, quality and cost of ingredients, which could adversely affect our operating results. For instance, our burgers depend on the availability of our proprietary ground beef blend. If there is an interruption of operation at our national grinder’s facility, we face an immediate risk because each restaurant typically has less than three days of beef patty inventory on hand. Any such material disruption would adversely affect our business.

Labor shortages or difficulty finding qualified employees could slow our growth, harm our business and legal requirementsreduce our profitability.

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Restaurant operations are highly service oriented, and our success depends in part upon the Company’s and our franchisees’ ability to consummateattract, retain and motivate a sufficient number of qualified employees, including restaurant managers and other crew members. The market for qualified employees in our industry is very competitive and labor shortages are prevalent. An inability to recruit and retain qualified individuals has delayed and in the future may delay the planned openings of new restaurants and has adversely impacted and could in the future adversely impact our existing restaurants, both corporate-owned and franchised. Any such delays, material increases in employee turnover rate in existing restaurants or widespread employee dissatisfaction could have a material adverse effect on our and our franchisees’ business combination).and results of operations. In addition, strikes, work slowdowns or other job actions may become more common in the United States. Although none of the employees employed by us or our franchisees are represented by a labor union or are covered by a collective bargaining agreement, in the event of a strike, work slowdown or other labor unrest, the ability to adequately staff our restaurants could be impaired, which could result in reduced revenue and customer claims, and may distract our management from focusing on our business and strategic priorities.

The digital and delivery business, and expansion thereof, is uncertain and subject to risk.

Digital innovation and growth remain a focus for us. Our continuous investment in a sophisticated technology infrastructure, we believe, has enabled us to strategically anticipate and execute against significant industry-wide changes. We utilize advanced technology to analyze, communicate and tactically execute in virtually all aspects of the business. We have executed upon our digital strategy over the past few years, including the development and launch of our BurgerFi app, licensing agreements regarding ghost or cloud kitchens, and using various third-party delivery partners, including agreements with Uber Eats, DoorDash, Postmates, and Grubhub. As the digital space around us continues to evolve, our technology needs to evolve concurrently to stay competitive with the industry. If we do not maintain digital systems that are competitive with the industry, our digital business may be adversely affected and could damage our sales. We rely on third parties for our ordering and payment platforms, including relating to our BurgerFi mobile app and ghost kitchens. Such services performed by these third parties could be damaged or interrupted by technological issues, which could then result in a loss of sales for a period of time. Information processed by these third parties could also be impacted by cyber-attacks, which could not only negatively impact our sales, but also harm our brand image.

Recognizing the rise in delivery services offered throughout the restaurant industry, we understand the importance of providing such services to guests wherever and whenever they want. We have invested in marketing to promote our delivery partnerships, which could negatively impact profitability if the business does not continue to expand. We rely on third parties, including Uber Eats, DoorDash, Postmates, and Grubhub to fulfill delivery orders timely and in a fashion that will satisfy guests. Errors in providing adequate delivery services may result in guest dissatisfaction, which could also result in loss of guest retention, loss in sales and damage to our brand image. Additionally, as with any third-party handling food, such delivery services increase the risk of food tampering while in transit. We are also subject to risk if there is a shortage of delivery drivers, which could result in a failure to meet guests’ expectations. Third-party delivery services within the restaurant industry are a competitive environment and include a number of players competing for market share. If our third-party delivery providers fail to effectively compete with other third-party delivery providers in the sector, delivery business may suffer, resulting in a loss of sales. If any third-party delivery provider we associate with experiences damage to their brand image, we may also see ramifications due to our association with them.

Additionally, some of our competitors have greater financial resources to spend on marketing and advertising around their digital and delivery campaigns than we have. Should our competitors increase their spend in these areas, or if our plan to redeemadvertising and promotions are less effective than our public sharescompetitors, there could be an adverse impact on our business in this space.

We face significant competition for guests, and if we are unable to consummate an initialcompete effectively, our business combination by September 16, 2019 (orcould be adversely affected.

The restaurant industry is intensely competitive with many well-established companies that compete directly and indirectly with us with respect to taste, price, food quality, service, value, design and location. We compete in the restaurant industry with multi-unit national, regional and locally owned and/or operated limited-service restaurants and full-service restaurants. We compete with (1) restaurants, (2) other fast casual restaurants, (3) quick service restaurants, and (4) casual dining restaurants. We may also compete with companies outside of the traditional restaurant industry, such later date as grocery store chains, meal subscription services, and delicatessens, especially those that target customers who seek high-quality food, as well as convenience food stores, cafeterias, and other dining outlets.

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Many of our competitors have existed longer than we have and may have a more established market presence, better locations and greater name recognition nationally or in some of the local markets in which we operate or plan to open restaurants. Some of our competitors may also have significantly greater financial, marketing, personnel, and other resources than we do. They may also operate more restaurants than we do and may be approved byable to take advantage of greater economies of scale than we can given our stockholders) is not consummated for any reason, Delaware law may require that we submit a plan of dissolutioncurrent size.

Our competition continues to our then-existing stockholders for approval prior tointensify as new competitors enter the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond 18 months before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.

Becauseburger and premium pizza, fast-casual, quick service, and casual dining segments. Many of our limited resourcescompetitors emphasize low cost “value meal” menu options or other programs that provide price discounts on their menu offerings, a strategy we do not currently pursue. We also face increasing competitive pressures from some of our competitors, who also offer better quality ingredients, such as antibiotic-free meat. Our continued success depends, in part, on the continued popularity of our menus and the significant competition for business combination opportunities, it may be more difficult for us to complete a business combination.experience we offer guests at our restaurants. If we are unable to complete our initial business combination, you may receive only $10.10 per share from our redemption of your shares,continue to compete effectively, customer traffic, restaurant sales, and restaurant-level operating profit margins could decline, and our warrants will expire worthless.

business, financial condition, and results of operations could be adversely affected.


We expectare subject to encounter intense competition from other entities having a business objective similarrisks associated with leasing property subject to ours, including private investors (which may be individuals or investment partnerships), other blank check companieslong-term non-cancelable leases.

We do not own any real property, and all of our corporate-owned restaurants are located on leased premises. The leases for our restaurants generally have initial terms averaging ten years and typically provide for two to four five-year renewal options as well as rent escalations. Generally, our leases are net leases that require us to pay our share of the costs of real estate taxes, utilities, building operating expenses, insurance and other entities, domesticcharges in addition to rent. We generally cannot cancel these leases. Additional sites that we lease are likely to be subject to similar long-term non-cancelable leases.

If we close a restaurant, which we have done and international, competinganticipate that we may need to do so again in the normal course of business, we may still be obligated to perform our monetary obligations under the applicable lease, including, among other things, payment of the base rent for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources, or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceedsremaining lease term. In addition, as each of our initial public offering, our abilityleases expire, we may fail to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Any of these obligations may place usnegotiate renewals, either on commercially acceptable terms or at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only $10.10 per share from our redemption of our shares, and our warrants will expire worthless.

If the net proceeds from our initial public offering and the private placement held out of trust are insufficient to allowall, which could cause us to operate until we consummate an initialclose restaurants in desirable locations. We depend on cash flows from operations to pay our lease expenses and to fulfill other cash needs. If our business combination, we may be unable to complete such initial business combination.

We cannot assure you that availabledoes not generate sufficient cash flow from operating activities, and sufficient funds will be sufficient to allow us to consummate an initial business combination within the required time period. Our initial stockholders, officers, directors or their affiliates are not obligated to loan any funds to us. Additionally, if we use a portion of the fundsotherwise available to us to pay fees to consultants to assist us with our search for a target business, we could expend funds available to us more rapidly than we currently expect. If our funds are insufficient, and we are unable to generate funds from borrowings or other sources, we may not be forcedable to liquidate.

service our lease obligations or fund our other liquidity and capital needs, which would materially affect our business.


Subsequent

Restaurant companies have been the target of class action lawsuits and other proceedings that are costly, divert management attention and, if successful, could result in our payment of substantial damages or settlement costs.

Our business is subject to consummationthe risk of, our initial business combination,and we may be requiredare party to, take write-downsincluding a stockholder class action lawsuit, litigation by employees, guests, suppliers, franchisees, stockholders, or write-offs, restructuring and impairmentothers through private actions, class actions, administrative proceedings, regulatory actions, or other charges that couldlitigation. The outcome of litigation, particularly class action and regulatory actions, is difficult to assess or quantify.

In recent years, restaurant companies have a significant negative effect on our financial condition, resultsbeen subject to lawsuits, including class action lawsuits, alleging violations of operationsfederal and our stock price, which could cause you to lose some or allstate laws regarding workplace and employment matters, discrimination, and similar matters. A number of your investment.

Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this examination will uncover all material risks that may be presentedthese lawsuits have resulted in the payment of substantial damages by a particular target business, or that factors outside of the target business and outside of our control will not later arise. Even if our due diligence successfully identifies the principal risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. As a result,defendants. Similar lawsuits have been instituted from time to time followingalleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, overtime eligibility of assistant managers, and failure to pay for all hours worked.


Additionally, our initial business combination,guests could file complaints or lawsuits against us alleging that we may be forcedare responsible for some illness or injury they suffered at or after a visit to write-downone of our restaurants, including actions seeking damages resulting from food-borne illnesses or write-off assets, restructure our operations, or incur impairment or other charges that could resultaccidents in our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,restaurants. We are also subject to a variety of other claims from third parties arising in the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtueordinary course of our obtaining post-combination debt financing.

If third parties bringbusiness, including contract claims.


The restaurant industry has also been subject to a growing number of claims that the menus and actions of restaurant chains have led to the obesity of certain of their customers. Regardless of whether any claims against us the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholdersare valid or whether we are liable, claims may be less than $10.10 per share.

Placing funds in the trust accountexpensive to defend and may not protect those fundsdivert time and money away from third party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses or other entities withour operations. In addition, they may generate negative publicity, which we do business execute agreements with us waiving any right, title, interest or claim in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements or, even if they execute such agreements, theycould reduce guest traffic and restaurant sales. Insurance may not be prevented from bringing claims against the trust account, including, but not limitedavailable at all or in sufficient amounts with respect to claims for fraudulent inducement, breach of fiduciary responsibilitythese or other similar claims, as well as claims challenging the enforceabilitymatters.


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A judgment or other liability in the trust account,excess of our management will perform an analysis of the alternatives available to it and will only enter into an agreement without a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any available alternative.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills management believes to be significantly superior to those of other consultants who would execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waiveinsurance coverage for any claims they may have in the future as a resultor any adverse publicity resulting from claims could adversely affect our business and results of or arising outoperations.


Our business is subject to risks related to its sale of any negotiations, contracts or agreements with usalcoholic beverages.

We serve beer and will not seek recourse against the trust account for any reason. Upon redemptionwine at most of our public shares, if we are unablerestaurants. Alcoholic beverage control regulations generally require our restaurants to complete a business combination within the required time frame, or upon the exercise of a redemption right in connection with a business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.10 per share initially held in the trust account due to claims of such creditors. Pursuantapply to a written agreement, our sponsor has agreedstate authority and, in certain locations, county or municipal authorities for a license that it willmust be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.10 per share except as to any claims by a third party who executed a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, if an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy his indemnity obligations, we have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that he would be able to satisfy those obligations.


Our directors may decide not to enforce our sponsor’s indemnification obligations, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.

If proceeds in the trust account are reduced below $10.10 per public share and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce his indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce his indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.10 per share.

If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.

If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, by making distributions to public stockholders before making provision for creditors, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims for punitive damages.

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law,renewed annually and may be included in our bankruptcy estate and subjectrevoked or suspended for cause at any time. Alcoholic beverage control regulations relate to the claimsnumerous aspects of third parties with priority over the claimsdaily operations of our stockholders. Torestaurants, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and handling, and the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If we are deemed to be an investment company under the Investment Company Act, we may be subject to burdensome regulatory requirementsstorage and our activities may be restricted, which may make it difficult for us to complete a business combination.

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:

restrictions on the nature of our investments;


restrictions on the issuance of securities; and

restrictions on the incurrence of debt;

eachdispensing of which may make it difficult for us to complete a business combination.

In addition, we may have to:

register as an investment company;

adopt a specific form of corporate structure; and

file reports, maintain records, and adhere to voting, proxy, disclosure and other requirements.

We do not believe that our anticipated principal activities will subject us to Investment Company Act regulation. The proceeds held in the trust account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money market funds investing solely in United States treasury and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may make it more difficult to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may only receive $10.10 per share on our redemption, and our warrants will expire worthless.

Changes in laws or regulations, or aalcoholic beverages.


Any future failure to comply with any lawsthese regulations and regulations, mayobtain or retain licenses could adversely affect our business, investmentsfinancial condition, and results of operations.

We are also subject in certain states to laws“dram shop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.


We carry liquor liability coverage as part of our existing comprehensive general liability insurance. Litigation against restaurant chains has resulted in significant judgments and regulations enactedsettlements under dram shop statutes. Because these cases often seek punitive damages, which may not be covered by national, regional and local governments, including in particular, reporting and other requirements under the Exchange Act. Compliance with, and monitoringinsurance, such litigation could have an adverse impact on our business, results of applicable laws and regulationsoperations, or financial condition. Regardless of whether any claims against us are valid or whether we are liable, claims may be difficult, time consumingexpensive to defend and costly. Those laws and regulations and their interpretation and application may also change from time todivert time and those changesresources away from operations and hurt our financial performance. A judgment significantly in excess of our insurance coverage or not covered by insurance could have a material adverse effect on our business, results of operations, or financial condition.

OTHER RISK FACTORS AFFECTING OUR BUSINESS

We and our franchisees may be adversely affected by climate change.

We, our franchisees, and our supply chain are subject to risks and costs arising from the effects of climate change, greenhouse gases, and diminishing energy and water resources. Climate change may have a negative effect on agricultural productivity which may result in decreased availability or less favorable pricing for certain commodities used in our products, such as beef, chicken, potatoes and dairy. Climate change may also increase the frequency or severity of weather-related events and natural disasters. Such adverse weather-related impacts may disrupt our operations, cause restaurant closures or delay the opening of new restaurants, and/or increase the costs of (and decrease the availability of) food and other supplies needed for our operations. In turn this could result in reduced profitability for our franchisees and our Company restaurants and reduced system-wide sales and franchise revenue for us. In addition, various legislative and regulatory efforts to combat climate change may increase in the future, which could result in additional taxes, increased expenses and otherwise disrupt or adversely impact our business and/or our growth prospects.

We are subject to increasing and evolving requirements and expectations with respect to social, governance and environmental sustainability matters, which could expose us to numerous risks.

There has been an increased focus, including from investors, the public and governmental and nongovernmental authorities, on social, governance and environmental sustainability matters, such as climate change, greenhouse gases, packaging and waste, human rights, diversity, sustainable supply chain practices, animal health and welfare, deforestation, land, energy and water use and other corporate responsibility matters. We and our franchisees are and may become subject to changing rules, regulations and consumer or investor expectations with respect to these matters. As the result of these evolving requirements and increased expectations, as well as our commitment to sustainability matters, we may continue to establish or expand goals, commitments or targets, take actions to meet such goals, commitments and targets and provide expanded disclosure on these matters. These goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, we may be criticized for the accuracy, adequacy or completeness of disclosures and we are not able to mandate compliance by our franchisees with any of these goals. Further, goals may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, assumptions that are subject to change, and other risks and uncertainties, many of which are outside of our control. If our data, processes and reporting with respect to social and environmental matters are incomplete or inaccurate, or if we fail to achieve progress with respect to these goals on a timely basis, or if our franchisees are not able to meet consumer or investor expectations, consumer and investor trust in our brands may suffer which could diminish the value of our brands and adversely affect our business.

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Security breaches of either confidential guest information in connection with, among other things, our electronic processing of credit and debit card transactions or mobile ordering app, or confidential employee information may adversely affect our business.

Our business requires the collection, transmission, and retention of large volumes of guest and employee data, including credit and debit card numbers and other personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract to provide services. The integrity and protection of that guest and employee data is critical to us. The techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time. Our information technology networks and infrastructure or those of our third-party vendors and other service providers could be vulnerable to damage, disruptions, shutdowns or breaches of confidential information due to criminal conduct, employee error or malfeasance, utility failures, natural disasters, or other catastrophic events. Due to these scenarios, we cannot provide assurance that we will be successful in preventing such breaches or data loss.

Additionally, the information, security, and privacy requirements imposed by governmental regulation are increasingly demanding. Our systems may not be able to satisfy these changing requirements or may require significant additional investments or time to do so. Efforts to hack or breach security measures, failures of systems or software to operate as designed or intended, viruses, operator error, or inadvertent releases of data all threaten our and our service providers’ information systems and records. A breach in the security of our information technology systems or those of our service providers could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits. Additionally, a significant theft, loss or misappropriation of, or access to, guests’ or other proprietary data or other breach of our information technology systems could result in fines, legal claims, or proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, which could disrupt our operations, damage our reputation, and expose us to claims from guests and employees, any of which could have a material adverse effect on our financial condition and results of operations. In addition,

If we experience a material failure to comply with applicable laws or regulations, as interpreted and applied, could resultinterruption in fines, injunctive relief or similar remedies whichour systems, our business could be costly to us or limit ouradversely impacted.

Our ability to complete an initialefficiently and effectively manage our business combination or operatedepends significantly on the post-combination company successfully.

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portionreliability and capacity of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business combination during the combination period may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following September 16, 2019 (or such later date as may be approved by our stockholders) if we do not consummate an initial business combination and, therefore, we do not intend to comply with those procedures.


Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers or investment bankers) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares if we do not consummate our initial business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

We may not hold an annual meeting of stockholders until after we consummate a business combination.

We may not hold an annual meeting of stockholders until after we consummate a business combination (unless required by Nasdaq), and thus may not be in compliance with Section 211(b) of the DGCL, which requires that an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company’s bylaws unless directors are elected by written consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.

A registration statement covering the shares underlying our warrants may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.

Under the terms of the warrant agreement governing our warrants, we have agreed to use our best efforts to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, and to use our best efforts to take such action as is necessary to register or qualify for sale, in those states in which the warrants were initially offered by us, the shares issuable upon exercise of the warrants, to the extent an exemption is not available. We cannot assure you that we will be able to do so. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement. However, in no event will we be required to issue cash, securities or other compensation in exchange for the warrants if we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified, the warrant holder will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of common stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of common stock for sale under all applicable state securities laws.


The grant of registration rights to our initial stockholders and purchasers of Private Placement Units may make it more difficult to complete our initial business combination, and the future exercise of such rights may reduce the market price of our common stock.

Pursuant to an agreement entered into concurrently with the consummation of our initial public offering, our initial stockholders, purchasers of private placement units and their permitted transferees can demand that we register the founder shares, private placement units, private placement shares, and private placement warrants, and the shares of common stock issuable upon conversion of the private placement warrants, as well as any units and underlying securities issued upon conversion of working capital loans. These registration rights with respect to the founder shares will be exercisable at any time commencing upon the date that such shares are released from transfer restrictions and these registration rights with respect to the other securities will be exercisable at any time commencing upon consummation of an initial business combination. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may reduce the market price of our common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common stock that is expected when the securities owned by our initial stockholders are registered.

You will be unable to ascertain the merits or risks of any particular target business’ operations.

We may pursue acquisition opportunities in any business sector or geographic region we wish, except that we will not, under our amended and restated certificate of incorporation, be permitted to effectuate a business combination with another blank check company or similar company with nominal operations. If we consummate our initial business combination, we may be affected by numerous risks inherent in the business operations of the entity with which we combine. Because we will seek to acquire businesses that potentially need financial, operational, strategic or managerial redirection, we may be affected by the risks inherent in the business and operations of a financially or operationally unstable entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in an acquisition target.

Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into a business combination with a target that does not meet such criteria and guidelines and, as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.

Although we have identified specific criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into a business combination will not have all of these positive attributes. If we consummate a business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law or Nasdaq, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to obtain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders may only receive $10.10 per share on our redemption, and our warrants will expire worthless.


You may not have any assurance from an independent source that the price we are paying for the target in our initial business combination is fair to our stockholders from a financial point of view.

Unless we consummate our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent third party that the price we are paying is fair to our stockholders from a financial point of view. If we do not obtain an opinion, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.

We may issue additional common or preferred stock to complete our initial business combination or under an employee incentive plan after consummation of our initial business combination, which would dilute the interest of our stockholders and likely present other risks.

We may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after consummation of our initial business combination. The issuance of additional shares of common or preferred stock:

may significantly dilute the equity interest of investors of our initial public offering;

may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;

could cause a change in control if a substantial number of shares of common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and

may adversely affect prevailing market prices for our Common Stock, and/or warrants after the business combination.

Resources could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate another target business and consummate our initial business combination. If we are unable to complete our initial business combination, our public stockholders may only receive $10.10 per share from our redemption of our shares and our warrants will expire worthless.

We anticipate that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to consummate our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business due to a reduction in the funds available for expenses relating to such efforts. If we are unable to complete our initial business combination, our public stockholders may only receive $10.10 per share from our redemption of their shares and our warrants will expire worthless.


We are dependent upon our officers and directors; the loss of any one or more of them could adversely affect our ability to complete a business combination.

information technology systems. Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure, or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive problems. The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, expanding our systems as we grow or a breach in security of these systems could result in interruptions to or delays in our business and guest service and reduce efficiency in our operations. If our information technology systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, our revenue and profits could be reduced, and the background, experience and contactsreputation of our officersbrands and directors.our business could be materially adversely affected. In addition, remediation of such problems could result in significant, unplanned capital investments. Additionally, as we continue to evolve our digital platforms and enhance our internal systems, we place increasing reliance on third parties to provide infrastructure and other support services. We believe thatmay be adversely affected if any of our success dependsthird-party service providers experience any interruptions in their systems, which then could potentially impact the services we receive from them and cause a material failure or interruption in our own systems.


We depend on key members of our executive management team.

We depend on the continued serviceleadership and experience of key members of our officers and directors, at least until we have consummated a business combination. We do not have an employment agreement with, or key-man insurance onmanagement team. The loss of the lifeservices of any of our directors or officers. In addition, our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and the search for a business combination and their other business commitments. We do not intend to have any full-time employees prior to the consummation of our business combination. Each of our executive officers and directors is engaged in other business endeavors and is not obligated to contribute any specific number of hours per week to our affairs. If our executive officers’ and directors’ other business commitments require them to devote substantial amounts of time in excess of their current commitment levels, it could limit their ability to devote time to our affairs which make it more difficult for us to identify an acquisition target and consummate our business combination.

Our success following our initial business combination likely will depend upon the efforts of management of the target business. The loss of any of the key personnel of the target’s management team could make it more difficult to operate the target profitably.

Although some of our key personnel may remain with the target business in senior management or advisory positions following a business combination, we can offer no assurance that any will do so. Moreover, as a result of the existing commitments of our key personnel, it is likely that we will retain some or all of the management of the target business to conduct its operations. The departure of any key members of the target’s management team could thus make it more difficult to operate the post-combination business profitably. Moreover, to the extent that we will rely upon the target’s management team to operate the post-combination business, we will be subject to risks regarding their managerial competence. While we intend to closely scrutinize the skills, abilities and qualifications of any individuals we retain after a business combination, our ability to do so may be limited due to a lack of time resources or information. Accordingly, we cannot assure you that our assessment of these individuals will prove to be correct and that they will have the skills, abilities and qualifications we expect.

Our key personnel may negotiate employment or consulting agreements with a target business in connection with our initial business combination. These agreements may provide for them to receive compensation following our initial business combination and, as a result, may cause them to have conflicts of interest in determining whether a particular business combination would be advantageous to us.

Our key personnel may decide to remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the consummation of our initial business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business and cause them to have conflicts of interest in determining whether a particular business combination would be advantageous to us.

Our officers and directors are now and may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

Until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses or entities. Our executive officers and directors may in the future become affiliated with entities that are engaged in the business of acquiring other businesses or entities. In each case, our executive officers and directors’ existing directorships or other responsibilities may give rise to contractual or fiduciary obligations that take priority over any obligation owed to us. Our amended and restated certificate of incorporation provides that the doctrine of corporate opportunity, or any other analogous doctrine, will not apply to us or any of our officers or directors or in circumstances that would conflict with any fiduciary duties or contractual obligations to other entities they may have. Accordingly, business opportunities that may be attractive to the entities described above will not be presented to us unless such entities have declined to accept such opportunities. As a result, our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented. We cannot assure you that these conflicts will be resolved in our favor or that a potential target business would not be presented to another entity prior to its presentation to us.


We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors or existing stockholders, which may raise potential conflicts of interest.

We may decide to acquire one or more businesses affiliated with holders of founder shares, or our officers and directors. Our officers and directors also serve as officers and board members of other entities. Such entities may compete with us for business combination opportunities. Despite our agreement to obtain an opinion from an independent investment banking firm, a firm that regularly prepares valuation reports on the type of company that we are seeking to acquire or an independent accounting firm regarding the fairness to our stockholders from a financial point of view of a business combination with one or more businesses affiliated with our executive officers, directors or holders of founder shares, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.

We may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.

When evaluating the desirability of effecting a business combination with a prospective target business, our ability to assess the target business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we expected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.

The officers and directors of an acquisition candidate may resign upon consummation of a business combination. The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.

The role of an acquisition candidate’s key personnel upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with us following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.

Since holders of founder shares and private placement units will lose some or all of their investment in us if we do not consummate a business combination, and since certain of our officers and directors have significant financial interests in us, a conflict of interest may arise in determining whether a particular acquisition target is appropriate for our initial business combination.

The personal and financial interests of our officers and directors in consummating an initial business combination, along with their flexibility in identifying and selecting a prospective acquisition candidate, may influence their motivation in identifying and selecting a target business combination and completing an initial business combination that is not in the best interests of our stockholders. Consequently, the discretion of our officers and directors, in identifying and selecting a suitable target business combination may result in a conflict of interest when determining whether the terms, conditions and timing of a particular initial business combination are appropriate and in the best interest of our public stockholders.


We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our financial condition and the value of our stockholders’ investment in us.

Although we have no commitments to issue any notes or other debt securities, otherwise to incur debt, we may choose to incur substantial debt in order to complete our initial business combination. The incurrence of debt could have a variety of negative effects, including:

default and foreclosure on our assets if our operating revenues or cash flows after an initial business combination are insufficient to meet our debt service obligations;

acceleration of our obligations to repay the indebtedness, even if we make all principal and interest payments when due, if we breach covenants that require the maintenance of financial ratios or reserves without a waiver or renegotiation of that covenant;

our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand and the lender demands payment;

our inability to obtain necessary additional financing if any debt we incur contains covenants restricting our ability to obtain additional financing while the debt is outstanding;

prohibitions of, or limitations on, our ability to pay dividends on our common stock;

use of a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared,material adverse effect on our business and prospects, as well as for expenses, capital expenditures, acquisitions and other general corporate purposes;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of growth strategies and other purposes and other disadvantages compared to our competitors who have less debt.

We do not have a policy with respect to how much debt we may incur. To the extent that the amount of our debt increases, the impact of the effects listed above may also increase.


We may be able to complete a business combination with only one business, which would result in our success being dependent solely on a single business which may have a limited number of products or services. This lack of diversification may harm our operations and profitability.

We are not limited as to the number of businesses we may acquire in our initial business combination. However, we may not be able to effectuate a business combination with more than one target business because of various factors, including the limited amount of the net proceeds of our initial public offering, the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operatedfind suitable individuals to replace such personnel on a combined basis. By consummating an initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks particular to the industry area in which the acquired business operates. Further, we would not be able to diversify our operationstimely basis or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may:

solely depend upon the performance of a single business, property or asset, or

depend upon the development or market acceptance of a single or limited number of products, processes or services.

We may attempt to consummate business combinations with multiple prospective targets simultaneously, which may hinder our ability to consummate an initial business combination and give rise towithout incurring increased costs, and risks that could negatively impact our operations and profitability.

If we determine to acquire several businesses simultaneously that are owned by different sellers, we will need each seller to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, we may be unable to operate the combined business successfully, and you could lose some or all of your investment in us.

We may attempt to consummate our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we expected, or at all.

In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of the information developed during our due diligence examination, which may be limited. As a result, we could acquire a company that is not as profitable as we expected, or at all. Furthermore, the relative lackWe do not maintain key person life insurance policies on any of information about a private company may hinder our officers. We believe that our future success will depend on our continued ability to properly assess the valueattract and retain highly skilled and qualified personnel. There is a high level of such a company which could resultcompetition for experienced, successful personnel in our overpaying for that company.

If we effectindustry. Our inability to meet our initial business combination with a business located outside of the United States, we would be subject to a variety of additional risks that could result in us being unable to operate the business successfully.

We may pursue an initial business combination with a business located outside of the United States. If we do, we would be subject to any special considerations or risks associated with businesses operatingexecutive staffing requirements in the target’s home jurisdiction, including any of the following:

tariffs and trade barriers;

regulations related to customs and import/export matters;

tax issues, such as tax law changes and variations in tax laws as compared to the United States;

currency fluctuations and exchange controls;

challenges in collecting accounts receivable;

future could impair our growth and harm our business.


cultural and language differences;

employment regulations;

crime, strikes, riots, civil disturbances, terrorist attacks and wars; and

deterioration of political relations with the United States.

We may not be able to adequately address these additional risks. If we are unableprotect our intellectual property, which, in turn, could harm the value of our brands and adversely affect our business.

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Our ability to do so, we may be unableimplement our business plan successfully depends in part on our ability to operatefurther build brand recognition using our trademarks, service marks, proprietary products, and other intellectual property, including our name and logos and the acquired business successfully.

If we effectunique character and atmosphere of our initial business combination with a business located outside of therestaurants. We rely on United States theand foreign trademark, copyright and trade secret laws, applicable to such business will likely govern all of our materialas well as franchise agreements, non-disclosure agreements, and weconfidentiality and other contractual provisions to protect our intellectual property. Nevertheless, our competitors may develop similar menu items and concepts, and adequate remedies may not be able to enforce our legal rights.

If we effect our initial business combination with a business located outside of the United States, the laws of the country in which such business operates will govern almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements or enforce remedies for breaches of those agreements in that jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation asavailable in the United States. The inability to enforceevent of an unauthorized use or obtain a remedy under anydisclosure of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a business located outside of the United States, it is likely that substantially all of our assets would be located outside of the United Statestrade secrets and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.

other intellectual property. We may not be able to maintain control of a target business afteradequately protect our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possesstrademarks and service marks, and our competitors and others may successfully challenge the skills, qualifications validity and/or abilities necessary to profitably operate such business.

We anticipate structuring our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses. However, we may structure our initial business combination to acquire less than 100% of the equity interest or assets of the target business, but only if we (or any entity that is a successor to us in a business combination) acquire a majority of the outstanding voting securities or assets of the target. Even if we own a majority interest in the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majorityenforceability of our outstanding shares of common stock subsequent to such transaction. In addition,trademarks and service marks and other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that we will not be able to maintain our control of the target business.

intellectual property.


We do not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to consummate a business combination with which a substantial number of our stockholders do not agree.

Since we have no specified percentage threshold for redemption in our amended and restated certificate of incorporation, our structure is different in this respect from the structure that has been used by many blank check companies. Many blank check companies would not be able to consummate a business combination if the holders of the company’s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company’s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of public shares for which conversion was elected exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. However,

Additionally, we may be prohibited from entering into certain new markets due to restrictions surrounding competitors’ trademarks. The steps we have taken to protect our intellectual property in the United States and in foreign countries may not be adequate. We may also from time to time be required to institute litigation to enforce our trademarks, service marks and other intellectual property. Such litigation could result in substantial costs and diversion of resources and could negatively affect our sales, profitability, and prospects regardless of whether we are able to consummate a business combination even though a substantial numbersuccessfully enforce our rights.

Our insurance coverage may not provide adequate levels of coverage against claims.

We maintain various insurance policies for employee health, workers’ compensation, cyber security, general liability, and property damage. We believe that we maintain insurance customary for businesses of our public stockholders do not agree with the transactionsize and have redeemed their shares. However, in no event willtype. There are, however, types of losses we redeem our public shares in an amountmay incur that would cause our net tangible assets tocannot be less than $5,000,001 upon consummation of our initial business combination, and the amountinsured against or that we redeem may be further limited bybelieve are not economically reasonable to insure. Such losses could have a material adverse effect on our business and results of operations.

REGULATORY AND LEGAL RISKS

We are subject to many federal, state and local laws, as well as other statutory and regulatory requirements, with which compliance is both costly and complex. Failure to comply with, or changes in these laws or requirements, could have an adverse impact on our business.

We are subject to extensive federal, state, local, and foreign laws and regulations, as well as other statutory and regulatory requirements, including those related to: (1) nutritional content labeling and disclosure requirements; (2) food safety regulations; (3) local licensure, building, and zoning regulations; (4) employment regulations; (5) the termsPatient Protection and conditionsAffordable Care Act of our initial business combination. In such case, we would not proceed2010 (the “PPACA”); (6) the Americans with the redemption of our public sharesDisabilities Act (“ADA”) and thesimilar state laws; (7) privacy and cybersecurity; and (8) laws and regulations related initial business combination, and instead may search for an alternate business combination.

Provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisionsfranchised operations. The impact of the agreement governing the release of funds from our trust account) may be amended with the approval of holders owning 65% of the issuedcurrent laws and outstanding shares of our common stock, which is a lower amendment threshold than that of many blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the consummation of an initial business combination that our stockholders may not support.

Many blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s stockholders. Amendment of these provisions requires approval by between 90% and 100% of the company’s public stockholders in many cases. Our amended and restated certificate of incorporation provides that provisions related to pre-business combination activity may be amended if approved by holders owning 65% of the issued and outstanding shares of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders owning 65% of the issued and outstanding shares of our common stock (in each case including all shares held by the initial stockholders, holders of placement units, our officers and our directors); provided, however, that ifregulations, the effect of any proposed amendment, if adopted, would be eitherfuture changes in laws or regulations that impose additional requirements and the consequences of litigation relating to (i) reduce the amountcurrent or future laws and regulations, uncertainty around future changes in the trust account availablelaws made by new regulatory administrations or our inability to redeeming stockholdersrespond effectively to less than $10.10 per share,significant regulatory or (ii) delay the date on which a public stockholderpolicy issues, could otherwise redeem shares for such per share amount in the trust account, we will provide a right for public shareholders to redeem public shares if such an amendment is approved). As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-business combination actions more easily that many blank check companies, and this may increase our abilitycompliance and other costs of doing business and, therefore, have an adverse effect on our results of operations.


Failure to consummate a business combination with which you do not agree.

Our initial stockholders, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period unless we provide our public stockholderscomply with the opportunity to redeem their shareslaws and regulatory requirements of common stock upon approval of any such amendment at a per-share price, payablefederal, state, and local authorities could result in, cash, equal to the aggregate amount then on deposit in the trust account, net of our tax obligations, divided by the number of then outstanding public shares. Our stockholders are not parties to, or third-party beneficiaries of, this written agreement with our initial stockholders, executive officers and directors and, as a result, will not have the ability to pursue remedies against these persons and entities for any breach of such agreement. Accordingly, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.


We may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then outstanding warrants.

Our warrants have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding warrants to make any change that adversely affects the interests of the registered holders. Although our ability to amend the terms of the warrants with the consent of at least 50% of the then outstanding warrants is unlimited, examples of such amendments could be amendments to, among other things, increaserevocation of required licenses, administrative enforcement actions, fines and civil and criminal liability. In addition, certain laws, including the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

We have the ability to redeem outstanding warrants (excluding any private placement warrants held by our initial stockholders or their permitted transferees) at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our common stock in the event the shares of our common stock are not traded on any specific trading day) of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third business day prior to the date we send proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrantsADA, could force you: (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

Our ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.

If we call our warrants for redemption, we will have the option to require any holder that wishes to exercise his warrants (including any warrants held by our initial stockholders or their permitted transferees) to do so on a “cashless basis.” If we choose to require holders to exercise their warrants on a cashless basis, the number of shares received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrants for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.

Nasdaq may delist our securities from trading which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our securities are listed on Nasdaq. However, we cannot assure you that our securities will continue to be listed on Nasdaq in the future or prior to a business combination. In order to continue listing our securities on Nasdaq prior to a business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000), a minimum number of public stockholders (generally 300 public holders), and a minimum number of shares held by non-affiliates (500,000 shares). Additionally, in connection with our business combination, it is likely that Nasdaq may require us to fileexpend significant funds to make modifications to our restaurants if we fail to comply with applicable standards. Compliance with all of these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.


Failure to comply with laws and regulations relating to our franchised operations could negatively affect our licensing sales and our relationships with our franchisees.

Our franchised operations are subject to laws enacted by a number of states, rules and regulations promulgated by the U.S. Federal Trade Commission and certain rules and requirements regulating licensing activities in foreign countries. Failure to comply with new initial listing applicationor existing franchising laws, rules and meet its initial listingregulations in any jurisdiction or to obtain required government approvals could negatively affect our licensing sales and our relationships with our franchisees.

Nutritional content labeling and disclosure requirements which are more rigorous than Nasdaq’s continued listing requirements. We cannot assure youmay change consumer buying habits in a way that we will be able to meet those initial listing requirements at that time.


If Nasdaq delistsadversely impacts our securities from trading on its exchangesales.


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In recent years, there has been an increased legislative, regulatory and we are not able to list our securities on another national securities exchange, we expect our securities could be quotedconsumer focus on the Over-The-Counter Bulletin Boardfood industry, including nutritional and advertising practices. These changes have resulted in, and may continue to result in, the enactment of laws and regulations that impact the ingredients and nutritional content of our menu offerings, or laws and regulations requiring us to disclose the “pink sheets.” If this werenutritional content of our food offerings. For example, a number of states, counties, and cities have enacted menu labeling laws requiring multi-unit restaurant operators to occur, there could be material adverse consequences, including:

a limited availability of market quotations for our securities;

reduced liquidity for our securities;

a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

a limited amount of, or no, news and analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, preventsdisclose certain nutritional information to customers or preemptshave enacted legislation restricting the states from regulating the saleuse of certain securities, which are referredtypes of ingredients in restaurants.


Furthermore, the PPACA establishes a uniform, federal requirement for certain restaurants to as “covered securities.” Because our units, common stockpost certain nutritional information on their menus. Specifically, the PPACA amended the Federal Food, Drug and warrants will be listed on Nasdaq, we expect that our units, common stock, and warrants will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the statesCosmetic Act to investigate companies if there is a suspicion of fraud and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state, other than the state of Idaho, having used these powersrequire certain chain restaurants to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.

Purchases of common stock in the open market or in privately negotiated transactions by our initial stockholders, directors, officers or their affiliates may make it difficult for us to continue to list our common stock on Nasdaq or another national securities exchange.

If our initial stockholders, directors, officers or their affiliates purchase shares of our common stock in the open market or in privately negotiated transactions, it would reduce the public “float” of our common stock and the number of beneficial holders of our common stock, which may make it difficult to maintain the listing or trading of our common stock on a national securities exchange if we determine to apply for such listing in connection with the business combination. If the number of our public holders falls below 300 or ifpublish the total number of shares heldcalories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake. These labeling laws may also change consumer buying habits in a way that adversely impacts our sales. Additionally, an unfavorable report on, or reaction to, our menu ingredients, the size of our portions or the nutritional content of our menu items could negatively influence the demand for our offerings.


Failure to comply with local licensure, building, and zoning regulations could adversely affect our business.

The development and operation of restaurants depend, to a significant extent, on the selection of suitable sites, which are subject to zoning, land use, environmental, traffic, liquor laws, and other regulations and requirements. We also are subject to licensing and regulation by non-affiliatesstate and local authorities relating to health, sanitation, safety, and fire standards. Typically, licenses, permits and approvals under such laws and regulations must be renewed annually and may be revoked, suspended, or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations. Difficulties or failure to maintain or obtain the required licenses, permits, and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which could adversely affect our business.

Failure to comply with privacy and cybersecurity laws and regulations could cause us to face litigation and penalties that could adversely affect our business, financial conditions, and results of operations.

Our business requires the collection, transmission, and retention of large volumes of guest and employee data, including credit and debit card numbers and other personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract to provide services. The collection and use of such information are regulated at the federal and state levels. Regulatory requirements, both domestic and internationally, have been changing and increasing regulation relating to the privacy, security, and protection of data. Such regulatory requirements may become more prevalent in other states and jurisdictions as well. It is less than 500,000,our responsibility to ensure that we are complying with these laws by taking the appropriate measures as well as monitoring our practices as these laws continue to evolve.

As our environment continues to evolve in this digital age and reliance upon new technologies, for example, cloud computing and its digital methods of ordering, become even more prevalent, it is imperative we secure the private and sensitive information we collect. Failure to do so, whether through fault of our own information systems or those of outsourced third-party providers, could not only cause us to fail to comply with these laws and regulations, but also could cause us to face litigation and penalties that could adversely affect our business, financial condition, and results of operations. Our brand’s reputation and our image as an employer could also be harmed by these types of security breaches or regulatory violations.

Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.

We are subject to taxes by the U.S. federal, state, local and foreign tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: (1) changes in the valuation of our deferred tax assets and liabilities; (2) expected timing and amount of the release of any tax valuation allowance; (3) tax effects of stock-based compensation; and (4) changes in tax laws, regulations, or interpretations thereof. We may also be subject to audits of our income, sales and other transaction taxes by U.S. federal, state, local and foreign taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

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An “ownership change” could limit our ability to utilize tax loss and credit carryforwards to offset future taxable income.

We have certain general business credit tax credits (“Tax Attributes”). Our ability to use these Tax Attributes to offset future taxable income may be significantly limited if we experience an “ownership change,” as discussed below. Under the Internal Revenue Code of 1986, as amended ("IRC" or "Internal Revenue Code"), and regulations promulgated by the U.S. Treasury Department, we may carry forward or otherwise utilize the Tax Attributes in certain circumstances to offset any current and future taxable income and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the Tax Attributes do not otherwise become limited, we believe that we will be non-compliant with Nasdaq’s continued listing ruleshave available a significant amount of Tax Attributes in future years, and our common stocktherefore the Tax Attributes could be de-listed. Ifa substantial asset to us. However, if we experience an “ownership change,” as defined in Section 382 of the IRC, our common stock were de-listed, we could face the material consequences set forth in the immediately preceding risk factor.

Because we must furnish our stockholders with target business financial statements, we may lose the ability to completeuse the Tax Attributes may be substantially limited, and the timing of the usage of the Tax Attributes could be substantially delayed, which could therefore significantly impair the value of that asset


In general, an otherwise advantageous initial business combination with some prospective target businesses.

“ownership change” under Section 382 occurs if the percentage of stock owned by an entity’s 5% stockholders (as defined for tax purposes) increases by more than 50 percentage points over a rolling three-year period. An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the entity immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the Internal Revenue Service (subject to certain adjustments). The annual limitation would be increased each year to the extent that there is an unused limitation in a prior year. The limitation on our ability to utilize the Tax Attributes arising from an ownership change under Section 382 of the IRC would depend on the value of our equity at the time of any ownership change. If we hold a stockholder votewere to approve our initial business combination, the federal proxy rules requireexperience an “ownership change,” it is possible that a proxy statement with respectsignificant portion of our tax loss and credit carryforwards could expire before we would be able to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. use them to offset future taxable income.


If we make a tender offer forfail to maintain effective internal controls over financial reporting, our public shares, we will include the sameability to produce timely and accurate financial statement disclosure in our tender offer documents that is required under the tender offer rules. These financial statements must be prepared in accordanceinformation or comply with or reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financing reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements must be audited in accordance with the standardsSection 404 of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the poolSarbanes-Oxley Act of potential target businesses we may acquire because some targets may2002 could be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rulesimpaired, which could have a material adverse effect on our business and consummate our initial business combination during the combination period.

stock price.


The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we will beare subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, (which we refer to as the amended (the Sarbanes-Oxley Act)Act”), the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (which we refer to as the Dodd-Frank Act), the listing requirementsstandards of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.”Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In orderIt also requires annual management assessments of the effectiveness of our internal control over financial reporting and disclosure of any material weaknesses in such controls. If we become a large accelerated filer or an accelerated filer, we will be required to have our independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting. To maintain and if required, improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, to meet this standard,we anticipate that we will expend significant resources, including accounting-related costs and significant management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our businessoversight. We expect that the requirements of these rules and operating results. We may needregulations will continue to hire more employees in the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal, accounting, and financial compliance costs, and makingmake some activities more difficult, time consuming. These laws, regulationsconsuming and standards are subjectcostly, and place significant strain on our personnel, systems, and resources.


Any failure to varying interpretations,develop or maintain effective controls, or any difficulties encountered in many cases duetheir implementation or improvement, could harm our operating results or cause us to their lack of specificity,fail to meet our reporting obligations and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased generala restatement of our financial statements for prior periods. Any failure to implement and administrative expensesmaintain effective internal control over financial reporting also could adversely affect the results of management evaluations and a diversionindependent registered public accounting firm audits of management’s time and attention from operational activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

However, for as long as we remain an “emerging growth company” as defined in the JOBS Act,internal control over financial reporting that we may take advantage of certain exemptions from various reporting requirements that are applicable to “emerging growth companies” including, but not limited to, not beingbecome required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensationinclude in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and proxy statements,procedures and exemptionsinternal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which may have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.


We have significant stockholders whose interests may differ from those of our public stockholders.

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As of January 1, 2024, approximately 69.1% of the requirementvoting power of holding a nonbinding advisory vote onour common stock was held, directly or indirectly, by our current board of directors, executive compensationofficers and shareholdergreater than 5% beneficial owners. Certain of these, and other, stockholders, including L. Catterton as discussed below, for the foreseeable future, have influence over corporate management and affairs, as well as matters requiring stockholder approval, and they will be able to participate in the election of the members of our board of directors, including amendments to the Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets. Our board of directors will have the authority, subject to the terms of our indebtedness and applicable rules and regulations, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions.

It is possible that the interests of these stockholders may in some circumstances conflict with our interests and the interests of our other stockholders. This could influence their decisions, including with regard to whether and when to dispose of assets and whether and when to incur new or refinance existing indebtedness. In addition, the determination of future tax reporting positions, the structuring of future transactions and the handling of any golden parachute payments not previously approved. Wefuture challenges by any taxing authorities to our tax reporting positions may take advantageinto consideration these stockholders’ tax or other considerations, which may differ from our considerations or those of these reporting exemptions until we are no longerour other stockholders.

On February 27, 2023, the Company filed an “emerging growth company.amended and restated certificate of designation, dated as of February 24, 2023 (the “A&R CoD

We will remain), with the Delaware Secretary of State regarding the Company’s shares of preferred stock, par value $0.0001 per share, designated as Series A Preferred Stock (the “Series A Junior Preferred Stock”), to amend certain powers, designations, preferences and other rights set forth therein, as more fully described below, to be effective February 27, 2023. As of January 1, 2024, CP7, an emerging growth company until the earlieraffiliate of (1) the last dayCardboard Box LLC and L Catterton, held substantially all of the fiscal year (a) followingissued and outstanding shares of Series A Junior Preferred Stock.


The A&R CoD added a provision providing that, subject to certain limitations, CP7 shall have the fifth anniversaryright (but not the obligation) to designate up to two directors to the Company's Board of Directors. In addition, the A&R CoD added to the list of major decisions of the completionCompany that require the written consent of our initial public offering, (b) in which we have total annual gross revenuethe holders of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which meansmajority of the market value of ourthen outstanding shares of common stock that are held by non-affiliates exceeds $700 million asSeries A Junior Preferred Stock the following actions: (x) hire, appoint, remove, replace, terminate or otherwise change the Chief Executive Officer or fail to consult with holders of a majority of the then outstanding shares of Series A Junior Preferred Stock prior June 30,to any other hiring, removal, replacement, termination or appointment of any other executive officer of the Corporation and (y) except as required by applicable law, amend, waive or modify any rights under, terminate or approve (1) any incurrence of debt or guarantee thereof involving more than $2,500,000, or (2) any incurrence of debt or guarantee thereof between the Company or any of its subsidiaries, on the one hand, and any director, officer or stockholder of the Company or any of their respective affiliates, on the other hand. (1) and (2) above are subject to certain exceptions set forth in the dateA&R CoD, including the Credit Agreement.

The A&R CoD added a provision providing that in the event the Company fails to timely redeem any shares of Series A Junior Preferred Stock on which we have issued more than $1.0 billionNovember 3, 2027, the applicable dividend rate shall automatically increase to the lesser of (A) the sum of 10.00% plus the applicable 2% default rate (with such aggregate rate increasing by an additional 0.35% per quarter from and after November 3, 2027), or (B) the maximum rate that may be applied under applicable law, unless waived in non-convertible debt duringwriting by a majority of the prior three year period.

outstanding shares of Series A Junior Preferred Stock.


As an “emerging growth company,” we cannot be certain if

The A&R also added a provision providing that in the reduced disclosure requirements applicableevent the Company fails to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” astimely redeem any shares of Series A Junior Preferred Stock in connection with a Qualified Financing (as defined in the JOBS Act,A&R CoD) or on November 3, 2027 (a “Default”), the Company agrees to promptly commence a debt or equity financing transaction or sale process to solicit proposals for the sale of the Company and we mayits subsidiaries (or, alternatively, the sale of material assets) designed to yield the maximum cash proceeds to the Company available for redemption of the Series A Junior Preferred Stock as promptly as practicable, but in any event, within 12 months from the date of the Default. If on or after November 3, 2026, the Company is aware that it is reasonably unlikely to have sufficient cash to timely effect the redemption in full of the Series A Junior Preferred Stock when first due, the Company shall, prior to such anticipated due date, take advantagereasonable steps to engage an investment banking firm of certain exemptions from various reportingnational standing (and other appropriate professionals) to conduct preparatory work for such a financing transaction and sale process of the Company and its subsidiaries to provide for such transaction to occur as promptly as possible after any failure for a timely redemption of the Series A Junior Preferred Stock.


For further description of the Series A Junior Preferred Stock, see Risk Factor - "Our common stock ranks junior to our Series A Junior Preferred Stock."

Our anti-takeover provisions could prevent or delay a change in control of the Company, even if such change in control would be beneficial to our stockholders.

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Provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as well as provisions of Delaware law, could discourage, delay or prevent a merger, acquisition or other change in control of the Company, even if such change in control would be beneficial to our stockholders. These provisions include: (1) the authority to issue “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; (2) our classified board of directors, which provides that not all members of our board of directors are elected at one time; (3) prohibitions regarding the use of cumulative voting for the election of directors; (4) limitations on the ability of stockholders to call special meetings or amend our Amended and Restated Bylaws; (5) requirements that are applicableall stockholder actions be taken at a meeting of our stockholders; and (6) advance notice requirements for nominations for election to other public companiesour board of directors or for proposing matters that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reportscan be acted upon by stockholders at stockholder meetings.

These provisions could also discourage proxy contests and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, our financial statements may not be comparable to companies that comply with all public company accounting standards. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for stockholders to elect directors of their choosing and cause us to effectuate a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.

The Sarbanes-Oxley Act requires that we maintain a system of internal controls and, beginning with our annual report on Form 10-K for the fiscal year ending December 31, 2019, that we evaluate and report on such system of internal controls.take other corporate actions. In addition, once we are no longer an “emerging growth company,” we must havebecause our system of internal controls audited. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete a business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.

Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. In addition, Delaware law, to which the Company is subject, prohibits it, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at least 15% of its common stock.


The provision of our Amended and the abilityRestated Certificate of the board of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.


Our amended and restated certificate of incorporation provides, subject to limited exceptions, thatIncorporation requiring exclusive venue in the Court of Chancery ofin the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us ortypes of lawsuits may have the effect of discouraging lawsuits against our directors officers, employees or stockholders.

and officers.


Our amendedAmended and restated certificateRestated Certificate of incorporationIncorporation includes an exclusive venue provision. This provision requires, to the fullest extent permitted by law, that (1) any derivative actionsaction or proceeding brought inon behalf of our name, actions againstCompany, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of Delaware General Corporation Law or our Amended and employees for breachRestated Certificate of fiduciary dutyIncorporation or the Amended and other similar actions mayRestated Bylaws, or (5) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.

Delaware.


This choice of forumchoice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with usthe Company or any of ourits directors, officers or other employees or stockholders,and may result in increased costs to a stockholder who has to bring a claim in a forum that is not convenient to the stockholder, which may discourage lawsuits with respect to such claims. Alternatively, iflawsuits. If a court were to find the choice ofexclusive forum provision contained inof our amendedAmended and restated certificateRestated Certificate of incorporation to beIncorporation inapplicable or unenforceable in an action,with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such actionmatters in other jurisdictions, which could harmmaterially and adversely affect our business, operatingfinancial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.

As a “smaller reporting company” we are permitted to provide less disclosure than larger public companies, which may make our common stock less attractive to investors.

We are currently a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies. Consequently, it may be more challenging for investors to analyze our results of operations and financial condition.

prospects, which may result in less investor confidence. Investors may find our common stock less attractive as a result of our smaller reporting company status. If some investors find our common stock less attractive, there may be a less active trading market for our common stock, and our stock price may be more volatile.


The Company’s Emerging Growth Company status has expired, which could increase the costs and demands placed upon our management.

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Table of ContentsITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTY

We currently maintain our executive offices at Park Plaza Torre I, Javier Barros Sierra 540, Of. 103, Col. Santa Fe, 01210 México City, México. The cost for this space is includedwere deemed an “emerging growth company”, as defined in the $10,000 per-month feeJumpstart Our Business Startups Act of 2012 (the “JOBS Act”), until January 1, 2024. Since the designation has expired for our emerging growth company status, we expect the costs and demands placed upon our management to increase, as we must comply with additional disclosure and accounting requirements under applicable SEC and Nasdaq rules and regulations. Complying with these requirements is costly and time consuming, and has placed significant demands on our management and on our administrative and operational resources. If we are unable to comply with these requirements in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that an affiliateapply to reporting companies could be impaired and our business, prospects, financial condition and results of operations could be harmed.

We may be unable to maintain the listing of our sponsor chargessecurities in the future.

On January 23, 2024, we received a notice (the “Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we are not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rules 5450(a)(1) (the “Bid Price Rule”) for generalcontinued listing. The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and administrative servicesNasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notice has no immediate effect on the listing of our common stock or warrants on the Nasdaq Global Market.

In accordance with the Compliance Period Rule, we have 180 calendar days to regain compliance. If, at any time before the end of this 180-day period, or through July 22, 2024, the closing bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to the Staff’s discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H), the Staff will provide written notification that we have achieved compliance with the Bid Price Rule. If we do not regain compliance during this 180-day period, we may be eligible for additional time to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(ii) by transferring to the Nasdaq Capital Market. To qualify, we would need to submit a letter agreement between usTransfer Application and a $5,000 application fee. In addition, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, except the minimum bid price requirement. In addition, we would be required to notify Nasdaq of our sponsor. intent to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split if necessary.

We believe, basedintend to continue to monitor the closing bid price of our common stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. If we do not regain compliance within the allotted compliance periods, including any extensions that may be granted by the Staff, the Staff will provide notice that our common stock will be subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that we will be successful in maintaining the listing of our common stock on rents and fees for similar services in Mexico City, that the fee charged is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office space adequate for our operations.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Nasdaq Global Market, Information

Our units are listedor, if transferred, on the Nasdaq Capital Market,Market.


If we fail to meet the continued listing requirements of the Nasdaq, we could face significant material adverse consequences, including: (1) a limited availability of market quotations for our securities; (2) reduced liquidity with respect to our securities; (3) a determination that our shares are a “penny stock” if they are not already determined to be a “penny stock” at the time of such failure to meet such requirements, which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; (4) a limited amount of news and analyst coverage for us; and (5) a decreased ability to issue additional securities or Nasdaq, underobtain additional financing in the symbol “OPESU.” future.

RISKS RELATED TO OUR CAPITAL STOCK

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on us. Research coverage from industry analysts may be limited. If no securities or industry analysts commence coverage of us, our stock price and trading volume could be negatively impacted. If any of the analysts who may cover us change their recommendation regarding our stock adversely, provide more favorable relative recommendations about our competitors or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If any analyst who may cover us ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.
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A significant number of shares of our common stock are subject to issuance upon exercise of the outstanding warrants, which upon such exercise may result in dilution to our security holders.

Outstanding warrants (including (A) warrants to purchase shares of common stock, at an exercise price of $11.50 per share, issued in connection with the IPO (the “Public Warrants”) and (B)(i) warrants to purchase shares of common stock, at an exercise price of $11.50 per share, which consist of warrants that are part of the units issued to Lion Point Capital, L.P. ("Lion Point") and Lionheart Equities, under the Amended and Restated Forward Purchase Contracts that the Company entered into, at the time of the BurgerFi acquisition, with Lion Point and Lionheart Equities, (ii) private placement warrants and (iii) working capital warrants, all of which were issued pursuant to private placement exemptions (together with (i) and (ii), the “Private Warrants”)) are exercisable at a price of $11.50 per share. Refer to Note 12, “Stockholders' Equity,” as it relates to the number of warrants and options outstanding as of fiscal year end. To the extent such warrants are listed on the Nasdaq under the symbols “OPES” and “OPESW,” respectively.

Holders

Asexercised, additional shares of December 31, 2018, there were fiveour common stock will be issued, which will result in dilution to our existing holders of recordcommon stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our units, five holderscommon stock.


The Company’s shares of recordcommon stock are currently deemed a “penny stock,” which may make it more difficult for investors to sell their common stock.

The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price less than $5.00 per common share or an exercise price of less than $5.00 per common share, subject to certain exceptions. The Company’s securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000, exclusive of their principal residence, or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade its securities. The Company believes that the penny stock rules may discourage investor interest in and limit the marketability of its common stock.


Sales of a substantial number of shares of our common stock in the public market by our existing stockholders could cause our stock price to decline.

Continued sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur has depressed and may continue to depress the market price of our shares of common stock and one holdercould impair our ability to raise capital through the sale of recordadditional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our warrants. We believe we havecommon stock.

Trading volatility and the price of our common stock may be adversely affected by many factors.

Many factors are expected to affect the volatility and price of our common stock in excessaddition to its operating results and prospects. Some of 300 beneficialthese factors, several of which are outside our control, are the following:

the unpredictable nature of economic and market conditions;
governmental action or inaction in light of key indicators of economic activity or events that can significantly influence financial markets, and media reports and commentary about economic, trade or other matters, even when the matter in question does not directly relate to our business;
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trading activity in our common stock or trading activity in derivative instruments with respect to our common stock or debt securities, which can be affected by market commentary (including commentary that may be unreliable or incomplete); and
investor confidence, driven in part by expectations about our performance.

Our common stock ranks junior to our Series A Junior Preferred Stock.

In the event of any voluntary or involuntary liquidation, dissolution or winding up or Deemed Liquidation Event (as defined in the A&R CoD), the holders of Series A Junior Preferred Stock are entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment is made to the holders of our common stock.

The rights of our holders of common stock to participate in the distribution of our assets rank junior to the prior claims of our current and future creditors, the Series A Junior Preferred Stock and any future series or class of preferred stock we may issue that ranks senior to our common stock. Our Amended and Restated Certificate of Incorporation authorizes us to issue up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series on terms determined by our board of directors. As a result of the Anthony's acquisition, shares of Series A Junior Preferred Stock were issued.

The issuance of Series A Junior Preferred Stock in connection with the Anthony's acquisition and any other future offerings of debt or senior equity securities may adversely affect the market price of our common stock. If we decide to issue debt or senior equity securities in the future, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. The Series A Junior Preferred Stock ranks senior to the Common Stock and may be redeemed at the option of the Company at any time and must be redeemed by the Company in limited circumstances.

Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the Series A Junior Preferred Stock or common stock and may result in dilution to holders of the Series A Junior Preferred Stock or common stock. We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities.

Dividends

Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we do not know the amount, timing or nature of any future offerings. Thus, holders of the Series A Junior Preferred Stock and common stock will bear the risk of our future offerings reducing the market price of our capital securities and diluting the value of their holdings in us.


The Series A Junior Preferred Stock is entitled to both preference dividends and participating dividends and no dividends, may be declared or paid on our common stock until (i) such preference dividends and participating dividends have been paid in full or (ii) all such dividends have been declared and a sum sufficient for the payment of them has been set aside for the benefit of the holders of the Series A Junior Preferred Stock.

The terms of the Series A Junior Preferred Stock place significant limitations on our ability to pay dividends on shares of our common stock, and payments made on the Series A Junior Preferred Stock are expected to significantly reduce or eliminate any cash that we might otherwise have available for the payment of dividends on shares of common stock. In particular, no dividends may be declared or paid on our common stock until (i) any accrued and unpaid preference dividends and participating dividends (as described below) with respect to the Series A Junior Preferred Stock have been paid in full or (ii) all such dividends have been or contemporaneously are declared and a sum sufficient for the payment of them has been or is set aside for the benefit of the holders of the Series A Junior Preferred Stock.

In addition, holders of Series A Junior Preferred Stock are entitled to participate in dividends paid to holders of our common stock to the same extent as if such holders of Series A Junior Preferred Stock had shares of common stock in accordance with the terms of the A&R CoD. As a result, the success of an investment in the common stock may depend entirely upon any future appreciation in the value of the common stock. There is no guarantee that the common stock will appreciate in value or even maintain its initial value.


Item 1B. Unresolved Staff Comments.

Not applicable.

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Item 1C. Cybersecurity.

We recognize the critical importance of maintaining the trust and confidence of our customers, franchisees, and employees.

Our operations utilize multiple information systems, including accounting software, human resources management software, back of house systems, supply chain software, our brands’ mobile apps, online ordering platforms, in-restaurant kiosks, point-of-sale software, and back-of-house software. In the ordinary course of our business, we collect, process, transmit, disclose, and retain personal information regarding our employees, our franchisees, vendors, contractors, and guests (which can include social security numbers, social insurance numbers, banking and tax identification information, health care information for employees, and credit card information) and our franchisees collect similar information.

To protect the information that we gather and the availability of our information systems from cybersecurity threats, we have an ongoing cybersecurity risk mitigation program, which includes maintaining up-to-date detection, prevention and monitoring systems and contracting with outside cybersecurity firms to provide continuous monitoring of our systems as well as threat-detection services. We define a cybersecurity threat as any potential unauthorized occurrence on or conducted through our information systems or information systems of a third party that we utilize in our business that may result in adverse effects on the confidentiality, integrity or availability of our information systems or any information residing therein.

Our cybersecurity risk management program includes:
▪    Risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;
▪    A security team led by a Chief Technology Officer (“CTO”) principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security controls, and (3) response to cybersecurity incidents;
▪    The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls and designed to anticipate cyber-attacks and prevent breaches;
▪    Cybersecurity awareness training of our employees, incident response personnel, and senior management;
▪    A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents;

Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks.

The Audit Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Audit Committee, as necessary, regarding cybersecurity incidents, that we experience.

The Audit Committee reports to the full board of directors regarding its activities, including those related to cybersecurity.

Our management team, including historically our CTO, is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises our retained external cybersecurity consultants. Our former CTO who recently left the company had significant experience across digital innovation and technology-enabled growth, information security, infrastructure, operations and compliance, including over 10 years of experience managing enterprise level programs over IT. The Company has identified a candidate that it desires to fill the role.

Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.

We have not encountered any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to affect us, including our business strategy, results of operations or financial condition. Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. See Item 1A. Risk Factors for potential risks related to our information technology systems that we are subject to and that may materially adversely affect our business ("Security breaches of either confidential guest information in connection with, among other things, our electronic processing of credit and debit card transactions or mobile ordering app, or confidential employee information may adversely affect our business” and "Failure to comply with privacy and cybersecurity laws and regulations could cause us to face litigation and penalties that could adversely affect our business, financial conditions, and results of operations.").

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Item 2. Properties.

Our BurgerFi and Anthony's brand restaurants are primarily end-cap facilities, and, to a lesser extent in-line or free-standing. As of January 1, 2024, we leased the premises in which our corporate-owned restaurants are operating. Our restaurant leases generally have initial terms averaging ten years, with two to four renewal options of five years each. Most restaurant leases provide for a specified annual rent, although some call for additional or contingent rent. Generally, leases are “net leases” that require the restaurant to pay a pro rata share of property taxes, insurance and common area maintenance costs. As of January 1, 2024, our restaurant system consisted of 168 restaurants comprised of 87 corporate-owned restaurants and 81 franchised restaurants located in the United States, Puerto Rico and Saudi Arabia.

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We previously leased our executive offices, consisting of approximately 16,500 square feet in North Palm Beach, Florida, for a term expiring in 2023, with an option to renew. In January 2022, we exercised our right to terminate this North Palm Beach lease effective as of July 2022. We currently lease approximately 18,000 square feet in Fort Lauderdale, Florida for our executive offices, for a term expiring in 2032, with an option to renew. Please see Certain Relationships and Related Transactions, and Director Independence for information about this lease.

We believe our current office space is suitable and adequate for its intended purposes and provides opportunity for expansion. The following chart shows the number of restaurants in each of the states in which we operated as of January 1, 2024:

State/Country1
Corporate-
Operated
Franchise-
Operated
Total
Domestic:
Alabama33
Alaska11
Arizona
Colorado11
Connecticut11
Delaware22
Florida543286
Georgia44
Illinois11
Indiana22
Kansas11
Kentucky
Maryland178
Massachusetts44
Michigan11
New Jersey718
Nevada
New York6511
North Carolina44
Ohio22
Pennsylvania11314
Puerto Rico44
RI11
South Carolina22
Tennessee11
Texas
Virginia44
International:
Saudi Arabia22
Total8781168
1Anthony’s brand is located along the East coast of the United States and has restaurants in eight states, including Florida (28 corporate and one co-branded franchised), Pennsylvania (11), New Jersey (7), New York (5), Massachusetts (4), Delaware (2), Maryland (1), and Rhode Island (1).

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Item 3. Legal Proceedings

Information regarding our legal proceedings can be found under the Contingencies sections of Note 7, “Commitments and Contingencies” to the Consolidated Financial Statements included within this report.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Trading Market

BurgerFi’s shares of common stock and public warrants, are each traded on Nasdaq, under the symbols “BFI,” and “BFIIW,” respectively. Each Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share. BurgerFi’s common stock and Public Warrants commenced trading on Nasdaq on March 16, 2018.

Record Holders

As of March 28, 2024, we had 27,042,213 shares of common stock outstanding and 121 record holders of our common stock.

Dividends

BurgerFi has not paid any cash dividends on ourits shares of common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination.date. The payment of any dividends subsequent to a business combination will be within the discretion of ourthe board of directors at such time.directors. It is the present intention of ourthe board of directors to retain all earnings, if any, for use in our business operations and, accordingly, ourthe board of directors does not anticipate declaring any dividends in the foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

Initial Public Offering – Use


Item 6. Reserved.

Item 7. Management’s Discussion and Analysis of Proceeds

On March 16, 2018, we closed our initial public offeringFinancial Condition and Results of 10,000,000 units with each unit consisting of one share of common stock and one warrant. Simultaneously with the consummation of the initial public offering, we consummated the private placement of 400,000 private placement units at a price of $10.00 per private placement unit, generating gross proceeds of $4,000,000. The private placement units were purchased by Axis Public Ventures, Lion Point, and the other initial stockholders. EarlyBirdCapital acted as representative of the underwriters for our initial public offering. The securities sold in our initial public offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-223106). The SEC declared the registration statement effective on March 13, 2018.

We also sold a unit purchase option to purchase up to 750,000 units to EarlyBirdCapital for a purchase price of $100. The unit purchase option is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummation of our initial business combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires on March 17, 2023. We also entered into a contingent forward purchase contract with Lion Point, wherein Lion Point agreed to purchase in a private placement to occur concurrently with the consummation of our initial business combination 3,000,000 units at $10.00 per unit, for aggregate gross proceeds of $30,000,000.

On March 20, 2018, in connection with the underwriters’ exercise of their overallotment option in full, we consummated the sale of an additional 1,500,000 units and the sale of an additional 45,000 private placement units, each at a purchase price of $10.00 per unit, generating additional gross proceeds of $15,450,000.

Operations.


The initial public offering, including the exercise in full of the underwriters’ overallotment option, and the simultaneous private placement, generated gross proceeds of $119,450,000. We paid a total of $2,300,000 in underwriting commissions and discounts and $431,946 in other costs and expenses relating to our initial public offering. An amount of $116,150,000 ($10.10 per Unit) from the net proceeds of the sale of the units and private placement units was placed in trust.

Purchases of Equity Securities by Issuer and Affiliates

No purchases of our equity securities have been made by us or affiliated purchasers within the fourth quarter of the fiscal year ended December 31, 2018.

ITEM 6. SELECTED FINANCIAL DATA

Not required.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Financial Statementsfinancial statements and footnotes thereto containedincluded elsewhere in this annual report.

Forward Looking Statements

All statementsAnnual Report.


Overview

The Company is a leading multi-brand restaurant company that develops, markets and acquires fast-casual and premium-casual dining restaurant concepts around the world, including corporate-owned stores and franchises. As of January 1, 2024, we were the owner and franchisor of the two following brands:

BurgerFi. BurgerFi is a fast-casual “better burger” concept, renowned for delivering an exceptional, all-natural premium “better burger” experience in a refined, contemporary environment. BurgerFi’s chef-driven menu offerings and eco-friendly restaurant design drive our brand communication. It offers a classic American menu of premium burgers, hot dogs, crispy chicken, frozen custard, hand-cut fries, shakes, beer, wine and more. Originally founded in 2011 in Lauderdale-by-the-Sea, Florida, the purpose was simple – “RedeFining” the way the world eats burgers by providing an upscale burger offering, at a fast-casual price point. BurgerFi is committed to an uncompromising and rewarding dining experience that promises fresh food of transparent quality. Since its inception, BurgerFi has grown to 108 BurgerFi locations, and as of January 1, 2024, was comprised of 28 corporate-owned restaurants and 80 franchised restaurants in one foreign country and 19 states, as well as Puerto Rico.

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BurgerFi was named "The Very Best Burger" at the 2023 edition of the nationally acclaimed SOBE Wine and Food Festival and “Best Fast Food Burger” in USA Today’s 10Best 2023 Readers’ Choice Awards for its BBQ Rodeo Burger, "Best Fast Casual Restaurant" in USA Today's 10Best 2023 Readers' Choice Awards for the third consecutive year, QSR Magazine's Breakout Brand of 2020 and Fast Casual's 2021 #1 Brand of the Year. In 2021, Consumer Reports awarded BurgerFi an “A Grade Angus Beef” rating for the third consecutive year.

Anthony’s. Anthony’sis a premium pizza and wing brand operating 59 corporate-owned casual restaurant locations, as of January 1, 2024. Anthony’s prides itself on serving fresh, never frozen, high-quality ingredients. The concept is centered around a 900-degree coal fired oven, and its menu offers “well-done” pizza, coal fired chicken wings, homemade meatballs, and a variety of handcrafted sandwiches and salads. The restaurants also feature a deep wine and craft beer selection to round out the menu. The pizzas are prepared using a unique coal fired oven to quickly seal in natural flavors while creating a lightly charred crust. Anthony’s provides a differentiated offering among its casual dining peers driven by its coal fired oven, which enables the use of fresh, high-quality ingredients with quicker ticket times.

Since its inception in 2002, the Anthony’s brand has grown to 59 corporate-owned locations and one franchised location co-branded with BurgerFi, as of January 1, 2024, primarily along the East coast and has restaurants in eight states, including Florida (28 corporate and 1 franchised co-branded with BurgerFi), Pennsylvania (11), New Jersey (7), New York (5), Massachusetts (4), Delaware (2), Maryland (1), and Rhode Island (1).

Anthony’s was named “The Best Pizza Chain in America" by USA Today's Great American Bites and “Top 3 Best Major Pizza Chain” by Mashed in 2021 and “The Absolute Best Wings in the U.S.” by Mashed in 2022. And named in “America's Favorite Restaurant Chains of 2022” by Newsweek.

Segments

We have two operating and reportable segments: (1) BurgerFi and (2) Anthony’s. Our business generates revenue from the following sources: (i) restaurant sales, (ii) royalty and other than statementsfees, consisting primarily of historical factroyalties based on a percentage of sales reported by franchised restaurants and paid by franchisees, and (iii) franchise fees, consisting primarily of licensing fees paid by franchisees.

Key Metrics

Systemwide Restaurant Sales

“Systemwide Restaurant Sales” are not revenues to the Company, however the Company records royalty revenue based as a percentage of Systemwide Restaurant Sales. Systemwide Restaurant Sales is presented as informational data in order to understand the aggregation of franchised stores sales, ghost kitchen and corporate-owned store sales performance. Systemwide Restaurant Sales growth refers to the percentage change in sales at all franchised restaurants, ghost kitchens and corporate-owned restaurants in one period from the same period in the prior year. Systemwide Restaurant Same-Store Sales growth refers to the percentage change in sales at all franchised restaurants, ghost kitchens, and corporate-owned restaurants after 14 months of operations. See definition below for “Same-Store Sales”

Corporate-Owned Restaurant Sales

“Corporate-Owned Restaurant Sales” represent the sales generated only by corporate-owned restaurants. Corporate-Owned Restaurant Sales growth refers to the percentage change in sales at all corporate-owned restaurants in one period from the same period in the prior year. Corporate-Owned Restaurant Same-Store Sales growth refers to the percentage change in sales at all corporate-owned restaurants after 14 months of operations. These measures highlight the performance of existing corporate-owned restaurants.

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Franchise Restaurant Sales

“Franchise Restaurant Sales” represent the sales generated only by franchisee-owned restaurants and are not recorded as revenue, however, the royalties based on a percentage of these franchise restaurant sales are recorded as revenue. Franchise Restaurant Sales growth refers to the percentage change in sales at all franchised restaurants in one period from the same period in the prior year. Franchise Restaurant Same-Store Sales growth refers to the percentage change in sales at all franchised restaurants after 14 months of operations. These measures highlight the performance of existing franchised restaurants.    

Same-Store Sales

The measure of “Same-Store Sales” is used to evaluate the performance of our store base, which excludes the impact of new stores and closed stores, in both periods under comparison. We include a restaurant in the calculation of Same-Store Sales after 14 months of operations. A restaurant that is temporarily closed, is included in the Same-Store Sales computation. A restaurant that is closed permanently, such as upon termination of the lease, or other permanent closure, is immediately removed from the Same-Store Sales computation. Our calculation of Same-Store Sales may not be comparable to others in the industry.

Digital Channel Orders

The measure of “Digital Channel % of Systemwide Sales” is used to measure performance of our investments made in our digital platform and partnerships with third party delivery partners. We believe our digital platform capabilities are a vital element to continuing to serve our customers and will continue to be a differentiator for the Company as compared to some of our competitors. Digital Channel as % of Systemwide Sales are indicative of the sales placed through our digital platforms and the percentage of those digital sales when compared to total sales at all our franchised and corporate-owned restaurants.

Unless otherwise stated, Systemwide Restaurant Sales, Systemwide Sales growth, and Same-Store Sales are presented on a systemwide basis, which means they include franchise restaurants and corporate-owned restaurants. Franchise restaurant sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and brand royalty revenues are calculated based on a percentage of franchise sales.

The following key metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of our marketing, operating, and growth initiatives. By providing these key metrics, we believe we are enhancing investors’ understanding of our business as well as assisting investors in evaluating how well we are executing our strategic initiatives.

(in thousands, except for percentage data)
Year Ended
January 1,
20241
Year Ended
January 2,
20231,2,3
Systemwide Restaurant Sales$274,437 $289,640 
Systemwide Restaurant Sales Growth(5)%— %
Systemwide Restaurant Same-Store Sales Growth(4)%(2)%
Corporate-Owned Restaurant Sales$160,827 $166,198 
Corporate-Owned Restaurant Sales Growth(3)%%
Corporate-Owned Restaurant Same-Store Sales Growth(4)%%
Franchise Restaurant Sales$113,610 $123,442 
Franchise Restaurant Sales Growth(7)%(7)%
Franchise Restaurant Same-Store Sales Growth(6)%(6)%
Digital Channel % of Systemwide Sales32 %35 %
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Year Ended
January 1, 20241
Year Ended January 2, 20231
(in thousands, except for percentage data)
Anthony's3
BurgerFi2
Anthony's3
BurgerFi2
Systemwide Restaurant Sales$125,686 $148,750 $128,819 $160,821 
Systemwide Restaurant Sales Growth(2)%(7)%%(3)%
Systemwide Restaurant Same-Store Sales Growth(1)%(8)%%(7)%
Corporate-Owned Restaurant Sales$125,629 $35,198 $128,819 $37,379 
Corporate-Owned Restaurant Sales Growth(2)%(5)%%10 %
Corporate-Owned Restaurant Same-Store Sales Growth(1)%(12)%%(11)%
Franchise Restaurant Sales$57 $113,553 N/A$123,442 
Franchise Restaurant Sales Growth100 %(7)%N/A(7)%
Franchise Restaurant Same-Store Sales GrowthN/A(6)%N/A(6)%
Digital Channel % of Systemwide Sales33 %31 %37 %33 %

1.Refer to “Key Metrics Definitions” and “About Non-GAAP Financial Measures” sections below.
2.The fiscal year 2023 reporting periods for BurgerFi changed to 4-4-5 calendar quarters with a 52-53 week fiscal year ending on the Monday nearest December 31 of each year to improve the alignment of financial and business processes following the acquisition of Anthony’s. We have adjusted for differences arising from the different fiscal-period ends for the quarter and fiscal year 2023 when comparing to 2022.
3.Included within Systemwide Restaurant Sales Growth, Systemwide Restaurant Same-Store Sales Growth, Corporate-Owned Restaurant Sales Growth and Corporate-Owned Restaurant Same-Store Sales Growth data presented above is information for Anthony's for the respective periods in 2021 which is presented only for informational purposes as Anthony's was not under common ownership until November 2021, the date of acquisition.




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Results of Operations

We present our results of operations as reported in our consolidated financial statements in accordance with generally accepted accounting principles in the United States of America ("GAAP").

(in thousands)Year Ended January 1, 2024Year Ended
January 2, 2023
Revenue:
Restaurant sales$160,833 $167,201 
Royalty and other fees7,492 9,733 
Royalty - brand development and co-op1,775 1,786 
Total Revenue170,100 178,720 
Restaurant level operating expenses:
Food, beverage and paper costs42,858 48,487 
Labor and related expenses50,289 49,785 
Other operating expenses29,888 30,277 
Occupancy and related expenses15,656 15,607 
General and administrative expenses22,477 25,907 
Depreciation and amortization expense13,154 17,138 
Share-based compensation expense5,612 10,239 
Brand development, co-op and advertising expense4,233 3,870 
Goodwill impairment— 66,569 
Asset impairment4,524 6,946 
Store closure costs587 1,949 
Restructuring costs2,657 1,459 
Pre-opening costs203 474 
Total Operating Expenses192,138 278,707 
Operating Loss(22,038)(99,987)
Other income, net80 2,608 
Gain on change in value of warrant liability13 2,511 
Interest expense, net(8,828)(8,659)
Loss before Income Taxes(30,773)(103,527)
Income tax benefit65 95 
Net Loss$(30,708)$(103,432)
Sales

The following table presents our corporate-owned restaurant sales by segment:

Revenue:Year Ended January 1, 2024Year Ended
January 2, 2023
BurgerFi$35,204 $38,382 
Anthony's125,629 128,819 
Consolidated$160,833 $167,201 



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Comparison of the years ended January 1, 2024 and January 2, 2023

Restaurant Sales

For the year ended January 1, 2024, the Company’s restaurant sales decreased by approximately $6.4 million, or 3.8%, as compared to the year ended January 2, 2023. This decrease was primarily driven by a decrease in same-store sales at Anthony’s and BurgerFi partially offset by the additional revenue from new restaurants transferred from franchisees during 2023 at BurgerFi.

Royalty and Other Fees

Royalty and other fees decreased by approximately $2.2 million, or 23.0% for the year ended January 1, 2024 as compared to the year ended January 2, 2023. This decrease was primarily driven by a decrease in franchise restaurant same-store sales by 6% and the absence of $1.1 million in franchise fee termination revenue during 2023 due to expiration of development agreements for the BurgerFi brand in the prior year.

Royalties – Brand Development and Co-op

Royalties – brand development and co-op advertising decreased by a nominal amount of 0.6% for the year ended January 1, 2024 as compared to the year ended January 2, 2023. This decrease was primarily due to a decrease in our franchisees’ sales for the year ended January 1, 2024 as compared to the year ended January 2, 2023.


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Restaurant Level Operating Expenses

Restaurant level operating expenses are as follows:

Year Ended January 1, 2024Year Ended
January 2, 2023
(in thousands, except for percentage data)In dollarsAs a % of restaurant SalesIn dollarsAs a % of restaurant sales
Consolidated:
Restaurant sales$160,833 100 %$167,201 100.0 %
Restaurant level operating expenses:
Food, beverage and paper costs$42,858 26.6 %$48,487 29.0 %
Labor and related expenses50,289 31.3 %49,785 29.8 %
Other operating expenses29,888 18.6 %30,277 18.1 %
Occupancy and related expenses15,656 9.7 %15,607 9.3 %
Total$138,691 86.2 %$144,156 86.2 %
Anthony's:
Restaurant sales$125,629 100 %$128,819 100.0 %
Restaurant level operating expenses:
Food, beverage and paper costs$32,592 25.9 %$36,618 28.4 %
Labor and related expenses39,114 31.1 %38,789 30.1 %
Other operating expenses22,035 17.5 %22,237 17.3 %
Occupancy and related expenses11,904 9.5 %11,798 9.2 %
Total$105,645 84.1 %$109,442 85.0 %
BurgerFi:
Restaurant sales$35,204 100 %$38,382 100.0 %
Restaurant level operating expenses:
Food, beverage and paper costs$10,266 29.2 %$11,869 30.9 %
Labor and related expenses11,176 31.7 %10,996 28.6 %
Other operating expenses7,852 22.3 %8,040 20.9 %
Occupancy and related expenses3,752 10.7 %3,809 9.9 %
Total$33,046 93.9 %$34,714 90.4 %

Total restaurant level operating expenses as a percentage of revenue was 86.2% for the year ended January 1, 2024 and 86.2% the year ended January 2, 2023, and remained consistent with the prior year. Restaurant-level operating expenses for the fiscal year of 2023 were approximately $138.7 million compared to approximately $144.2 million in the fiscal year 2022. For the Anthony's brand, restaurant-level operating expenses, as a percentage of sales, decreased 90 basis points for the fiscal year 2023, as compared to the fiscal year 2022, driven primarily by lower food costs partially offset by loss on sales leverage. For the BurgerFi brand, restaurant-level operating expenses, as a percentage of sales, increased 350 basis points for the fiscal year 2023 to 93.9%, as compared to 90.4% for the fiscal year 2022, primarily due to loss on sales leverage partially offset by lower food, beverage and paper costs.







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Food, Beverage and Paper Costs

Food, beverage, and paper costs for the year ended January 1, 2024 decreased by approximately $5.6 million, or 11.6% as compared to the year ended January 2, 2023. As a percentage of corporate-owned restaurant sales, food, beverage and paper costs were 26.6% for the year ended January 1, 2024 as compared to 29.0% for the year ended January 2, 2023. This decrease was primarily attributable to lower food costs for the Anthony’s brand due primarily to lower chicken wing prices compared to the prior fiscal year, which contributed approximately $4.0 million, or 72%, of the decrease.

Labor and Related Expenses

Labor and related expenses for the year ended January 1, 2024 increased by approximately $0.5 million, or 1.0% as compared to the year ended January 2, 2023. As a percentage of corporate-owned restaurant sales, labor and related expenses were 31.3% for the year ended January 1, 2024, as compared to 29.8% for the year ended January 2, 2023. This 150 basis points increase is primarily due to higher per hour labor rates and lower efficiencies at both brands, in addition to more BurgerFi corporate stores operating in the current year when compared to the prior year.

Other Operating Expenses

Other operating expenses for the year ended January 1, 2024 decreased by approximately $0.4 million, or 1.3% as compared to the year ended January 2, 2023. As a percentage of corporate-owned restaurant sales, other operating expenses were 18.6% for the year ended January 1, 2024 as compared to 18.1% for the year ended January 2, 2023. This 50 basis points increase primarily relates to increased cost of insurance, repairs and maintenance and other restaurant expenses compared to the prior year, including inflationary increases.

Occupancy and Related Expenses

Occupancy and related expenses for the year ended January 1, 2024 remained consistent with a nominal increase of approximately 0.3% as compared to the year ended January 2, 2023. As a percentage of corporate-owned restaurant sales, other occupancy and related expenses were 9.7% for the year ended January 1, 2024 as compared to 9.3% for the year ended January 2, 2023 due to loss on sales leverage.

General and Administrative Expenses

General and administrative expense was $22.5 million for the year ended January 1, 2024 and decreased by approximately $3.4 million, or 13.2%, as compared to the year ended January 2, 2023. The decrease was due to lower litigation, merger and integration activities, wages, insurance and professional fees incurred during the year ended January 1, 2024, as compared to the year ended January 2, 2023. During the year ended January 1, 2024, we reduced headcount in our restaurant support center driven by efficiencies gained by merger and integration activities.

Depreciation and Amortization Expense

Depreciation and amortization expense was $13.2 million for the year ended January 1, 2024, as compared to $17.1 million for the year ended January 2, 2023. This decrease was primarily related to lower asset values due to fully depreciated assets and as a result of impairments recorded during the prior year.

Share-Based Compensation Expense

Share-based compensation expense was $5.6 million for the year ended January 1, 2024, as compared to $10.2 million for the year ended January 2, 2023, primarily due to lower amortization of restricted stock unit grants and forfeiture of shares granted to executives during the year ended January 1, 2024 as compared to the year ended January 2, 2023.

Brand Development, Co-op and Advertising Expense

Brand development, co-op, and advertising expense was $4.2 million for the year ended January 1, 2024, as compared to $3.9 million for the year ended January 2, 2023. Such expense was at a rate of 2.6% as a percentage of restaurant sales for the year ended January 1, 2024 as compared to 2.3% for the year ended January 2, 2023 due to loss on sales leverage.
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Goodwill and Intangible Asset Impairment

For the year ended January 2, 2023, the Company recorded a goodwill impairment charge of $66.6 million, of which $49.1 million related to the Anthony’s reporting unit, and $17.5 million related to the BurgerFi reporting unit. There were no such impairment charges recognized for the year ended January 1, 2024.

Asset Impairment

For the year ended January 1, 2024, the Company recorded a non-cash asset impairment charge of $4.5 million related to property and equipment and right-of-use assets for certain underperforming stores, of which $3.3 million related to BurgerFi and $1.2 million related to Anthony’s. For the year ended January 2, 2023, the Company recorded a non-cash asset impairment charge of $6.9 million related to property and equipment and right-of-use assets for certain underperforming stores, of which $6.7 million related to BurgerFi and $0.2 million related to Anthony’s.

Store Closure Costs

Store closure costs were $0.6 million for the year ended January 1, 2024 as compared to $1.9 million during the year ended January 2, 2023 primarily as a result of contract termination costs and the Company’s decision to close one BurgerFi location and one Anthony’s location during 2023. During 2022, the Company closed one Anthony’s store, closed its commissary at BurgerFi and incurred contract termination costs on BurgerFi stores previously under development partially offset by the net gain on three BurgerFi store transfers to a franchisee. Store closure costs include contract termination expenses including lease termination, rent expense and other expenses incurred by a restaurant after the Company’s decision to cease development or closure of a restaurant. Store closure costs can fluctuate significantly from period to period based on the number and timing of restaurant closures and the specific closing costs incurred for each restaurant.

Restructuring Costs

Restructuring costs for the year ended January 1, 2024 were $2.7 million, primarily related to expenses in connection with the Credit Agreement requirements to raise additional capital or debt of $1.2 million, and severance expenses of $1.5 million primarily related to the departure of our former Chief Executive Officer and Chief Financial Officer during the current year. Restructuring costs and other charges, net for the year ended January 2, 2023 were $1.5 million, primarily related to expenses in connection with the Credit Agreement requirements to raise additional capital or debt of $0.7 million, severance and other termination benefits of $0.8 million related to the departure of members of executive management. See Note 9, “Debt,” for further discussion of our credit facilities and indebtedness.

Pre-opening Costs

Pre-opening costs were $0.2 million for the year ended January 1, 2024 as compared to $0.5 million for the year ended January 2, 2023, primarily related to our new BurgerFi flagship store in New York City during the year ended January 1, 2024 compared to three new BurgerFi stores during the year ended January 2, 2023. Pre-opening costs include all expenses incurred by a restaurant prior to the restaurant's opening for business. These pre-opening costs include costs to relocate and reimburse restaurant management staff members, costs to recruit and train hourly restaurant staff members, wages, travel, and lodging costs for our training team and other support staff members, as well as rent expense. Pre-opening costs can fluctuate significantly from period to period based on the number and timing of restaurant openings and the specific pre-opening costs incurred for each restaurant.

Other Income, net

Other income, net was $0.1 million for the year ended January 1, 2024 as compared to approximately $2.6 million during the year ended January 2, 2023, which was primarily related to recording an Employee Retention Credit made available through the amended Coronavirus Aid, Relief, and Economic Security Act legislation in 2022.

Gain on Change in Value of Warrant Liability

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The Company recorded an immaterial non-cash gain during the year ended January 1, 2024, as compared to a non-cash gain of $2.5 million during the year ended January 2, 2023 related to a change in the fair value of the warrant liability as a result of a decrease in the market price of our outstanding warrants.

Interest Expense, net

Interest expense, net was approximately $8.8 million for the year ended January 1, 2024, as compared to $8.7 million for the year ended January 2, 2023. Interest expense in each period primarily resulted from interest associated with our senior credit facility, discount amortization and accrued interest on the related party note, and the accretion in value of our outstanding preferred stock.

Income Tax Benefit

For each the years ended January 1, 2024 and January 2, 2023, the Company recorded a $0.1 million income tax benefit due primarily to the Company’s recent history of losses.

Net Loss

Net loss for the year ended January 1, 2024 was $30.7 million, as compared with a net loss of $103.4 million, for the year ended January 2, 2023. The change was primarily due to lower food beverage and paper costs, lower asset impairments, lower share-based compensation expenses, lower depreciation and amortization expense, lower general and administrative expenses due to decreased litigation expense, partially offset by lower same-store sales, the absence of gains on employee retention credits, higher costs due to restructuring and lower gain on change in value of warrant liability compared to the prior year.

Adjusted EBITDA

Adjusted EBITDA was approximately $6.1 million and $9.2 million for the years ended January 1, 2024 and January 2, 2023, respectively. The decrease in Adjusted EBITDA for the years ended January 1, 2024 was primarily due to lost leverage on sales and lower systemwide restaurant sales partially offset by lower food costs and other operating expenses. Please see below for reconciliation of non-U.S. GAAP financial measure Adjusted EBITDA to the most directly comparable U.S. GAAP measure, net (loss) income on a consolidated basis and by segment.

Non-U.S. GAAP Financial Measures

We supplement our reported U.S. GAAP financial information with certain non-U.S. GAAP financial measures, including adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”). We define Adjusted EBITDA as net loss before goodwill impairment, asset impairment charges, employee retention credits, share-based compensation expense, depreciation and amortization expense, interest expense (which includes accretion on the value of preferred stock and interest accretion on the related party note), restructuring costs, merger, acquisition and integration costs, legal settlements, store closure costs, loss (gain) on change in value of warrant liability, pre-opening costs, (gain) loss on sale of assets and income tax expense (benefit).

We use Adjusted EBITDA to evaluate our performance, both internally and as compared with our peers, because this measure excludes certain items that we believe may not be indicative of our core operating results, as well as items that can vary widely across different industries or among companies within the same industry. We believe that this adjusted measure provides a baseline for analyzing trends in our underlying business.

We believe that this non-U.S. GAAP financial measure provides meaningful information and helps investors understand our financial results and assess our prospects for future performance. Because non-U.S. GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-U.S. GAAP financial measures having the same or similar names. These financial measures should not be considered in isolation from, as substitutes for, or alternative measures of, reported net income or diluted earnings per share, and should be viewed in conjunction with the most comparable U.S. GAAP financial measures and the provided reconciliations thereto. We believe this non-U.S. GAAP financial measure, when viewed together with our U.S. GAAP results and the related reconciliations, provides a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

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Below is a reconciliation of Non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net loss on a consolidated basis and by segment for the years ended:



ConsolidatedAnthony’sBurgerFi
(in thousands)January 1, 2024January 2, 2023January 1, 2024January 2, 2023January 1, 2024January 2, 2023
Net Loss$(30,708)$(103,432)$(3,132)$(53,057)$(27,576)$(50,375)
Goodwill impairment66,56949,06417,505
Asset impairment charges4,5246,9461,2402563,2846,690
Employee retention credits(2,626)(2,626)
Share-based compensation expense5,61210,2391885,42410,239
Depreciation and amortization expense13,15417,1384,5447,5678,6109,571
Interest expense8,8288,6594,7664,8164,0623,843
Restructuring costs2,6571,4591,0687631,589696
Merger, acquisition and integration costs8182,7871271546912,633
Legal settlements5641,62399354651,588
Store closure costs5871,949303162841,933
(Gain) on change in value of warrant liability(13)(2,511)(13)(2,511)
Pre-opening costs203474203474
(Gain) loss on sale of assets(93)(15)(94)19 1(34)
Income tax (benefit) expense(65)(95)(61)(335)(4)240 
Adjusted EBITDA$6,068 $9,164 $9,048 $9,298 $(2,980)$(134)


Liquidity and Capital Resources

Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand. As of January 1, 2024, we maintained a cash and cash equivalents balance of approximately $7.6 million and $4.0 million of undrawn availability on our line of credit under the Credit Agreement.

We have short and long-term material cash requirements for our working capital needs, known contractual obligations in the form of operating leases, finance leases, and debt obligations as disclosed in our consolidated financial statements, as well as ongoing capital expenditures. Excluding debt repayments, our requirements for working capital are generally not significant because our guests pay for their food and beverage purchases in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the supplier of such items. Our requirements for operating and finance leases and ongoing capital expenditures are principally related to operating our store locations, remodels and maintenance, and investments in our digital and corporate infrastructure.

Our Credit Agreement contains numerous covenant clauses, including those whereby the Company is required to meet certain trailing twelve month quarterly financial ratios and a minimum liquidity requirement. The Company was not in compliance with the minimum liquidity covenant under the Credit Agreement as of January 1, 2024, which constitutes a breach of the Credit Agreement and an event of default.

This event of default allows the lenders to call the debt sooner than its maturity date of September 30, 2025. The Company does not currently have and is not forecasted to have the readily available funds to repay the debt if called by the lenders, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.

The Company has been and continues to be in communication with its lenders about potential options to address concerns related to the event of default and resolutions thereof. Management cannot, however, predict the results of any such negotiations.. See Note 9, “Debt,” for additional disclosure surrounding the amended Credit Agreement.

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Our long-term material cash requirements for periods beyond the next 12 months include obligations for operating leases and finance leases and ongoing capital expenditures. We currently are unable to assess the likelihood that our cash flows generated from operations and future available liquidity balances will be sufficient to meet our known short and long-term obligations as they currently exist.

The following table presents the summary cash flow information for the periods indicated (in thousands):

Year Ended January 1, 2024Year Ended
January 2, 2023
Net cash (used in) provided by:
Operating activities$(5,383)$2,168 
Investing activities(1,567)(1,549)
Financing activities2,589 (3,591)
Net decrease in cash$(4,361)$(2,972)

Cash Flows (Used in) Provided By Operating Activities

During the year ended January 1, 2024, cash flows used in operating activities were approximately $5.4 million. The cash flows used in operating activities resulted from a net loss of $30.7 million, which was primarily related to results from operations and non-cash charges. Additionally, changes in operating assets and liabilities resulted in a net liability decrease of approximately $1.5 million, which was mainly due to a net decrease in accounts payable and accrued expenses and other current liabilities, primarily as a result of legal settlements and restructuring costs primarily due to expenses related to financing and severance payments due to the departure of our former Chief Executive Officer and Chief Financial Officer.

During the year ended January 2, 2023, cash flows (used in) provided by operating activities were approximately $2.2 million. The cash flows used in operating activities resulted from results of operations, non-cash items and changes in operating assets and liabilities.

Cash Flows Used in Investing Activities

During the year ended January 1, 2024, cash flows used in investing activities were approximately $1.6 million, of which $2.5 million, primarily related to purchases of property and equipment for minor remodels, equipment replacements and capital expenditures associated with the opening of our flagship store in New York City, offset by $0.9 million primarily related to proceeds from the sale of liquor license for one of our closed Anthony’s locations.

During the year ended January 2, 2023, cash flows (used in) investing activities were approximately $1.5 million, which was primarily the result of constructing two stores, and minor remodel equipment replacements in existing locations of $2.5 million offset by $1.1 million of proceeds from sale of property & equipment in connection with the sale of three corporate-owned BurgerFi restaurants to franchisees.

Cash Flows Provided By (Used in) Financing Activities

During the year ended January 1, 2024, cash flows provided by financing activities were approximately $2.6 million, which were primarily related to principal payments on borrowings of approximately $5.3 million, which included repayment of $2.5 million on our line of credit and $3.3 million in loan repayments primarily on our term loan, offset by proceeds from borrowings of $5.1 million on our related party note and proceeds of $3.4 million from the private placement of shares of our common stock.

During the year ended January 2, 2023, cash flows (used in) financing activities were approximately $3.6 million, which was primarily related to principal payments on borrowings of approximately $3.3 million.


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Credit Agreement

On November 3, 2021, the Company joined a credit agreement with a syndicate of commercial banks as part of the Anthony’s acquisition (as amended, the “Credit Agreement”). The Credit Agreement, which has a maturity date of September 30, 2025 (the “Maturity Date”), provides the Company with lender financing structured as a $57.8 million term loan and a $4.0 million revolving loan. The terms of the Credit Agreement require the Company to repay the principal of the term loan in quarterly installments of approximately $0.8 million with the balance due at the Maturity Date. The principal amount of revolving loans is due and payable in full on the Maturity Date. The loan and revolving line of credit are secured by substantially all of the Company’s assets and incurred interest on outstanding amounts of 6.75% through December 31, 2023 and incur interest of 7.25% through June 15, 2024 and 7.75% from June 16, 2024 though the Maturity Date.

Effective March 9, 2022, certain of the covenants of (i) the Company and Plastic Tripod, Inc., as the borrowers (the "Borrowers"), and (ii) the subsidiary guarantors (the "Guarantors") party to the Credit Agreement were amended (such amendment herein referred to as the “Twelfth Amendment”). Pursuant to the terms of the Twelfth Amendment, the Borrowers and Guarantors agreed to pay incremental deferred interest of 2% per annum, in the event that the obligations under the Credit Agreement were not repaid on or prior to June 15, 2023; provided, however, that if no event of default had occurred and was continuing then (1) no incremental deferred interest would be due if all of the obligations under the Credit Agreement had been paid on or prior to December 31, 2022, and (2) only 50% of the incremental deferred interest would be owed if all of the obligations under the Credit Agreement had been paid from and after January 1, 2023 and on or prior to March 31, 2023.

The Credit Agreement was further amended on December 7, 2022 (such amendment herein referred to as the “Thirteenth Amendment”) by amending certain covenants of the Credit Agreement and extending the maturity date from June 15, 2024 to September 30, 2025. The amendment also provided for periodic increases to the annual reportrate of interest changing the rate per annum to (1) 5.75% from January 1, 2023 through June 15, 2023; (2) 6.75% per annum from June 16, 2023 through December 31, 2023; (3) 7.25% per annum from January 1, 2024 through June 15, 2024; and (4) 7.75% per annum from and after June 16, 2024 through the Maturity Date. In addition, the 2% incremental deferred interest implemented on Form 10-KMarch 9, 2022 was reduced to 1% beginning January 3, 2023 and was eliminated at December 31, 2023.

The terms of the Thirteenth Amendment also provided for a change in the timing of paying approximately $0.3 million of deferred interest payments previously scheduled to be paid on June 16, 2023 to be paid monthly from January to June 2023, while deferring the balance of deferred interest amount of approximately $1.3 million from June 15, 2023 to December 31, 2023. The Borrowers and Guarantors also agreed to obtain $5.0 million in net cash proceeds from (x) a shelf registration and equity issuance by not later than January 2, 2023, or (y) issuance of unsecured subordinated debt by not later than January 30, 2023, referred to as the “Initial New Capital Infusion Covenant”.

Under the terms of the Thirteenth Amendment, certain modifications were made to the accounting definitions in the Credit Agreement to bring such definitions in line with Company practices and needs.

In addition, under the terms of the Thirteenth Amendment, the Borrowers and Guarantors agreed to reset their consolidated senior lease-adjusted leverage ratio and fixed charge coverage ratio as follows:
(a) maintain a quarterly consolidated senior lease-adjusted leverage ratio greater than (i) 7.00 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2022, (ii) 7.00 to 1.00 as of the end of the fiscal quarter ending on or about March 31, 2023, and (iii) 6.50 to 1.00 as of the end of the fiscal quarter ending on or about June 30, 2023 and the end of each fiscal quarter thereafter;
(b) maintain a quarterly minimum fixed charge coverage ratio of 1.10 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2022 and the end of each fiscal quarter thereafter; and
(c) the liquidity requirement of the Credit Agreement remained unchanged; provided, that in the event the Company had not received by January 2, 2023 at least $5.0 million in net cash proceeds as a result of shelf registration and equity issuance then the required liquidity amount as of January 2, 2023 would be reduced to $9.5 million.

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The consolidated senior lease-adjusted leverage ratio, fixed charge coverage ratio and liquidity are computed in accordance with the Credit Agreement. If upon delivery of the quarterly financial statements, the consolidated fixed charge coverage ratio as of the end of any fiscal quarter of the Company ending after January 2, 2023 was less than 1.15 to 1.00, then Borrowers and Guarantors agreed to engage a consulting firm to help with certain operational activities and other matters as reasonably determined by the lenders; provided, that, if after delivery of the quarterly financial statements, (x) the consolidated fixed charge coverage ratio as of the end of each of the two prior consecutive fiscal quarters of the Company was greater than 1.15 to 1.00, and (y) the consolidated senior lease-adjusted leverage ratio as of the end of each of the two prior consecutive fiscal quarters of the Company was less than the correlative amount of the consolidated senior lease-adjusted leverage ratio required for the financial covenants for such fiscal quarters by 0.25 basis points or more, then retention of the consulting firm shall not be required during the following fiscal quarter.

On February 1, 2023, the Credit Agreement was amended through the Fourteenth Amendment and subsequently on February 24, 2023 further amended through the Fifteenth Amendment resulting in the Company and its subsidiaries entering into a Secured Promissory Note with CP7 Warming Bag L.P., an affiliate of L. Catterton Fund L.P., as lender, pursuant to which the Junior Lender continued that Delayed Draw Term Loan of $10.0 million, under the Credit Agreement, which is junior subordinated secured indebtedness, and also provided $5.1 million of new junior subordinated secured indebtedness, to the Company, for a total of $15.1 million in junior subordinated secured debt on terms reasonably acceptable to the Required Lenders (as defined in the Credit Agreement), including, without limitation, that (1) such indebtedness shall not mature until at least two (2) years after the maturity date of the credit facility of September 30, 2025; (2) no payments of cash interest shall be made on such indebtedness until after the repayment in full of the obligations under the Credit Agreement; and (3) no scheduled or voluntary payments of principal shall be made until after the repayment in full of the obligations under the Credit Agreement.

On July 7, 2023, the Credit Agreement was amended through the Sixteenth Amendment, which amended the definition of EBITDA for the purposes of expanding the scope of non-recurring items that may be included in the determination of Adjusted EBITDA,as well as modifications to the timeline for when a management consultant must be engaged.

In addition, under the terms of the Sixteenth Amendment, the Borrowers and Guarantors agreed to reset their consolidated senior lease-adjusted leverage ratio and fixed charge coverage ratio as follows:
(a) maintain a quarterly consolidated senior lease-adjusted leverage ratio greater than (i) 7.00 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2023, (ii) 6.75 to 1.00 as of the end of each of the fiscal quarters ending on or about March 31, 2024, June 30, 2024 and September 30, 2024, and (iii) 6.50 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2024 and the end of each fiscal quarter thereafter; and
(b) maintain a quarterly minimum fixed charge coverage ratio of(i) 1.00 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2023, (ii) 1.05 to 1.00 as of the end of each of the fiscal quarters ending March 31, 2024, June 30, 2024 and September 30, 2024, and (iii) 1.10 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2024 and the end of each fiscal quarter thereafter.

As of January 1, 2024, we had $53.3 million outstanding under the Credit Agreement and $15.1 million outstanding under the Junior Indebtedness. Refer to Note 9, “Debt,” of the notes to the consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” of our Annual Report for further information on our obligations and the timing of expected payments.

Redeemable Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. As of January 1, 2024 and January 2, 2023, there were 2,120,000 shares of redeemable Series A preferred stock, par value $0.0001 per share (the “Series A Junior Preferred Stock”), outstanding.

As of January 1, 2024 and January 2, 2023, the value of the redeemable preferred stock was $55.6 million and $51.4 million, respectively and the principal redemption amount was $53.0 million. During the years ended January 1, 2024 and January 2, 2023, the Company recorded non-cash interest expense on the redeemable preferred stock in the amount of $4.2 million and $3.9 million, respectively, related to accretion of the preferred stock to its estimated redemption value.

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On November 3, 2021, and as part of the Anthony's acquisition, the Company issued 2,120,000 shares of Series A Junior Preferred Stock. The Series A Junior Preferred Stock is redeemable on November 3, 2027 and accrues dividends at 7% per annum compounded quarterly from June 15, 2024 with such rate increasing by an additional 0.35% per quarter commencing with the three month period ending September 30, 2024; provided, however that in the event that the Credit Agreement is refinanced or repaid in full prior to June 15, 2024 and the Series A Junior Preferred Stock is not redeemed in full on such date, from and after such date, the Series A Junior Preferred Stock shall accrue dividends at 5% per annum, compounded quarterly, until June 15, 2024.

On February 24, 2023, the Company filed an amended and restated certificate of designation, (the “A&R CoD”), which among other matters, added a provision providing that in the event the Company fails to timely redeem any shares of Series A Preferred Stock on November 3, 2027, the applicable dividend rate shall automatically increase to the lesser of (A) the sum of 10% plus the 2% applicable default rate (with such aggregate rate increasing by an additional 0.35% per quarter from and after November 3, 2027), or (B) the maximum rate that may be applied under “Management’sapplicable law, unless waived in writing by a majority of the outstanding shares of Series A Junior Preferred Stock.

The A&R CoD also added a provision providing that in the event the Company fails to timely redeem any shares of Series A Junior Preferred Stock in connection with a Qualified Financing (as defined in the A&R CoD) or on November 3, 2027 (a “Default”), the Company agrees to promptly commence a debt or equity financing transaction or sale process to solicit proposals for the sale of the Company and its subsidiaries (or, alternatively, the sale of material assets) designed to yield the maximum cash proceeds to the Company available for redemption of the Series A Junior Preferred Stock as promptly as practicable, but in any event, within 12 months from the date of the Default. If on or after November 3, 2026 the Company is aware that it is reasonably unlikely to have sufficient cash to timely effect the redemption in full of the Series A Junior Preferred Stock when first due, the Company shall, prior to such anticipated due date, take reasonable steps to engage an investment banking firm of national standing (and other appropriate professionals) to conduct preparatory work for such a financing transaction and sale process of the Company and its subsidiaries to provide for such transaction to occur as promptly as possible after any failure for a timely redemption of the Series A Junior Preferred Stock.

The Series A Junior Preferred Stock ranks senior to the Common Stock and may be redeemed at the option of the Company at any time and must be redeemed by the Company in limited circumstances. The Series A Junior Preferred Stock shall not have voting rights or conversion rights.

For further discussion of the A&R CoD, including certain board and governance rights included in the A&R CoD, please see Part I, Item 1A Risk Factors “We have significant stockholders whose interests may differ from those of our public stockholders.” and Part III, Item 10 Directors and Executive Officers.

Operating and Finance Lease Obligations

Refer to Note 10, “Leases,” of the notes to the consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” of our Annual Report for further information on our obligations and the timing of expected payments.

Purchase Commitments

From time to time, the Company enters into purchase commitments for food commodities in the normal course of business. As of January 1, 2024, we entered into $5.7 million in conditional purchase obligations over the next 12 months.

Critical Accounting Policies and Use of Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this annual report on Form 10-K, words such “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.   Such forward looking statements areOperations is based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this annual report on Form 10-K should be read as being applicable to all forward-looking statements whenever they appear in this annual report.   Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Overview

We are a blank check company in the development stage, formed on July 24, 2017 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Our efforts in identifying a prospective target business are not limited to a particular industry or geographic region of the world.

Initial Public Offering

On March 16, 2018, we closed our initial public offering of 10,000,000 units with each unit consisting of one share of common stock and one warrant. Simultaneously with the consummation of the initial public offering, we consummated the private placement of 400,000 private placement units at a price of $10.00 per private placement unit, generating gross proceeds of $4,000,000. The private placement units were purchased by Axis Public Ventures, Lion Point, and the other initial stockholders.


We also sold a unit purchase option to purchase up to 750,000 units to EarlyBirdCapital for a purchase price of $100. The unit purchase option is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummation of our initial business combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires on March 17, 2023. We also entered into a contingent forward purchase contract with Lion Point, wherein Lion Point agreed to purchase in a private placement to occur concurrently with the consummation of our initial business combination 3,000,000 units at $10.00 per unit, for aggregate gross proceeds of $30,000,000.

On March 20, 2018, in connection with the underwriters’ exercise of their overallotment option in full, we consummated the sale of an additional 1,500,000 units and the sale of an additional 45,000 private placement units, each at a purchase price of $10.00 per unit, generating additional gross proceeds of $15,450,000.

The initial public offering, including the exercise in full of the underwriters’ overallotment option, and the simultaneous private placement, generated gross proceeds of $119,450,000. An amount of $116,150,000 ($10.10 per Unit) from the net proceeds of the sale of the units and private placement units was placed in trust. Continental Stock Transfer & Trust Company is acting as trustee. The trust funds are invested in U.S. government treasury bills, until the earlier of: (i) the consummation of a business combination or (ii) our failure to consummate a business combination during the combination period. Our sponsor has agreed that it will be liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or vendors or other entities that are owed money by us for services rendered, contracted for or products sold to the Company. However, it may not be able to satisfy those obligations should they arise.

Our management has broad discretion with respect to the specific application of the net proceeds of our initial public offering and simultaneous private placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination.

Results of Operations

We have neither engaged in any business operations nor generated any revenues to date. Our entire activity from inception up to the closing of our initial public offering on March 16, 2018 was in preparation for that event. Subsequent to the initial public offering, our activity has been limited to the evaluation of business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We have, and expect to continue to generate, non-operating income in the form of interest income on marketable securities. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the year ended December 31, 2018, we had net income of $1,021,711, which consists of interest income on marketable securities held in the trust account of $1,871,405, offset by an unrealized loss on marketable securities held in our trust account of $19,398, operating costs of $553,546 and a provision for income taxes of $276,750.

For the period from July 24, 2017 (inception) through December 31, 2017, we had a net loss of $1,176, which consists of operating costs.

Our operating expenses principally consisted of expenses related to our public filings and listing and identification and due diligence related to a potential target business, and to general operating expenses including printing, insurance and office expenses. Until we consummate a business combination, we will have no operating revenues.

Liquidity and Capital Resources

As of December 31, 2018, we had marketable securities held in the trust account of $117,740,109 (including approximately $1,871,000 of interest income consisting of U.S. treasury bills with a maturity of 180 days or less. Interest income on the balance in the trust account may be used by us to pay taxes. Through December 31 2018, we withdrew $261,898 of interest earned on the trust account to pay for our income tax obligations.


For the year ended December 31, 2018, cash used in operating activities was $649,276. Net income $1,021,711 was impacted by interest earned on marketable securities held in the trust account of $1,871,405 and an unrealized loss on marketable securities held in our trust account of $19,398. Changes in operating assets and liabilities provided $181,020 of cash from operating activities.

For the period from July 24, 2017 (inception) through December 31, 2017, cash used in operating activities was $138. Net loss of $1,176 was offset by changes in operating assets and liabilities, which provided $1,176 of cash from operating activities.

We intend to use substantially all of the funds held in the trust account to acquire a target business or businesses and to pay our expenses relating thereto, including a fee payable to EarlyBirdCapital in the amount of $4,025,000. To the extent that our capital stock or debt is used, in whole or in part, as consideration to effect a business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our business combination if the funds available to us outside of the trust account were insufficient to cover such expenses.

Lion Point has entered into a contingent forward purchase agreement with us to purchase, in a private placement for aggregate gross proceeds of $30,000,000, to occur concurrently with the consummation of our initial business combination, 3,000,000 units at $10.00 per unit, on substantially the same terms as the sale of units in the initial public offering. The funds from the sale of these units may be used as part of the consideration to the sellers in the initial business combination; any excess funds may be used for the working capital needs of the post-transaction company. This agreement is independent of the percentage of stockholders electing to redeem their public shares and may provide us with an increased minimum funding level for the initial business combination. The contingent forward purchase agreement is subject to conditions, including Lion Point giving us its irrevocable written consent to purchase the units no later than five days after we notify Lion Point of our intention to meet to consider entering into a definitive agreement for a proposed business combination. Lion Point granting its consent to the purchase is entirely within its sole discretion. Accordingly, if it does not consent to the purchase, it will not be obligated to purchase the units.

In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, our sponsor, our officers, directors and other initial stockholders or their affiliates may, but are not obligated to, loan us funds from time to time or at any time as may be required. If we complete a business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into units at a price of $10.00 per unit at the option of the lender. The units would be identical to the private placement units. The loans would be non-interest bearing and would be payable upon consummation of a business combination.

As of December 31, 2018, we had $205,638 in cash and working capital of $199,734, which excludes franchise and income taxes payable as these amounts can be paid from the interest earned on the trust account. We have not generated operating revenues, nor do we expect to generate operating revenues until the consummation of a business combination. Until the consummation of a business combination, we will be using the funds not held in the trust account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the business combination.


We will need to raise additional capital through loans or additional investments from our sponsor, stockholders, officers, directors, or third parties. Our officers, directors and sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These conditions raise substantial doubt about our ability to continue as a going concern.

Related Party Transactions

Prior to our initial public offering, an affiliate of our sponsor advanced us an aggregate amount of $67,013 and loaned us an aggregate amount of $122,839 pursuant to a promissory note to cover expenses related to our formation and the initial public offering, which were repaid on from the proceeds received upon closing of the initial public offering.

We currently occupy office space provided by an affiliate of our sponsor. Such entity has agreed that until we consummate a business combination, it will make such office space, as well as general and administrative services, available to us. We have agreed to pay an aggregate of $10,000 per month for such services. During the year ended December 31, 2018, we incurred $95,000 in fees for these services, of which such amount is in included in accounts payable and accrued expenses.

In order to finance transaction costs in connection with an intended initial business combination and working capital expenses, our initial stockholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit. We believe the purchase price of these units will approximate the fair value of such units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase price in accordance with ASC 718 — Compensation — Stock Compensation.

Off-balance sheet financing arrangements

We did not have any off-balance sheet arrangements as of December 31, 2018.

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of our executive officers an aggregate monthly fee of $10,000 for office space and office and administrative support provided to the Company. We began incurring these fees upon the consummation of our initial public offering and will continue to incur these fees monthly until the earlier of the completion of a business combination and the Company’s liquidation.


Critical Accounting Policy

The preparation ofconsolidated financial statements, and related disclosureswhich have been prepared in conformityaccordance with accounting principles generally accepted in the United StatesStates. The preparation of Americathese financial statements requires managementthe Company to make estimates and assumptionsjudgments that affect the reported amounts of assets, and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and incomerevenues and expenses duringas well as related disclosures. On an ongoing basis, the periods reported.Company evaluates its estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could materiallymay differ from thosethese estimates. We have identified


The Company reviews its financial reporting and disclosure practices and accounting policies quarterly to confirm that they provide accurate and transparent information relative to the current economic and business environment. The Company believes that of its significant accounting policies, the following critical accounting policy:

Common stock subject to possible redemption

involve a higher degree of judgment and/or complexity:

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Goodwill

We accountreview goodwill for common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measuredimpairment annually at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of our balance sheet.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 31, 2018, we were not subject to any market or interest rate risk. The net proceeds of our initial public offering, including amounts in the trust account, have been invested in United States government treasury bills, bonds or notes having a maturity of 180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act and that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This information appears following Item 16 of this annual report and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROL AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscalfourth quarter, or more frequently if circumstances indicate a possible impairment. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, management conducts a quantitative goodwill impairment test. We estimate the fair values of its reporting unit using a combination of the income, or discounted cash flows approach and the market approach, which utilizes comparable companies’ data. If the estimated fair value of a reporting unit is less than its carrying value, a goodwill impairment exists for the reporting unit and an impairment loss is recorded. The estimated fair value of goodwill is subject to change as a result of many factors including, among others, any changes in our business plans, changing economic conditions, a potential decrease in our stock price and market capitalization, and the competitive environment. Should actual cash flows and our future estimates vary adversely from those estimates used, we may be required to recognize impairment charges in future years. We reviewed the sensitivity of our goodwill impairment test assumptions noting that a 1% increase in our discount rate and a 5% decrease in cash flows would not cause an impairment of our Anthony’s goodwill for the year ended December 31, 2018, as such term is definedJanuary 1, 2024.


Refer to Note 5, “Impairment” and Note 13, “Fair Value Measurements,” for more information.

Long-lived assets and definite-lived intangible assets

We evaluate our long-lived assets and definite-lived intangible assets for impairment at the end of each reporting period or whenever events or changes in Rules 13a-15(e) and 15d-15(e) undercircumstances indicate that the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this annual report, our disclosure controls and procedures were effective.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


Management’s Report on Internal Controls Over Financial Reporting

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rulescarrying value of the SECassets or asset group may not be recoverable. Indefinite-lived intangible assets are tested for newly public companies.

Changesimpairment at least annually, or more frequently if events or changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reportingcircumstances indicate that occurred during the fiscal year ended December 31, 2018 covered by this annual report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.


PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Our current directors and executive officers are as follows:

Name 

Age  

Position 

José Antonio Cañedo White56Chief Executive Officer
Gonzalo Gil White46Chairman of the Board
Miguel Angel Villegas34Chief Financial Officer
Adolfo Rios Olivier51Director
Martha (Stormy) L. Byorum62Director
Rodrigo Lebois Mateos55Director

José Antonio Cañedo White has served as our Chief Executive Officer since July 2017. Mr. Cañedo White has served as a Managing Partner of Axis Capital Management (“Axis”) since 1990, overseeing the firm’s principal investment and trading activities. Under Mr. Cañedo White’s leadership, Axis served as in-house merchant bank for Grupo Televisa, S.A. (“Grupo Televisa”), the largest Spanish-speaking media company in the world and Mexico’s largest television company, from 1990 to 1997, providing M&A and corporate finance advisory services. During his involvement with Groupo Televisa, Mr. Cañedo White served as Chairman of the Board of Grupo Televicentro, S.A. de C.V. (“Grupo Televicentro”), Grupo Televisa’s controlling holding company, from 1993 to 1997, and Grupo Video Visa, S.A. de C.V. (“Grupo Video Visa”), the largest video distributor in Mexico at the time, from 1993 to 1994. Previously, Mr. Cañedo White served as Head of Investment Banking for Nacional Financiera (“Nafinsa”), the Mexican government’s premier development bank, from 1988 to 1990. From 1989 to 1990, he was a member of the governing board of the Comision Nacional Bancaria y de Valores (“CNBV”), Mexico’s national securities and banking commission, Mexico’s regularly equivalent of the SEC. Mr. Cañedo White is Chairman of the Board of Integradora de Servicios Petroleros Oro Negro, SAPI de C.V. (“Oro Negro”), an entity affiliated with Axis. Mr. Cañedo White also held board positions in several Mexican companies including Celanese Mexicana, S.A., an industrial chemical company, Cementos Guadalajara, S.A. de C.V., a major cement manufacturer, and Coronado, S.A. de C.V., a consumer products company for which he served as Chairman of the Board until the sale of the company to Grupo Bimbo. Mr. Cañedo White graduated with a degree in Business Administration from Universidad Anahuac. Mr. Cañedo White is the cousin of Mr. Gil White. We believe Mr. Cañedo White is well-qualified to serve as a member of the board due to his business experience and contacts.

Gonzalo Gil White has served as our Chairman of the Board since July 2017. Mr. Gil White has served as a Managing Partner and CEO of Axis since 2012. Mr. Gil White has been the CEO and a Director of Oro Negro since its inception in 2012 and has been responsible for transforming it from a greenfield venture into a leading operating offshore drilling company with one of the highest operating and safety track records in the industry worldwide. Mr. Gil White has also served as President of the Executive Committee and Founding Partner of Navix de Mexico, a Mexican finance company, since 2007. Prior to founding Oro Negro, Mr. Gil White served as the CEO of Navix from 2007 to 2012. During his tenure, Mr. Gil White positioned Navix as a leading non-regulated financial intermediary; launched multiple credit-driven strategies; pioneered private securitization transactions of consumer loans; issued the first credit-focused development capital certificates (CKD) in the Mexican stock exchange and established a Partnership Product Program with a leading global financial institution to underwrite structured credit in multiple asset classes. Prior to launching Navix, Mr. Gil White established several funding vehicles, such as Navitas Investments and Arto Holdings, which have financed more than $1.5 billion in projects in the oil and gas industry since 2005. Previously, Mr. Gil White worked at Equity Group Investments, the investment arm of Sam Zell, where he was Vice-President for Latin America and oversaw corporate and real estate investments throughout the region. Mr. Gil White received a Masters in Business Administration degree from Stanford Graduate School of Business and a law degree from Instituto Tecnológico Autónomo de México (ITAM). Mr. Gil White is the cousin of Mr. Cañedo White. We believe Mr. Gil White is well-qualified to serve as a member of the board due to his business experience and contacts.


Miguel Angel Villegas Vargas has served as our Chief Financial Officer since December 2017. Since 2014, Mr. Villegas has served as Chief Financial Officer and member of the board at Oro Negro, a Mexican oilfield services company, and served as its Vice President of Investments from 2013 to 2014. He also serves as a member of the board of Navigatis Radiance Pte Ltd, a company that owns, operates and manages offshore support vessels and Navix de Mexico, a private specialty finance company, where he also was a Senior Originator Associate from 2009 to 2011. Navigatis and Navix are companies affiliated to our sponsor, Axis Management S.A. de C.V. Prior to that, Mr. Villegas worked for Citigroup as Relationship Manager and Credit Analyst from 2005 to 2009. Mr. Villegas received a Bachelor of Arts in Financial Management, summa cum laude, from the Instituto Tecnológico y de Estudios Superiores de Monterrey and an M.B.A. from Wharton Business School.

Adolfo Rios Olivier has served as a member of our board of directors since July 2017. Since December 2015, Mr. Rios has served as the founding and managing partner of BI Administradora, S.C. (“BPBI”), a multi-family private investment group focused on identifying, structuring and executing private investments through vehicles designed for ultra-high net worth individuals, family offices and institutional investors. From March 2009 to November 2015, Mr. Rios was the founding and managing partner of Alfaro, Davila Y Rios, S.C., a private investment banking firm that was Lazard’s exclusive strategic partner to conduct transactions in Mexico at the time. From February 2008 to February 2009, Mr. Rios was a managing partner and chief financial officer of Axis in Mexico and Chief Financial Officer for Navix. Prior to this, Mr. Rios served as a managing director of Rothschild in Mexico and Salomon Smith Barney/Citigroup Global Markets in New York. Mr. Rios received a Bachelor of Economics, with honors, at the Universidad de las Americas – Puebla in Puebla, Mexico and an M.B.A. from Stanford Graduate School of Business. We believe Mr. Rios is well-qualified to serve as a member of the board due to his business experience and contacts.

Martha (Stormy) L. Byorum has served as a member of our board of directors since January 2018. Ms. Byorum is founder and chief executive officer of Cori Investment Advisors, LLC (Cori Capital), a financial services entity that was most recently (January 2005 through August 2013) a division of Stephens Inc., a private investment banking firm founded in 1933. Ms. Byorum was also an executive vice president of Stephens Inc. from January 2005 until August 2013. She has also been a managing director at Young America Capital LLC, since October 2014. From March 2003 to December 2004, Ms. Byorum served as chief executive officer of Cori Investment Advisors, LLC, which was spun off in 2003 from Violy, Byorum & Partners Holdings, LLC (“VB&P”), a leading independent strategic advisory and investment banking firm specializing in Latin America. Ms. Byorum co-founded VB&P in 1996 and served as a Partner until February 2003. Prior to co-founding VB&P in 1996, Ms. Byorum had a 24-year career at Citibank, where, among other things, she served as chief of staff and chief financial officer for Citibank’s Latin American Banking Group from 1986 to 1990, overseeing $15 billion of loans and coordinating activities in 22 countries. She was later appointed the head of Citibank’s U.S. Corporate Banking Business and a member of the bank’s Operating Committee and a Customer Group Executive with global responsibilities. Ms. Byorum is a Life Trustee of Amherst College. She has also served as a director of Tecnoglass Inc. (formerly Andina Acquisition Corp., or “Andina”) since 2011, where she currently serves as chair of the audit committee, as a director of Northwest Natural Gas Company since 2004, where she currently serves as chair of the finance committee and as a member of the audit and governances committees, and as a director of JELD-WEN Holding, Inc. since 2014, where she currently is a member of the audit and governance and nominating committees. Ms. Byorum received a B.B.A. from Southern Methodist University and an M.B.A. from The Wharton School at the University of Pennsylvania. We believe Ms. Byorum is well-qualified to serve as a member of the board of directors due to her operational experience with Cori Capital Advisors, VB&P and Citibank and her financial background, which includes having served on the audit committees of four publicly-traded companies, as well as her experience with Andina.


Rodrigo Lebois Mateos has served as a member of our board of directors since October 2018. Mr. Lebois Mateos founded Unifin Financiera, S.A.B. de C.V., SOFOM, ENR, one of the leading publicly traded (non-bank) leasing companies in Mexico and Latin America, in 1993 and since that time has served as its Chairman of the Board. Since 1993, he has also been the President of Fundación Unifin, A.C. and Chairman of the board of Unifin Corporativo, S.A. de C.V., Unifin Credit, S.A. de C.V., Unifin Autos, S.A. de C.V., and Aralpa Capital, S.A. de C.V. He also has been Director of Unifin Financiera, S.A.B. de C.V., S.O.F.O.M. E.N.R. since 1993. In 2013, he also founded Aralpa Capital, S.A. de C.V., a private equity fund focused in direct or indirect private equity investments in several industries in Mexico and abroad, including telecommunications, wholesale distribution, construction, real estate and technology. He has also been a Director of Maxcom Telecomunicaciones S.A.B. de C.V. since April 2016. Prior to the creation of Unifin in 1993, Mr. Lebois Mateos held several positions with car dealers, including as General Manager and member of the board of directors of Grupo Ford Satélite. He also served as President of the National Association of Nissan Car Dealers (ANDANAC), and a board member of Sistema de Crédito Automotriz, S.A. de C.V. (SICREA) and Arrendadora Nimex. Mr. Lebois Mateos completed studies in business administration from Universidad Anahuac in Mexico City. We believe Mr. Lebois is well-qualified to serve as a member of the board due to his business experience and contacts

Number and Terms of Office of Officers and Directors

Our board of directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first class of directors, consisting of Adolfo Rios Olivier, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Rodrigo Lebois Mateos and Martha (Stormy) L. Byorum, will expire at the second annual meeting. The term of office of the third class of directors, consisting of José Antonio Cañedo Whiteand Gonzalo Gil White, will expire at the third annual meeting.

Director Independence

Nasdaq rules require that a majority of the board of directors of a company listed on Nasdaq mustassets may be composed of “independent directors.” An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. We have determined that Adolfo Rios, Martha (Stormy) L. Byorum, and Rodrigo Lebois Mateos are independent directors under the Nasdaq rules and Rule 10A-3 of the Exchange Act. Our independent directors hold regularly scheduled meetings at which only independent directors are present.

Audit Committee

Effective March 13, 2018, we established an audit committee of the board of directors, which consists ofMr. Rios (chairman), Mr. Lebois and Ms. Byorum, each of whom is an independent director under the Nasdaq’s listing standards. The audit committee’s duties, which are specified in our Audit Committee Charter,impaired. Factors considered include, but are not limited to:

reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommend to the board whether the audited financial statements should be included in our Form 10-K;


discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;

discussing with management major risk assessment and risk management policies;

monitoring the independence of the independent auditor;

verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;

reviewing and approving all related-party transactions;

inquiring and discussing with management our compliance with applicable laws and regulations;

pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;

appointing or replacing the independent auditor;

determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;

establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and

approving reimbursement of expenses incurred by our management team in identifying potential target businesses.

Financial Expert on Audit Committee

The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under Nasdaq listing standards. Nasdaq listing standards define “financially literate” as being able to, read and understand fundamental financial statements, including a company’s balance sheet, income statement andnegative cash flow, statement.

In addition, we must certifysignificant underperformance relative to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in financehistorical or accounting, requisite professional certification in accounting, or other comparable experience or background thatprojected future operating results, significant changes in the individual’s financial sophistication. The boardmanner in which an asset is being used, an expectation that an asset will be disposed of directors has determined that Mr. Rios qualifiessignificantly before the end of its previously estimated useful life and significant negative industry or economic trends.


To estimate future cash flows, we make certain assumptions about expected future operating performance, such as an “audit committee financial expert,” as defined under rulesrevenue growth rates, royalties, gross margins, and regulationsoperating expense in relation to the current economic environment and the Company’s future expectations. Estimates of future cash flows are highly subjective judgments based on the Company’s experience and knowledge of its operations. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the SEC.

Nominating Committee

Effective Marchassets exceeds their fair value.


For more information, refer to Note 5, “Impairment” and Note 13, 2018, we have established a nominating committee of the board of directors, which consists of Ms. Byorum (chairman), Mr. RiosFair Value Measurements.

Income Taxes

We make certain estimates and Mr. Lebois, each of whom is an independent director under Nasdaq’s listing standards. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others.


Guidelines for Selecting Director Nominees

The guidelines for selecting nominees, which are specifiedjudgments in the Nominating Committee Charter, generally provide that the persons to be nominated:

should have demonstrated notable or significant achievements in business, education or public service;

should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and

should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders.

The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by stockholders and other persons.

Compensation Committee

Effective as of March 13, 2018, we established a compensation committee of the board of directors, which consists of Mr. Lebois (chairman), Mr. Rios and Ms. Byorum, each of whom is an independent director under Nasdaq’s listing standards. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:

reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation;

reviewing and approving the compensation of all of our other executive officers;

reviewing our executive compensation policies and plans;

implementing and administering our incentive compensation equity-based remuneration plans;

assisting management in complying with our proxy statement and annual report disclosure requirements;

approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;

if required, producing a report on executive compensation to be included in our annual proxy statement; and

reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.


Notwithstanding the foregoing, as indicated below, other than the $10,000 per month administrative fee, no compensation of any kind, including finders, consulting or other similar fees, will be paid to anycalculation of our existing stockholders, including our directors, or any of their respective affiliates, prior to, orprovision for any services they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and ten percent stockholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on copies of such forms received or written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended December 31, 2018, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.

Code of Ethics

On March 13, 2018, our board of directors adopted a code of ethics that applies to our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that governs aspects of our business. We will provide, without charge, upon request, copies of our code of ethics. Requests for copies of our code of ethics should be sent in writing to Opes Acquisition Corp., Park Plaza Torre I, Javier Barros Sierra 540, Of. 103, Col. Santa Fe, 01210 Mexico City, Mexico

ITEM 11. EXECUTIVE COMPENSATION

None of our executive officers or directors has received any compensation (cash or non-cash) for services rendered to us. No compensation of any kind, including finder’s and consulting fees, will be paid to holders of founder shares, executive officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the consummation of an initial business combination other than (i) repayment of loans made to us prior to our initial public offering by our officers and directors to cover offering-relating and organization expenses and (ii) and payment to an affiliate of our sponsor a fee of $10,000 per month for providing us with office space and certain office and administrative services. Individuals will also 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 business combinations. Our audit committee will approve all such reimbursements.

After the consummation of our initial business combination, directors or members of our management team who remain in one of those capacities may be paid director, consulting, management or other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known,income taxes, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, as it will be up to the directors of the post-combination business to determine executiveresulting tax liabilities, and director compensation.

Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee consisting solely of independent directors or by a majority of the independent directors on our board of directors.


We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements may influence our management’s motivation in identifying or selecting a target business although we do not believe that the ability of our management to remain with us after the consummation of an initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding the beneficial ownership of our shares of common stock as of December 31, 2018, by:

each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

each of our officers and directors; and

all our officers and directors as a group.

Unless otherwise indicated, we believe that all persons named in the table have sole votingrecoverability of deferred tax assets. We record valuation allowances against our deferred tax assets, when necessary. Realization of deferred tax assets is dependent on future taxable earnings and investment power with respectis therefore uncertain. Refer to all sharesNote 11, “Income Taxes,” for additional information.


New Accounting Pronouncements

See Note 2, “Summary of common stock beneficially owned by them. The following table does not reflect record of beneficial ownership of any shares of common stock issuable upon exercise of Warrants as such securities are not exercisable or convertible within 60 days.

Name and Address of Beneficial Owner(1) Amount and
Nature of
Beneficial
Ownership
  Percent of
Class
 
     
José Antonio Cañedo White (2)  945,937   6.38%
Gonzalo Gil White (2)  1,231,562   8.31%
Adolfo Rios Olivier  0   0 
Martha (Stormy) L. Byorum  0   0 
Jack Landsmanas Stern *  0   0 
Miguel Angel Villegas Vargas  0   0 
Rodrigo Lebois Mateos (3)  1,142,500   7.71%
All directors and executive officers as a group (seven individuals)  2,374,062   16.02%
         
Greater than 5% Beneficial Owners        
LB&B S.A. de C.V. (4)  1,142,500   7.71%
Axis Public Ventures S. de R.L. de C.V.  945,937   6.38%
Lion Point Capital (5)  825,000   6.4%
Polar Asset Management Partners Inc. (6)  1,480,000   9.99%
Weiss Asset Management LP (7)  1,033,354 (8)   6.97%

*Mr. Landsmanas Stern served as a director from July 2017 until October 2018.


(1)Unless otherwise indicated, the business address of each of the individuals is c/o Opes Acquisition Corp., Park Plaza Torre I, Javier Barros Sierra 540, Of. 103, Col. Santa Fe, 01210 Mexico City, Mexico

(2)Includes an aggregate of 945,937 shares held by Axis Public Ventures S. de R.L. de C.V. (“Axis Public Ventures”). Messrs. José Antonio Cañedo White, Gonzalo Gil White, and Carlos Enrique Williamson share responsibility for the voting and investment decisions relating to the securities held by Axis Public Ventures.

(3)Includes an aggregate of 1,142,500 shares held by LB&B Capital, S.A. de C.V. (“LB&B”). Mr. Lebois is the Chairman of LB&B and may be deemed to have voting and dispositive control over the shares held by LB&B.

(3)The business address of HCG Investment Management Inc. is 366 Adelaide, Suite 601, Toronto, Ontario M5V 1R9, Canada. Information derived from a Schedule 13G filed on February 11, 2019.

(4)The business address of LB&B is Presidente Masaryk 111, Piso 5, Polanco, 11560, Mexico City, Mexico.

(5)The business address of Lion Point Capital is 250 West 55th Street, 33rd Floor, New York, NY 10019.

(6)The business address of Polar Asset Management Partners Inc. is 401 Bay Street, Suite 1900, PO Box 19, Toronto, Ontario M5H 2Y4, Canada. Information derived from a Schedule 13G filed on February 11, 2019.

(7)The business address of Weiss Asset Management LP is 222 Berkley Street, 16th Floor, Boston, MA 02116. Information derived from a Schedule 13G/A filed on February 14, 2019.

(8)Includes 812,555 shares beneficially owned by a private investment partnership of which BIP GP is the sole general partner. Weiss Asset Management is the sole investment manager to the partnership. WAM GP is the sole general partner of Weiss Asset Management and Andrew Weiss is the managing member of WAM GP and BIP GP.

All of the founders’ shares outstanding prior to our initial public offering were placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price of our common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination, or earlier if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.

During the escrow period, the holders of these shares will not be able to sell or transfer their securities except for transfers, assignments or sales (i) among our initial stockholders or to our initial stockholders’ members, officers, directors, consultants or their affiliates, (ii) to a holder's stockholders or members upon its liquidation, (iii) by bona fide gift to a member of the holder's immediate family or to a trust, the beneficiary of which is the holder or a member of the holder's immediate family, for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value for cancellation in connection with the consummation of our initial business combination, or (vii) in connection with the consummation of a business combination at prices no greater than the price at which the shares were originally purchased, in each case (except for clause (vi) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate, there will be no liquidation distribution with respect to the founders’ shares.


The private placement units, and securities contained therein, are each subject to transfer restrictions set forth in letter agreements among us and the purchasers of the private placement units. These transfer restrictions provide that such securities are not transferable or salable until 30 days after the consummation of our initial business combination; provided, however, that the transfer restrictions will lapse earlier if following the completion of our initial business combination we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. During the lockup period, the only permitted transfers are (i) amongst our officers, directors and employees, (ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death in the case of individuals or pursuant to applicable law or organizational documents upon dissolution in the case of entities, (iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of our securities, (vi) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased or (vii) to us for no value for cancellation in connection with the consummation of our initial business combination, in each case (except for clause (vii) or with our prior consent) where the transferee agrees to the terms of the transfer restrictions and the letter agreement being signed by the transferor.

Lion Point Capital has also entered into a contingent forward purchase agreement with us to purchase, in a private placement for aggregate gross proceeds of $30,000,000, to occur concurrently with the consummation of our initial business combination, 3,000,000 of our units at $10.00 per unit, on substantially the same terms as the sale of units in our initial public offering. The funds from the sale of these units may be used as part of the consideration to the sellers in the initial business combination; any excess funds may be used for the working capital needs of the post-transaction company. This agreement is independent of the percentage of stockholders electing to redeem their public shares and may provide us with an increased minimum funding level for the initial business combination. The contingent forward purchase agreement is subject to conditions, including Lion Point Capital giving us its irrevocable written consent to purchase the units no later than five days after we notify them of our intention to meet to consider entering into a definitive agreement for a proposed business combination. Lion Point Capital granting its consent to the purchase is entirely within its sole discretion. Accordingly, if it does not consent to the purchase, it will not be obligated to purchase the units.

Equity Compensation Plans

As of December 31, 2018, we had no compensation plans (including individual compensation arrangements) under which equity securities were authorized for issuance.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Founder Shares

In connection with our organization, we issued 2,875,000 shares of common stock to Axis Public Ventures for $25,000 in cash, at a purchase price of approximately $0.01 per share, in connection with our organization. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Axis Public Ventures subsequently transferred some of its shares to our other initial stockholders.

All of the founders’ shares outstanding prior to the date of this prospectus will be placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until the earlier of six months after the date of the consummation of our initial business combination and the date on which the closing price of our common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination, or earlier if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.

During the escrow period, the holders of these shares will not be able to sell or transfer their securities except for transfers, assignments or sales (i) among our initial stockholders or to our initial stockholders’ members, officers, directors, consultants or their affiliates, (ii) to a holder's stockholders or members upon its liquidation, (iii) by bona fide gift to a member of the holder's immediate family or to a trust, the beneficiary of which is the holder or a member of the holder's immediate family, for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value for cancellation in connection with the consummation of our initial business combination, or (vii) in connection with the consummation of a business combination at prices no greater than the price at which the shares were originally purchased, in each case (except for clause (vi) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate, there will be no liquidation distribution with respect to the founders’ shares.

Advances and Promissory Notes

An affiliate of our sponsor advanced in an aggregate amount of $67,013 and loaned us an aggregate amount of $122,839 pursuant to a promissory note. The advances and notes were non-interest bearing. Due to the short-term nature of these advances and notes, the fair value of the advances and notes approximated their carrying amount. The Company fully repaid these amounts on March 16, 2018.

Administrative Service Fee

We currently maintain our executive offices at Park Plaza Torre I, Javier Barros Sierra 540, Of. 103, Col. Santa Fe, 01210 México City, México. The cost for this space is included in the $10,000 per-month fee that an affiliate of our sponsor charges us for general and administrative services pursuant to a letter agreement between us and our sponsor. During the year ended December 31, 2018, we incurred $95,000 in fees for these services, of which such amount is included in accounts payable and accrued expenses.

Private Units

Simultaneously with the consummation of the initial public offering, we consummated the private placement of 400,000 private placement units at a price of $10.00 per private placement unit, generating gross proceeds of $4,000,000. The private placement units were purchased by Axis Public Ventures, Lion Point, and the other initial stockholders. On March 20, 2018, in connection with the underwriters’ exercise of their overallotment option in full, we consummated the sale of an additional 45,000 private placement units to Axis Public Ventures, Lion Point, and our other initial stockholders, each at a purchase price of $10.00 per unit, generating additional gross proceeds of $450,000.


Our sponsor and initial stockholders have the right to require us to register the private placement units for resale, as described below under “—Registration Rights”. We will bear the costs and expenses of filing any such registration statements. The private placement warrants are non-redeemable so long as they are held by our initial stockholders or their permitted transferees. The private placement warrants may also be exercised by our initial stockholders or their permitted transferees, for cash or on a cashless basis. Other than as stated above, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in our initial public offering.

We also sold a unit purchase option to purchase up to 750,000 units to EarlyBirdCapital for a purchase price of $100. The unit purchase option is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummation of our initial business combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires on March 17, 2023. We also entered into a contingent forward purchase contract with Lion Point, wherein Lion Point agreed to purchase in a private placement to occur concurrently with the consummation of our initial business combination 3,000,000 units at $10.00 per unit, for aggregate gross proceeds of $30,000,000.

Working Capital Loans

In order to finance transaction costs in connection with an intended initial business combination and working capital expenses, our initial stockholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $1,500,000Significant Accounting Policies,” of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit. We believe the purchase price of these units will approximate the fair value of such units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase price in accordance with ASC 718 — Compensation — Stock Compensation.

Registration Rights

The holders of the founder shares and the holders of the private placement units (including securities contained therein) that may be issued upon conversion of working capital loans will have the right to require us to register under the Securities Act a sale of any of our securities held by them pursuant to a registration rights agreement. These holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the founders’ shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the private unitsconsolidated financial statements included in Part II, Item 8 “Financial Statements and units issued to our sponsor, officers, directors or their affiliates in payment of working capital loans made to us (or underlying securities) can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.


Related Party Policy

Our Code of Ethics, which we adopted upon consummation of our initial public offering, requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nomineeSupplementary Data” for election as a director, (b) greater than 5% beneficial owner of our shares of common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

We also require each of our directors and executive officers to annually complete a directors’ and officers’ questionnaire that elicitsadditional information about related party transactions.

Our audit committee, pursuant to its written charter, is responsible for reviewingnew accounting pronouncements.


Item 7A. Quantitative and approving related-party transactions to the extent we enter into such transactions. All ongoingQualitative Disclosures About Market Risk.

Not applicable.


48

Item 8. Financial Statements and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our initial stockholders unless we obtain an opinion from an independent investment banking firm, another independent firm that commonly renders valuation opinions on the type of target business we are seeking to acquire, or an independent accounting firm, and that is reasonably acceptable to EarlyBirdCapital, that the business combination is fair to our unaffiliated stockholders from a financial point of view. Furthermore, in no event will any of our existing officers, directors, special advisors or initial stockholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination.

Director Independence

Nasdaq rules require that a majority of the board of directors of a company listed on Nasdaq must be composed of “independent directors.” An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. We have determined that Adolfo Rios, Martha (Stormy) L. Byorum, and Rodrigo Lebois Mateos are independent directors under the Nasdaq rules and Rule 10A-3 of the Exchange Act.Our independent directors have regularly scheduled meetings at which only independent directors are present.

Supplementary Data.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The firm of Marcum LLP acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum LLP for services rendered.

Audit Fees

During the year ended December 31, 2018 and for the period from July 24, 2017 (inception) through December 31, 2017, audit fees for our independent registered public accounting firm were $84,460 and $25,000, respectively.

Audit-Related Fees

We did not pay our independent registered public accounting firm for consultations concerning financial accounting and reporting standards during the year ended December 31, 2018 and for the period from July 24, 2017 (inception) through December 31, 2017.

Tax Fees

We did not pay our independent registered public accounting firm for tax services during the year ended December 31, 2018 and for the period from July 24, 2017 (inception) through December 31, 2017.

All Other Fees

We did not pay our independent registered public accounting firm for other services for the year ended December 31, 2018 and for the period from July 24, 2017 (inception) through December 31, 2017.

Audit Committee Approval

Since our audit committee was not formed until March 13, 2018, the audit committee did not pre-approve all of the foregoing services although any services rendered prior to the formation of our audit committee were approved by our board of directors. However, in accordance with Section 10A(i) of the Securities Exchange Act, before we engage our independent accountant to render audit or non-audit services on a going-forward basis, the engagement will be approved by our audit committee.

PART IV

ITEM 15. EXHIBITS,

BURGERFI INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

(a) The following Exhibits are filed as part of this annual report.

STATEMENTS

Exhibit No.Description

1.1Business Combination Marketing Agreement between the Registrant and EarlyBirdCapital, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K, filed on March 15, 2018).Page
3.1Certificate of Incorporation (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
3.2Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K, filed on March 15, 2018).


3.3Bylaws (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
4.1Specimen Unit Certificate (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
4.2Specimen Common Stock Certificate (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
4.3Specimen Warrant Certificate (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
4.4Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 18, 2018).
10.1Form of Letter Agreement among the Registrant, the sponsor, each initial stockholder, and the Registrant’s officers and directors (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).).
10.2Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2018).
10.3Escrow Agreement between the Company, Continental Stock Transfer & Trust Company, and the initial stockholders (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on March 15, 2018).
10.5Registration Rights Agreement among the Registrant and the Initial Stockholders (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2018).
10.6Form of Subscription Agreement for the private units (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
10.7Administrative Services Agreement between Axis Management S.A. de C.V. and the Registrant (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on March 15, 2018).
10.8Forward Purchase Agreement (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
14Form of Code of Ethics (incorporated by reference to the Company’s Registration Statement on Form S-1 (No. 333-223106) filed on March 8, 2018).
31.1Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INSXBRL Instance DocumentHerewith
101.SCHXBRL Taxonomy Extension SchemaHerewith
101.CALXBRL Taxonomy Extension Calculation LinkbaseHerewith
101.DEFXBRL Taxonomy Extension Definition LinkbaseHerewith
101.LABXBRL Taxonomy Extension Label LinkbaseHerewith
101.PREXBRL Taxonomy Extension Presentation LinkbaseHerewith

ITEM 16. FORM 10-K SUMMARY

None.


OPES ACQUISTION CORP.

INDEX TO FINANCIAL STATEMENTS

F-2
Financial Statements:
F-3
Consolidated Statements of OperationsF-4
F-5
F-6
F-7 to F-17

49


Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the ShareholdersStockholders and the Board of Directors of
Opes Acquisition Corp.

BurgerFi International, Inc.:

Opinion on the Consolidated Financial Statements


We have audited the accompanying consolidated balance sheets of Opes Acquisition Corp.BurgerFi International, Inc. and subsidiaries (the “Company”)Company) as of December 31, 2018January 1, 2024 and 2017,January 2, 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the yearyears then ended, December 31, 2018 and for the period from July 24, 2017 (inception) through December 31, 2017, and the related notes (collectively, referred to as the “financial statements”)consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018January 1, 2024 and 2017,January 2, 2023, and the results of its operations and its cash flows for each of the yearyears then ended, December 31, 2018 and for the period from July 24, 2017 (inception) through December 31, 2017, in conformity with accounting principlesU.S. generally accepted in the United States of America.

Explanatory Paragraph – accounting principles.


Going Concern


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s business plan is dependent onCompany was not in compliance with the completionminimum liquidity requirement of its credit agreement, which constitutes a business combinationbreach of the credit agreement and the Company’s cash and working capital asan event of December 31, 2018 are not sufficient to complete its planned activities. These conditions raisedefault that raises substantial doubt about the Company’sits ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


Basis for Opinion


These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sthese consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.


Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/ s/ Marcum LLP
We have served as the Company's auditor since 2017.
Marcumllp
New York, NY
April 1, 2019

F-2


OPES ACQUISTION CORP

BALANCE SHEETS

  December 31,  December 31, 
  2018  2017 
ASSETS        
Current Assets        
Cash $205,638  $22,002 
Prepaid expenses  89,095    
Total Current Assets  294,733   22,002 
         
Deferred offering costs     143,199 
Marketable securities held in Trust Account  117,740,109    
Total Assets $118,034,842  $165,201 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities        
Account payable and accrued expenses $256,301  $1,038 
Income taxes payable  14,852    
Accrued offering costs     17,500 
Promissory note – related party     122,839 
Total Current Liabilities  271,153   141,377 
         
Commitments        
         
Common stock subject to possible redemption, 11,030,442 and -0- shares at redemption value as of December 31, 2018 and 2017, respectively  112,763,686    
         
Stockholders’ Equity        
Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding      
Common stock, $0.0001 par value; 100,000,000 shares authorized; 3,789,558 and 2,875,000 issued and outstanding (excluding 11,030,442 and -0- shares subject to possible redemption) as of December 31, 2018 and 2017, respectively  379   288 
Additional paid-in capital  3,979,089   24,712 
Retained earnings/(Accumulated deficit)  1,020,535   (1,176)
Total Stockholders’ Equity  5,000,003   23,824 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $118,034,842  $165,201 

Critical Audit Matter

The accompanying notes are an integral partcritical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements.


OPES ACQUISTION CORP 

STATEMENTS OF OPERATIONS

  Year
Ended
December 31,
2018
  For the Period
from July 24,
2017
(inception)
thru
December 31,
2017
 
       
Operating costs $553,546  $1,176 
Loss from operations  (553,546)  (1,176)
         
Other income:        
Interest income  1,871,405    
Unrealized loss on marketable securities held in Trust Account  (19,398)   
Other income, net  1,852,007    
         
Income (loss) before provision for income taxes  1,298,461   (1,176)
Provision for income taxes  (276,750)   
Net income (loss) $1,021,711  $(1,176)
         
Weighted average shares outstanding, basic and diluted(1)  3,499,414   2,500,000 
         
Basic and diluted net loss per common share(2) $(0.17) $ 
         

(1)Excludes an aggregate of up to 11,030,442 shares subject to possible redemption at December 31, 2018 and 375,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised at December 31, 2017

(2)Net loss per share – basic and diluted excludes income attributable to common stock subject to possible redemption of $1,607,478 for the year ended December 31, 2018.

statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The accompanying notescommunication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are an integral partnot, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


50

Valuation of the Anthony’s reporting unit

As discussed in Notes 2 and 4 to the consolidated financial statements.


OPES ACQUISTION CORP 

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY  

        Additional     Total 
  Common Stock  Paid-in  Accumulated  Stockholders’ 
  Shares  Amount  Capital  Deficit  Equity 
Balance – July 24, 2017 (inception)   $  $  $  $ 
                
Issuance of common stock to Sponsor  2,875,000   288   24,712      25,000 
                     
Net loss           (1,176)  (1,176)
                     
Balance – December 31, 2017  2,875,000   288   24,712   (1,176)  23,824 
                     
Sale of 11,500,000 Units, net of underwriting discounts and offering expenses  11,500,000   1,150   112,266,904      112,268,054 
                     
Sale of 445,000 Private Placement Units  445,000   45   4,449,955      4,450,000 
                     
Proceeds from the sale of unit purchase option        100      100 
                     
Common stock subject to possible redemption  (11,030,442)  (1,104)  (112,762,582)     (112,763,686)
                     
Net income           1,021,711   1,021,711 
                     
Balance – December 31, 2018  3,789,558  $379  $3,979,089  $1,020,535  $5,000,003 

The accompanying notes are an integral part of the financial statements.


OPES ACQUISTION CORP

STATEMENTS OF CASH FLOWS

  

Year
Ended 

December 31, 

  For the Period
from July 24,
2017
(inception)
thru
December 31,
 
  2018  2017 
       
Cash Flows from Operating Activities:        
Net income (loss) $1,021,711  $(1,176)
Adjustments to reconcile net income (loss) to net cash used in operating activities:        
Interest earned on marketable securities held in Trust Account  (1,871,405)   
Unrealized loss on marketable securities held in Trust Account  19,398    
Changes in operating assets and liabilities:        
Prepaid expenses  (89,095)   
Accounts payable and accrued expenses  255,263   1,038 
Income taxes payable  14,852    
Net cash used in operating activities  (649,276)  (138)
         
Cash Flows from Investing Activities:        
Investment of cash in Trust Account  (116,150,000)   
Withdrawal from Trust Account to pay for income taxes and franchise fees  261,898    
Net cash used in investing activities  (115,888,102)   
         
Cash Flows from Financing Activities:        
Proceeds from issuance of common stock to initial stockholders     25,000 
Proceeds from sale of Units, net of underwriting discounts paid  112,700,000    
Proceeds from sale of Private Placement Units  4,450,000    
Proceeds from Unit Purchase Option  100    
Advances from related party  67,013    
Repayment of advances from related party  (67,013)   
Proceeds from promissory note – related party     122,839 
Repayment of promissory note – related party  (122,839)   
Payment of offering costs  (306,247)  (125,699)
Net cash provided by financing activities  116,721,014   22,140 
         
Net Change in Cash  183,636   22,002 
Cash – Beginning  22,002    
Cash – Ending $205,638  $22,002 
         
Supplemental cash flow information:        
Cash paid for income taxes $261,898  $ 
         
Non-cash investing and financing activities:        
Initial classification of common stock subject to redemption $111,741,988  $ 
Change in value of common stock subject to redemption $1,021,698  $ 
Offering costs included in accrued offering costs $  $17,500 

The accompanying notes are an integral part of the financial statements.


OPES ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Opes Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on July 24, 2017. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business transaction with one or more operating businesses or entities thatstatements, the Company has not yet$31.6 million of Goodwill related to the Anthony’s reporting unit as of January 1, 2024. The Company evaluates goodwill at the end of the fourth quarter or more frequently if management believes indicators of impairment exist. The Company estimates the fair values of its reporting unit using a combination of the income, or discounted cash flows approach, and the market approach, which utilizes comparable companies’ data.


We identified (a “Business Combination”the evaluation of the Anthony’s reporting unit goodwill impairment analysis as a critical audit matter. Subjective auditor judgment was required in evaluating certain assumptions used to estimate the fair value of goodwill, including the evaluation of projected revenue, terminal value growth rate, and discount rate used in the income approach, and the market multiples used in the market approach. The assessment of the projected revenue assumption was subjective as it is based largely on the outcome of uncertain future events. Additionally, specialized skills and knowledge were required to assess the terminal value growth rate, discount rate, and market multiple assumptions used to estimate the fair value of goodwill.

The following are the primary procedures we performed to address this critical audit matter. We compared the Company’s historical forecasts of projected revenue to actual results to evaluate the Company’s ability to accurately forecast. We performed sensitivity analyses over the Company’s projected revenue to assess the impact of changes in projected revenue on the determination of fair value. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in

evaluating the terminal value growth rate by comparing it to industry and market data for comparable companies
evaluating the Company’s discount rate by developing a range of independent estimates for the discount rate using publicly available market data for comparable companies and comparing the Company’s discount rate to our independently developed range
evaluating the appropriateness of the selected guideline public companies by researching the selected guideline public companies and reviewing the business description
evaluating the market multiple assumptions by comparing to market multiple ranges developed using publicly available market data for the selected guideline public companies.

/s/ KPMG LLP

We have served as the Company’s auditor since 2022.

Miami, Florida
April 10, 2024

51

BurgerFi International Inc., and Subsidiaries
Consolidated Balance Sheets
(in thousands, except for per share data)January 1,
2024
January 2,
2023
Assets
Current Assets
Cash and cash equivalents$7,556 $11,917 
Accounts receivable, net1,368 1,926 
Inventory1,190 1,320 
Asset held for sale732 732 
Prepaid expenses and other current assets1,654 2,564 
Total Current Assets12,500 18,459 
Property & equipment, net16,121 19,371 
Operating right-of-use assets, net46,052 45,741 
Goodwill31,621 31,621 
Intangible assets, net150,856 160,208 
Other assets1,326 1,380 
Total Assets$258,476 $276,780 
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable - trade and other$7,093 $8,464 
Accrued expenses8,537 10,589 
Short-term operating lease liability10,111 9,924 
Other liabilities4,117 6,241 
Short-term borrowings, including finance leases52,834 4,985 
Total Current Liabilities82,692 40,203 
Non-Current Liabilities
Long-term borrowings, including finance leases1,718 53,794 
Redeemable preferred stock, $0.0001 par value, 10,000,000 shares authorized, 2,120,000 shares issued and outstanding, as of January 1, 2024 and January 2, 2023, $53 million principal redemption value55,629 51,418 
Long-term operating lease liability44,631 40,748 
Related party note payable14,488 9,235 
Warrant liability182 195 
Other non-current liabilities740 1,017 
Deferred income taxes1,146 1,223 
Total Liabilities201,226 197,833 
Commitments and Contingencies - Note 7
Stockholders' Equity
Common stock, $0.0001 par value, 100,000,000 shares authorized, 26,832,691 and 22,257,772 shares issued and outstanding as of January 1, 2024 and January 2, 2023, respectively
Additional paid-in capital315,107 306,096 
Accumulated deficit(257,859)(227,151)
Total Stockholders' Equity57,250 78,947 
Total Liabilities and Stockholders' Equity$258,476 $276,780 

See accompanying notes to consolidated financial statements.
52

BurgerFi International Inc., and Subsidiaries
Consolidated Statements of Operations

(in thousands, except for per share data)Year Ended January 1, 2024Year Ended
January 2, 2023
Revenue:
Restaurant sales$160,833 $167,201 
Royalty and other fees7,492 9,733 
Royalty - brand development and co-op1,775 1,786 
Total Revenue170,100 178,720 
Restaurant level operating expenses:
Food, beverage and paper costs42,858 48,487 
Labor and related expenses50,289 49,785 
Other operating expenses29,888 30,277 
Occupancy and related expenses15,656 15,607 
General and administrative expenses22,477 25,907 
Depreciation and amortization expense13,154 17,138 
Share-based compensation expense5,612 10,239 
Brand development, co-op and advertising expense4,233 3,870 
Goodwill impairment 66,569 
Asset impairment4,524 6,946 
Store closure costs587 1,949 
Restructuring costs2,657 1,459 
Pre-opening costs203 474 
Operating Loss(22,038)(99,987)
Other income, net80 2,608 
Gain on change in value of warrant liability13 2,511 
Interest expense, net(8,828)(8,659)
Loss before Income Taxes(30,773)(103,527)
Income tax benefit65 95 
Net Loss$(30,708)$(103,432)
Weighted average common shares outstanding:
Basic and Diluted25,521,098 22,173,694 
Net Loss per common share:
Basic and Diluted$(1.20)$(4.66)

See accompanying notes to consolidated financial statements.
53

BurgerFi International Inc., and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity

Common StockAdditional Paid-in CapitalAccumulated DeficitTotal
(in thousands, except for share data)SharesAmount
Balance at December 31, 202121,303,500 $2 $296,992 $(123,719)$173,275 
Share-based compensation— — 10,239 10,239 
Stock issued in acquisition of Anthony's1
123,131 — — — — 
Vested shares issued1,001,532 — — — — 
Shares withheld for taxes(170,391)— (1,135)— (1,135)
Net loss— — — (103,432)(103,432)
Balance at January 2, 202322,257,772 2 306,096 (227,151)78,947 
Shares issued in private placement2,868,853 — 3,436 3,436 
Share-based compensation— — 5,612 — 5,612 
Vested shares issued1,798,653 — — — — 
Shares issued in legal settlement200,000 — 352 — 352 
Shares withheld for taxes(292,587)— (389)— (389)
Net loss—  — (30,708)(30,708)
Balance at January 1, 202426,832,691 2 315,107 (257,859)57,250 
1Timing of share issuance differs from recognition of related financial statement dollar amounts.

See accompanying notes to consolidated financial statements.
54

BurgerFi International Inc., and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)Year Ended January 1, 2024Year Ended
January 2, 2023
Cash Flows (Used In) Provided By Operating Activities
Net loss$(30,708)$(103,432)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill impairment— 66,569 
Asset impairment4,524 6,946 
Depreciation and amortization13,154 17,138 
Share-based compensation5,612 10,239 
Gain on legal settlement(619)— 
Forfeited franchise deposits(418)(1,481)
Gain on change in value of warrant liability(13)(2,511)
Deferred income taxes(78)(130)
Other non-cash interest4,884 4,457 
Other, net(228)892 
Changes in operating assets and liabilities:
Accounts receivable570 (268)
Inventory152 67 
Prepaid expenses and other assets924 (499)
Accounts payable - trade and other(1,885)224 
Accrued expenses and other current liabilities(1,404)3,576 
Other long-term liabilities150 381 
Net Cash Flows (Used In) Provided By Operating Activities(5,383)2,168 
Net Cash Flows From Investing Activities
Purchases of property and equipment(2,503)(2,517)
Proceeds from sale of property and equipment936 1,087 
Other investing activities— (119)
Net Cash Flows Used In Investing Activities(1,567)(1,549)
Net Cash Flows From Financing Activities
Proceeds from issuance of common stock3,436 — 
Proceeds from borrowings— 1,500 
Payments on borrowings(5,333)(3,339)
Proceeds from related party note payable5,100 — 
Tax payments for restricted stock upon vesting(389)(1,089)
Debt issuance cost(57)(486)
Repayments of finance leases(168)(177)
Net Cash Flows Provided By (Used In) Financing Activities2,589 (3,591)
Net Decrease in Cash and Cash Equivalents(4,361)(2,972)
Cash and Cash Equivalents, beginning of year11,917 14,889 
Cash and Cash Equivalents, end of year$7,556 $11,917 
Supplemental cash flow disclosures:
Cash paid for interest$3,459 $2,884 
Fair value of net liabilities assumed in legal settlement$(79)$— 
Fair value of common stock issued in legal settlement$352 $ 
ROU assets obtained in the exchange for lease liabilities:
Finance leases$758 $1,078 
Operating leases$9,984 $2,260 
55

ROU liabilities reduced in exchange for lease terminations$192 $ 
Cash paid for income taxes$5 $1 
See accompanying notes to consolidated financial statements.
56

Table of Contents
BurgerFi International Inc., and Subsidiaries
Notes to Consolidated Financial Statements




1.     Organization

BurgerFi International, Inc. and its wholly owned subsidiaries (“BFI,” the “Company,” also “we,” “us,” and “our”). Although, is a multi-brand restaurant company that develops, markets and acquires fast-casual and premium-casual dining restaurant concepts around the world, including corporate-owned stores and franchises located in the United States, Puerto Rico and Saudi Arabia. As of January 1, 2024, the Company had 168 franchised and corporate-owned restaurants of the two following brands:

BurgerFi. BurgerFi is not limited to a particular industry or geographic region for purposesfast-casual “better burger” concept with 108 franchised and corporate-owned restaurants as of consummatingJanuary 1, 2024, offering burgers, hot dogs, crispy chicken, frozen custard, hand-cut fries, shakes, beer, wine and more.

Anthony’s. Anthony’sis a Business Combination, the Companypizza and wing brand that operated with 60 restaurants including 59 corporate-owned and one franchise location co-branded with BurgerFi as of January 1, 2024. The concept is currently focusing on businessescentered around a coal fired oven, and its menu offers “well-done” pizza, coal fired chicken wings, homemade meatballs, and a variety of handcrafted sandwiches and salads.

2.Summary of Significant Accounting Policies

Basis of presentation

The accompanying Consolidated Financial Statements have been prepared in Mexico.

All activity through December 31, 2018 relates to the Company’s formation, its initial public offering (“Initial Public Offering”), which is described below, and identifying a target business for a Business Combination.

The registration statement for the Company’s Initial Public Offering was declared effective on March 13, 2018. On March 16, 2018, the Company consummated the Initial Public Offering of 10,000,000 units (“Units” and,accordance with respect to the common stock includedgenerally accepted accounting principles in the Units sold, the “Public Shares”), generating gross proceedsUnited States of $100,000,000, which is described in Note 4.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 400,000 units (the “Private Placement Units”) at a price of $10.00 per unit in a private placement to Axis Public Ventures S. de R.L. de C.V. (“Axis Public Ventures”), an affiliate of Axis Capital Management (the “Sponsor”), Lion Point Capital (“Lion Point”America (“GAAP”) and the other stockholders of the Company prior to the Initial Public Offering (“Initial Stockholders”), generating gross proceeds of $4,000,000, which is described in Note 5.

Following the closing of the Initial Public Offering on March 16, 2018, an amount of $101,000,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offeringrules and the Private Placement Units was placed in a trust account (“Trust Account”) which may be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account upon failure to consummate a Business Combination, as described below.

On March 20, 2018, in connection with the underwriters’ exercise of their over-allotment option in full, the Company consummated the sale of an additional 1,500,000 Units, and the sale of an additional 45,000 Private Placement Units each at $10.00 per unit, generating total gross proceeds of $15,450,000. Following the closing, an additional $15,150,000 of the net proceeds ($10.10 per Unit) was placed in the Trust Account, resulting in $116,150,000 ($10.10 per Unit) held in the Trust Account.

Transaction costs amounted to $2,731,946, consisting of $2,300,000 of underwriting fees and $431,946 of other costs. As of December 31, 2018, $205,638 of cash was held outside of the Trust Account and is available for working capital purposes.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and private placement of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (net of taxes payable) at the time of the signing an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding 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. There is no assurance that the Company will be able to successfully effect a Business Combination.

The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account ($10.10 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.  


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon consummation of such Business Combination and, solely if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rulesregulations of the Securities and Exchange Commission (“(SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other legal reasons, assuming the Company will offer to redeem shares in conjunction withcontinue as a proxy solicitation pursuant togoing concern. The going concern assumption contemplates the proxy rulesrealization of assets and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Initial Stockholders have agreed to (a) vote their Founder Shares (as defined in Note 6), Placement Shares (as defined in Note 5) and any Public Shares held by them in favorsatisfaction of approving a Business Combination and (b) not to convert any shares in connection with a stockholder vote to approve a Business Combination (or to sell any shares in any tender offer in connection with a Business Combination). Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed Business Combination.

The Company has until September 16, 2019 (or such later date as may be approved by stockholders) to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company 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, redeem 100% of the outstanding Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on depositliabilities in the Trust Account, including interest earned (netnormal course of taxes payable), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The proceeds deposited in the Trust Account could, however, become subject to claims of creditors. Therefore, the actual per-share redemption amount could be less than $10.10.

The Initial Stockholders have (i) waived their redemption rights with respect to Founder Shares, Placement Shares and any Public Shares they may acquire during or after the Initial Public Offering in connection with the consummation of a Business Combination, (ii) waived their rights to liquidating distributions from the Trust Account with respect to their Founder Shares and Placement Shares if the Company fails to consummate a Business Combination within the Combination Period and (iii) agreed that they will not propose any amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect Public Stockholders’ ability to convert or sell their shares to the Company in connection with a Business Combination or affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period unless the Company provides the Public Stockholders with the opportunity to redeem their shares in conjunction with any such amendment.business. However the Initial Stockholders will be entitled to liquidating distributions with respect to any Public Shares acquired if the Company fails to consummate a Business Combination or liquidates within the Combination Period.

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a Business Combination agreement, reduce the amount of funds in the Trust Account below $10.10 per share. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Proposed Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

NOTE 2. LIQUIDITY AND GOING CONCERN

As of December 31, 2018, the Company had $205,638 in its operating bank accounts, $117,740,109 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital of $199,734, which excludes franchise and income taxes payable as these amounts can be paid from the interest earned in the Trust Account. As of December 31, 2018, approximately $1,610,000 of the amount on deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations.

Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.

The Company will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Theseconcern existed as of January 1, 2024 as a result of non-compliance of the Company’s liquidity covenant within the Company’s Credit Agreement.


The Company’s credit agreement (“Credit Agreement”) with a syndicate of banks has approximately $53.3 million in financing outstanding as of January 1, 2024, and expires on September 30, 2025. The Credit Agreement contains various covenants, including requirements for the Company to meet certain trailing twelve-month quarterly financial ratios and a minimum liquidity threshold. As of January 1, 2024, the Company was not in compliance with the minimum liquidity requirement of the Credit Agreement, which constitutes a breach of the Credit Agreement and an event of default. Accordingly, the outstanding balance of the Credit Agreement is included in short-term borrowings together with the short term portion outstanding balance under its finance leases on the accompanying consolidated balance sheets.

This event of default entitles the lenders to call the debt sooner than its maturity date of September 30, 2025. The Company does not have and is not forecasted to have the readily available funds to repay the debt if called by the lenders.

The Company has been actively engaged in discussions with its lenders to explore potential solutions regarding the default event and its resolution. We cannot, however, predict the results of any such negotiations. The consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or thecarrying amounts and classification of theassets, liabilities, and reported expenses that mightmay be necessary shouldif the Company bewere unable to continue as a going concern.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BasisSee Note 9, “Debt,” for additional disclosure surrounding the amended Credit Agreement.


On July 28, 2022, the Company's board of presentation

directors approved the change to a 52-53-week fiscal year ending on the Monday nearest to December 31 of each year in order to improve the alignment of financial and business processes following the acquisition of Anthony’s. With this change, the Company’s fiscal years 2023 and 2022 ended on January 1, 2024 and January 2, 2023, respectively.


Reclassifications

Certain amounts for general and administrative expense, and other income, have been reclassified within the consolidated statements of operations for the year ended January 2, 2023 and are comparable to the year ended January 1, 2024.

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Principles of Consolidation

The accompanyingconsolidated financial statements are presented in conformity with accounting principles generally accepted inpresent the United Statesconsolidated financial position, results from operations and cash flows of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

Emerging growth company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)BurgerFi International, Inc., and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply withits wholly owned subsidiaries. All material balances and transactions between the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensationentities have been eliminated in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s balance sheet with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

consolidation.


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

Use of estimates

Estimates


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosuredisclosures of contingent assets and liabilitiescontingencies at the date of the consolidated financial statements and the reported amounts of revenuesrevenue and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual Actual results could differ significantly from those estimates.


Corporate-owned stores and Franchised stores

The Company grants franchises to independent operators who in turn pay an initial franchise fee, royalties and other fees as stated in the franchise agreement. Store activity for the years ended and January 1, 2024 and January 2, 2023 is as follows:

20232022
Corporate-ownedFranchisedTotalCorporate-ownedFranchisedTotal
Total BurgerFi and Anthony's87 81 168 85 89 174 
BurgerFi stores, beginning of the period25 89 114 25 93 118 
BurgerFi stores opened— 11 
BurgerFi stores transferred/sold(4)— (3)— 
BurgerFi stores closed(1)(13)(14)— (15)(15)
BurgerFi total stores, end of the period28 80 108 25 89 114 
Anthony's stores, beginning of period / acquired60 — 60 61 — 61 
Anthony's stores opened— — — — 
Anthony's stores closed(1)— (1)(1)— (1)
Anthony's total stores, end of the period59 1 60 60  60 

End of year store totals included one international store for both fiscal years ended January 1, 2024 and January 2, 2023, respectively.

Cash and cash equivalents

Cash Equivalents


The Company considers all short-termhighly liquid investments with an original maturitymaturities of three months or less when purchasedas cash equivalents. Cash and cash equivalents also include approximately $1.9 million and $2.4 million as of January 1, 2024 and January 2, 2023, respectively, of amounts due from commercial credit card companies, such as Visa, MasterCard, Discover, and American Express, which are generally received within a few days of the related transactions. At times, the balances in the cash and cash equivalents accounts may exceed federal insured limits. The Federal Deposit Insurance Corporation insures eligible accounts up to $250,000 per depositor at each financial institution. The Company limits uninsured balances to only large, well-known financial institutions and believes that it is not exposed to significant credit risk on cash and cash equivalents.
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Notes to Consolidated Financial Statements




Accounts Receivable, net

Accounts receivable consist of amounts due from vendors for rebates on purchases of goods and materials and franchisees for training and royalties and are stated at the amount invoiced. Accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. Management provides for probable uncollectible amounts through a charge to earnings and a credit to allowance for uncollectible accounts based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for uncollectible accounts and a credit to accounts receivable. The allowance for uncollectible accounts was approximately $0.1 million at January 1, 2024 and $0.2 million at January 2, 2023.

Employer Retention Tax Credits

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, made a number of changes to employer retention tax credits previously made available under The Coronavirus Aid, Relief, and Economic Security Act, including modifying and extending the Employee Retention Credit (“ERC”). As a result of such legislation, the Company qualified for ERC for the first and second calendar quarters of 2021 and has applied for ERC through amended payroll tax filings for the applicable quarters. During the fiscal year ended January 1, 2024, we assumed $0.4 million in ERC receivables as part of the John Rosatti settlement agreement disclosed in Note 7, “Commitments and Contingencies,” and during the fiscal year ended January 2, 2023, $2.6 million, net of third party preparation fees, in other income, net related to ERC. The Company has collected $3.0 million on ERC receivables through January 1, 2024.

Inventories

Inventories primarily consist of food and beverages. Inventories are accounted for at lower of cost or net realizable value using the first-in, first-out (FIFO) method. Spoilage is expensed as incurred.

Assets Held for Sale

In February 2020, the Company entered into an asset purchase agreement with an unrelated third party for the sale of substantially all of the assets used in connection with the operation of BF Dania Beach, LLC. The closing of this transaction has been delayed due to additional on-going negotiations. In the event the transaction is terminated, the Company will begin operating this BurgerFi restaurant, and return the deposit of $0.9 million included in other current assets to the unrelated third-party purchaser. Assets used in the operations of BF Dania Beach, LLC totaling $0.7 million have been classified as held for sale in the accompanying consolidated balance sheets as of January 1, 2024 and January 2, 2023.

Property and Equipment, net

Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is provided by the straight-line method over an estimated useful life as shown below:

Years
Leaseholder ImprovementsShorter of lease term or life of asset
Kitchen equipment and other equipment5 - 7
Computers and office equipment3 - 5
Furniture and fixtures5 - 7
Vehicles5 - 7

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Notes to Consolidated Financial Statements



Maintenance and repairs which are not considered to extend the useful lives of the assets are charged to operations as incurred. Expenditures for additions and improvements are capitalized. Expenditures for renewals and betterments, which materially extend the useful lives of assets or increase their productivity, are capitalized. The Company capitalizes construction costs during construction of the restaurant and will begin to depreciate them once the restaurant is placed in service. Wage costs directly related to and incurred during a restaurant’s construction period are capitalized. Interest costs incurred during a restaurant’s construction period are capitalized. Upon sale or retirement, the cost of assets and related accumulated depreciation and amortization are removed from the accounts and any resulting gains or losses are included in other income (loss) on the Company’s consolidated statements of operations.

Impairment of Long-Lived Assets and Definite-Lived Intangible Assets

The Company assesses the potential impairment of its long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, the Company may be monitoring a small number of locations, and future impairment charges could be required if individual restaurant performance does not improve or if the decision is made to close or relocate a restaurant. If such assets are considered to be cash equivalents. impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the assets exceeds the fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Definite-lived intangible assets are amortized on a straight-line basis using the following estimated useful lives of the related classes of intangibles as shown below:

Years
Franchise agreements7
Trade names30
License agreements2
VegiFi product10
Right of use assets5 - 10

Refer to Note 10, “Leases”, for additional disclosures for discussion of amortization of right of use assets.

The Company didreviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.

The Company recorded impairment charges of approximately $4.5 million for the year ended January 1, 2024, of which $1.8 million related to property and equipment, $2.6 million related to right-of-use assets, and $0.1 million related to intangible assets, all of which is included in asset impairment on our consolidated statements of operations. The Company recorded an impairment charge of approximately $6.9 million during the year ended January 2, 2023, of which $3.1 million related to property and equipment and $3.8 million related to right-of-use assets which is included in asset impairment on our consolidated statements of operations.

Goodwill and Indefinite-Lived Intangible Assets

The Company accounts for goodwill and indefinite-lived intangible assets in accordance with Financial Accounting Standards Board “FASB” Accounting Standards Codification (“ASC”) No. 350, “Intangibles—Goodwill and Other” (“ASC 350”). ASC 350 requires goodwill and indefinite-lived intangible assets to be reviewed for impairment annually, or more frequently if circumstances indicate a possible impairment. The Company evaluates goodwill at the end of the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include but are not limited to (1) changes in the Company’s business plans, (2) changing economic conditions including a potential decrease in the Company’s stock price and market capitalization, (3) a significant adverse change in legal factors or in business climate, (4) unanticipated competition, or (5) an adverse action or assessment by a regulator.

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Notes to Consolidated Financial Statements



In evaluating goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, management conducts a quantitative goodwill impairment test. This impairment test involves comparing the fair value of the reporting unit with its carrying value (including goodwill). The Company estimates the fair values of its reporting unit using a combination of the income, or discounted cash flows approach and the market approach, which utilizes comparable companies’ data. If the estimated fair value of the reporting unit is less than its carrying value, a goodwill impairment exists for the reporting unit and an impairment loss is recorded.

Based on the results of the Company’s annual goodwill impairment test performed for the year ended January 1, 2024, it determined that goodwill was not impaired. For the year ended January 2, 2023, the Company recorded goodwill impairment charges of approximately $66.6 million. Refer to Note 5, “Impairment,” for additional information.

The following table represents changes to the Company's goodwill balances during the years ended January 1, 2024 and January 2, 2023:
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Reporting Unit
(in thousands)BurgerFiAnthony'sTotal Goodwill
Balance at December 31, 2021$17,505 $80,495 $98,000 
Adjustment to goodwill acquired— 190 190 
Impairment loss(17,505)(49,064)(66,569)
Balance at January 2, 2023 and January 1, 2024$ $31,621 $31,621 


Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. The annual impairment test for indefinite-lived intangible assets may be completed through a qualitative assessment to determine if the fair value of the indefinite-lived intangible assets is more likely than not to be greater than the carrying amount. If the Company elects to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, it tests for impairment using a quantitative process. If the Company determines that impairment of its intangible assets may exist, the amount of impairment loss is measured as the excess of carrying value over fair value. The Company’s estimates in the determination of the fair value of indefinite-lived intangible assets include the anticipated future revenue of corporate-owned and franchised restaurants and the resulting cash flows.

The Company’s liquor licenses are considered to have any cash equivalentsan indefinite life with a value of $5.8 million and $6.7 million as of December 31, 2018January 1, 2024 and 2017.

Marketable securities heldJanuary 2, 2023, respectively, and are included in Trust Account

At December 31, 2018, theintangible assets, held in the Trust Account were substantially held in U.S. Treasury Bills.net on its consolidated balance sheets. During the year ended December 31, 2018,January 1, 2024, the Company withdrew $261,898recognized the following related to the Anthony’s liquor license intangible assets:

(i) a gain of interest$0.1 million, which is included in other income, net, in its consolidated statements of operations from the Trust Accountsale of a liquor license intangible asset for one of its closed Anthony’s locations with a book value of $0.8 million; and
(ii) an asset impairment charge of $0.1 million as part of its annual impairment test, which is included in asset impairment on its consolidated statement of operations.

For the year ended January 2, 2023, there were no asset impairment charges recorded related to paythe Company’s liquor licenses. Refer to Note 4, “Intangible Assets,” for additional information.

Deferred Financing Costs

Deferred financing costs relate to the Company’s debt instruments, which are reflected as deductions from the carrying amounts of the related debt instrument, including the Company’s Credit Agreement. Deferred financing costs are amortized over the terms of the related debt instruments using the effective interest method. For the years ended January 1, 2024 and January 2, 2023, the Company deferred $0.1 million and $0.9 million, respectively, of financing costs in connection with its income tax obligations.

CommonCredit Agreement. Amortization expense associated with deferred financing costs, which is included within interest expense, net, totaled $0.5 million for each of the years ended January 1, 2024 and January 2, 2023. See Note 9, “Debt,” for additional information.


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Share-Based Compensation

The Company has granted share-based compensation awards to certain employees under the 2020 Omnibus Equity Incentive Plan (the “Plan”). The Company measures the cost of employee services received in exchange for an equity award, which may include grants of employee stock options and restricted stock units, based on the fair value of the award at the date of grant. The Company recognizes share-based compensation expense over the requisite service period unless the awards are subject to possible redemption

performance or market conditions, in which case the Company recognizes compensation expense over the requisite service period to the extent the conditions are considered probable. Forfeitures are recognized as they occur. The Company accounts for itsdetermines the grant date fair value of stock options using a Black-Scholes-Merton option pricing model (the “Black-Scholes Model”). The grant date fair value of restricted stock unit awards (“RSU Awards”) and restricted stock unit awards with performance conditions (“PSU Awards”) are determined using the fair market value of the Company’s common stock on the date of grant, as set forth in the applicable plan document, unless the awards are subject to possible redemptionmarket conditions, in which case the Monte Carlo simulation model is used. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved.


Warrant Liability

The Company has certain warrants which include provisions that affect the settlement amount. Such variables are outside of those used to determine the fair value of a fixed-for-fixed instrument, and as such, the warrants are accounted for as liabilities in accordance with ASC 815-40, “Derivatives and Hedging”, with changes in fair value included in the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subjectconsolidated statement of operations.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to mandatory redemption is classified astransfer a liability instrument and(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy is measured atrequired to prioritize the inputs used to measure fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the controlThe three levels of the holderfair value hierarchy are described as follows:

Level 1 – Quoted prices in active markets for identical assets or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classifiedliabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1, such as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

Income taxes

The Company complies with the accounting and reporting requirements of ASC Topic 740 “Income Taxes,” which requires an asset and liability approach to financial accounting and reportingquoted prices for income taxes. Deferred income taxsimilar assets and liabilities are computedin active markets; quoted prices for differences between the financial statement and tax bases ofidentical or similar assets and liabilities in markets that will result in future taxableare not active; or deductible amounts, based on enacted tax lawsother inputs that are observable or can be corroborated by observable market data.

Level 3 – Unobservable inputs that are supported by little or no market activity and rates applicablethat are significant to the periods in whichfair value of the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

ASC Topic 740 prescribes a recognition thresholdor liabilities. This includes certain pricing models, discounted cash flow methodologies and a measurement attributesimilar techniques that use significant unobservable inputs.


Restructuring Costs

Restructuring costs for the financial statement recognition and measurementperiods shown consist of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2018 and 2017, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company may be subject to potential examination by federal, state, city and foreign taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state, city and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21% effective January 1, 2018, among other changes. ASC Topic 740 requires companies to recognize the effect of tax law changes in the period of enactment; therefore, the Company was required to revalue its deferred tax assets and liabilities at December 31, 2017 at the new rate. The Company completed its analysis which resulted in no material changes to the financial statements.

following:


(in thousands)Year Ended January 1, 2024Year Ended
January 2, 2023
Expenses related to financing$1,168 $660 
Severance and onboarding costs associated with change in CEO and CFO1,489 799 
Total$2,657 $1,459 

Net lossLoss per common share

Common Share


Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The Company applies the two-class method in calculating earnings per share. Shares of common stock subject to possible redemption at December 31, 2018, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of (1) warrants sold in the Initial Public Offering and private placementoutstanding to purchase 11,945,00015,063,800 shares of common stock, and (2) 750,0002,562,550 shares of commonrestricted stock and warrants to purchase 750,000 shares of common stock in the unit purchase option sold to the underwriters and their designees,grants in the calculation of diluted loss per share, since the exercise of the warrants and the exercise of the unit purchase option is contingent upon the occurrence of future events. As a result, dilutednet loss per common share, isand (3) the same as basicimpact of any dividends associated with its redeemable preferred stock, and such items have not been included in the calculation of net loss per common share foras the periods.

effect of such items would have been anti-dilutive.

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Reconciliation of net income (loss)Net Loss per common share

The Company’s net income (loss) is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares only participate in the income of the Trust Account and not the losses of the Company. Accordingly, basicCommon Share


Basic and diluted net loss per common share is calculated as follows:

  Year Ended  For the Period from July 24, 2017 (inception) thru 
  December 31, 2018  December 31, 2017 
Net income (loss) $1,021,711  $(1,176)
Less: Income attributable to shares subject to redemption  (1,607,478)   
Adjusted net loss $(585,767) $(1,176)
         
Weighted average shares outstanding, basic and diluted  3,499,414   2,500,000 
         
Basic and diluted net loss per share $(0.17) $(0.00)


(in thousands, except for per share data)Year Ended January 1, 2024Year Ended
January 2, 2023
Numerator:
Net loss available to common stockholders$(30,708)$(103,432)
Denominator:
Weighted-average shares outstanding, basic and diluted25,521,098 22,173,694 
Basic and diluted net loss per common share$(1.20)$(4.66)

OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018


Concentration of creditRisk

Management believes there is no concentration of risk

Financial instruments that potentially subject with any single franchisee or small group of franchisees whose failure or nonperformance would materially affect the Company’s results of operations. The Company had no customers which accounted for 10% or more of consolidated revenue for the years ended January 1, 2024 and January 2, 2023. As of January 1, 2024, the Company had two main in-line distributors of food, packaging and beverage products that provided approximately 89% of the Company's restaurants purchasing of those products in the United States. We believe that the Company’s vulnerability to risk concentrations related to significant vendors and sources of its raw materials is mitigated as it believes that there are other vendors who would be able to service our requirements. However, if a disruption of service from any of our main in-line distributors was to occur, the Company could experience short-term increases in its costs while distribution channels were adjusted.


The Company's restaurants are principally located throughout the United States. The Company has corporate-owned and franchised locations in 19 states, with the largest number in Florida. We believe the risk of geographic concentration is not significant. The Company could be adversely affected by changing consumer preferences resulting from concerns over nutritional or safety aspects of ingredients it sells or the effects of food safety events or disease outbreaks.

The Company is subject to credit risk through its accounts receivable consisting primarily of amounts due from vendors for rebates, franchisees for royalties and franchise fees. This concentration of credit risk consistis mitigated, in part, by the number of cash accountsfranchisees and the short-term nature of the franchise receivables.

Revenue Recognition

Revenue consists of restaurant sales and franchise licensing revenue.

Restaurant Revenue

Revenue from restaurant sales is presented net of discounts and recognized when food, beverage and retail products are sold. Sales tax collected from customers is excluded from restaurant sales and the obligation is included in sales tax payable until the taxes are remitted to the appropriate taxing authorities. Revenue from restaurant sales is generally paid at the time of sale. Credit cards and delivery service partners sales are generally collected shortly after the sale occurs.

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Notes to Consolidated Financial Statements



The revenue from gift cards is included in unearned revenue when purchased by the customer and revenue is recognized when the gift cards are redeemed. Unearned revenues include liabilities established for the value of the gift cards when sold and are included in other current liabilities on the Company’s consolidated balance sheets. The Company estimates the amount of gift cards for which the likelihood of redemption is remote, referred to as “breakage,” using historical gift card redemption patterns. The estimated breakage is recognized over the expected period of redemption as the remaining gift card values are redeemed and is immaterial. If actual redemption patterns vary from these estimates, actual gift card breakage income may differ from the amounts recorded. Estimates of the redemption period and breakage rate applied are updated periodically.

The Company contracts with delivery service partners for delivery of goods and services to customers. The Company has determined that the delivery service partners are agents, and the Company is the principal. Therefore, restaurant sales through delivery services are recognized at gross sales and delivery service commission is recorded as expense.

Franchise Revenue

The franchise agreements require the franchisee to pay an initial, non-refundable fee and continuing fees based upon a percentage of sales. Generally, payment for the initial franchise fee is received upon execution of the franchise agreement. Owners can make a deposit equal to 50% of the total franchise fee to reserve the right to open additional locations. The remaining balance of the franchise fee is due upon signing by the franchisee of the applicable location’s lease or mortgage. Franchise deposits received in advance for locations not expected to open within one year are classified as long-term liabilities, while franchise deposits received in advance for locations expected to open within one year are classified as short-term liabilities.

Generally, the licenses granted to develop, open and operate each BurgerFi franchise in a financial institution,specified territory are the predominant performance obligations transferred to the licensee in the Company’s contracts, and represent symbolic intellectual property. Certain initial services such as training, site selection and lease review are considered distinct services that are recognized at a point in time when the performance obligations have been provided, generally when the BurgerFi franchise has been opened. We determine the transaction price for each contract and allocate it to the distinct services based on the costs to provide the service and a profit margin. On an annual basis, the Company performs a review to reevaluate the amount of this initial franchise fee revenue that is recognized.

The remainder of the transaction price is recognized over the remaining term of the franchise agreement once the BurgerFi restaurant has been opened. Because the Company transfers licenses to access its intellectual property during a contractual term, revenue is recognized on a straight-line basis over the license term.

Franchise agreements and deposit agreements outline a schedule for store openings. Failure to meet the schedule can result in forfeiture of deposits made. Forfeiture of deposits is recognized as terminated franchise fee revenue once contracts have been terminated for failure to comply. All terminations are communicated to the franchisee in writing using formal termination letters. Additionally, a franchise store that is already open may terminate before its lease term has ended, in which case the remainder of the transaction price is recognized as terminated franchise fee revenue.

Revenue from sales-based royalties (i.e. royalty and other fees, brand development and advertising co-op royalty) is recognized as the related sales occur. The sales-based royalties are invoiced and collected from the franchisees on a weekly basis. Rebates from vendors received on franchisee’s sales are also recognized as revenue from sales-based royalties.

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Contract Balances

Opening and closing balances of contract liabilities and receivables from contracts with customers for the years ended January 1, 2024 and January 2, 2023 are as follows:
(in thousands)Year Ended January 1, 2024 Year Ended
January 2, 2023
Franchising receivables$137 $168 
Gift card liability$2,205 $1,847 
Unearned revenue, current$19 $84 
Unearned revenue, long-term$726 $1,008 

Franchise Revenue

Revenue recognized during the years ended are as follows:

(in thousands)Year ended January 1, 2024 Year Ended January 2, 2023
Franchise Fees$613 $1,806 
An analysis of unearned revenue is as follows:

(in thousands)Year ended January 1, 2024 Year Ended January 2, 2023
Balance, beginning of period$1,092 $2,577 
Initial/Transfer franchise fees received265 364 
Revenue recognized for stores open and transfers during period(137)(325)
Revenue recognized related to franchise agreement terminations(418)(1,481)
Other unearned revenue (recognized) received(57)(43)
Balance, end of period$745 $1,092 

Presentation of Sales Taxes

The Company collects sales tax from customers and remits the entire amount to the respective states. The Company’s accounting policy is to exclude the tax collected and remitted from revenue and cost of sales. Sales tax payable amounted to approximately $0.8 million and $1.0 million at times may exceedJanuary 1, 2024 and January 2, 2023, respectively, and is presented in accrued expenses and other current liabilities in the Federal depository insurance coverageaccompanying consolidated balance sheets.

Advertising Expenses

Advertising costs are expensed as incurred. Advertising expense for the years ended January 1, 2024 and January 2, 2023 was $1.2 million and $2.4 million, respectively and is included in other operating expenses for specific store related advertising costs and brand development, co-op and advertising expense on the consolidated statements of $250,000. At December 31, 2018,operations.
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Brand Development Royalties and Expenses

The Company’s franchise agreements provide for franchisee contributions of a percentage of gross restaurant sales, which are recognized as royalty income. Amounts collected are required to be used for advertising and related costs, including reasonable costs of administration. For the year ended January 1, 2024 , the Company had not experienced losses on these accountsbrand development royalties of approximately $1.4 million and management believesbrand development expenses of approximately $2.7 million. For the year ended January 2, 2023, the Company had brand development royalties of approximately $1.4 million and approximately $1.8 million brand development expenses.

Advertising Co-Op Royalties and Expenses

The Company's South Florida franchises contribute a percentage of gross restaurant sales, which are recognized as royalty income. Amounts collected are required to be used for local advertising and related costs, including reasonable costs of administering the advertising program. For the year ended January 1, 2024, the Company had advertising co-op royalties of approximately $0.4 million and advertising co-op expenses of approximately $0.7 million. For the year ended January 2, 2023, the Company had advertising co-op royalties of approximately $0.4 million and approximately $0.8 million of advertising co-op expenses.

Pre-opening Costs

The Company follows ASC Topic 720-15, “Start-up Costs,” which provides guidance on the financial reporting of start-up costs and organization costs. In accordance with this ASC Topic, costs of pre-opening activities and organization costs are expensed as incurred. Pre-opening costs include all expenses incurred by a restaurant prior to the restaurant's opening for business. These pre-opening costs include costs to relocate and reimburse restaurant management staff members, costs to recruit and train hourly restaurant staff members, wages, travel, and lodging costs for the Company’s training team and other support staff members, as well as rent expense. Pre-opening costs can fluctuate significantly from period to period based on the number and timing of restaurant openings and the specific pre-opening costs incurred for each restaurant.

Pre-opening costs expensed for the years ended January 1, 2024 and January 2, 2023 were $0.2 million and $0.5 million, respectively.

Leases

The Company currently leases all of its corporate-owned restaurants, corporate offices, and certain equipment. The Company’s leases are accounted for under the requirements of Accounting Standards Codification Topic 842 “Leases” (“ASC 842”), effective January 1, 2022.

Upon the possession of a leased asset, the Company determines its classification as an operating or finance lease. The Company's real estate leases are classified as operating leases, and the Company's equipment leases are classified as finance leases. Generally, the real estate leases have initial terms averaging 10 years and typically include two 5-year renewal options. Renewal options are generally not recognized as part of the initial right-of-use assets and lease liabilities as it is not exposedreasonably certain at commencement date that the Company would exercise the options to significant risksextend the lease. The real estate leases typically provide for fixed minimum rent payments or variable rent payments based on such accounts.

Fair valuea percentage of financial instruments

The fair valuemonthly sales or annual changes to the Consumer Price Index. Fixed minimum rent payments are recognized on a straight-line basis over the lease term from the date the Company takes possession of the Company’sleased property. Lease expense incurred before a corporate-owned store opens is recorded in pre-opening costs in the consolidated statements of operations. Once a corporate-owned store opens, the straight-line lease expense is recorded in occupancy and related expenses in the consolidated statements of operations. Many of the leases also require the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in occupancy and related expenses in the consolidated statements of operations. The Company from time to time enters into sublease agreements as lessor which are immaterial for the years ended January 1, 2024 and January 2, 2023. See Note 10, “Leases,” for further discussion.


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Income Taxes

The Company accounts for income taxes under the asset and liability method. A deferred tax asset or liability is recognized whenever there are (1) future tax effects from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and (2) operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the years in which qualify as financial instruments under ASC Topic 820, “Fair Value Measurementsthose differences are expected to be recovered or settled.

Deferred tax assets are recognized to the extent the Company believes these assets will more likely than not be realized. In evaluating the realizability of deferred tax assets, the Company considers all available positive and Disclosures,” approximatesnegative evidence, including the interaction and the timing of future reversals of existing temporary differences, projected future taxable income, recent operating results and tax-planning strategies. When considered necessary, a valuation allowance is recorded to reduce the carrying amounts represented inamount of the accompanying balance sheets, primarily duedeferred tax assets to their short-term nature.

anticipated realizable value.


The Company measures income tax uncertainties in accordance with a two-step process of evaluating a tax position. We first determine if it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is then measured, for purposes of financial statement recognition, as the largest amount that has a greater than 50% likelihood of being realized upon effective settlement. We had $0.2 million unrecognized tax benefits at January 2, 2023. The Company had no unrecognized tax benefits at January 1, 2024

The Company accrues interest related to uncertain tax positions in “Interest expense” and penalties in “General and administrative expenses.” At January 1, 2024 and January 2, 2023, there were no amounts accrued for interest or for penalties.

The statute of limitations for the Company’s state tax returns varies, but generally the Company’s federal and state income tax returns from its 2020 fiscal year forward remain subject to examination.

Recently issued accounting standards

Management doesand adopted Accounting Pronouncements


In October 2021, the FASB issued ASU No. 2021-08 (“ASU 2021-08”), Business Combinations, (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to provide guidance that requires entities to recognize contract assets and contract liabilities in a business combination. This standard was effective for the Company’s fiscal year beginning after January 3, 2023, including interim periods within the fiscal year. The adoption of ASU 2021-08 did not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effectimpact on its consolidated financial statements for the year ended January 1, 2024.

Recently issued Accounting Pronouncements not yet adopted

In November 2023, the FASB issued ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.


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3.     Property & Equipment

Property and equipment consisted of the following:

(in thousands)January 1, 2024January 2, 2023
Leasehold improvements$17,579 $17,029 
Kitchen equipment and other equipment8,708 8,196 
Computers and office equipment1,536 1,468 
Furniture and fixtures2,828 2,677 
Vehicles37 
30,659 29,407 
Less: Accumulated depreciation and amortization(14,538)(10,036)
Property & equipment – net$16,121 $19,371 

Depreciation expense for the years ended January 1, 2024 and January 2, 2023 was $4.7 million and $8.7 million, respectively.

The Company's long-lived assets are reviewed for impairment annually and whenever there are triggering events that require us to perform this review. The Company recorded $1.8 million and $3.1 million of property and equipment impairment during the years ended January 1, 2024 and January 2, 2023, respectfully. Refer to Note 5, “Impairment,” for further discussion.

4.     Goodwill and Intangible Assets, net

The following is a summary of the components of intangible assets and the related amortization expense and impairment charges:

January 1, 2024
(in thousands)Weighted Average Remaining Useful Life (years)AmountAccumulated AmortizationAccumulated Impairment ChargesNet Carrying Value
Franchise agreements4.0$24,839 $(10,793)$— 14,046 
BurgerFi trade names / trademarks27.083,033 (8,419)— 74,614 
Anthony's trade names / trademarks27.860,690 (4,383)— 56,307 
Other intangibles7.09,018 (1,241)(7,706)71 
  Subtotal177,580 (24,836)(7,706)145,038 
Liquor licenses$5,930— (113)5,818 
Total intangible assets, net$183,510 $(24,836)$(7,818)$150,856 






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January 2, 2023
(in thousands)Weighted Average Remaining Useful Life (years)AmountAccumulated AmortizationAccumulated Impairment ChargesNet Carrying Value
Franchise agreements5.0$24,839 $(7,244)$— $17,595 
BurgerFi trade names / trademarks28.083,033 (5,650)— 77,383 
Anthony's trade names / trademarks28.860,690 (2,359)— 58,331 
Other intangibles8.09,018 (1,091)(7,706)221 
  Subtotal177,580 (16,344)(7,706)153,530 
Liquor licenses6,678 — 6,678 
Total intangible assets, net$184,258 $(16,344)$(7,706)$160,208 

The following presents information about the Company’s goodwill on the Company’s financial statements.

NOTE 4. INITIAL PUBLIC OFFERING

Pursuantdates indicated:

(in thousands)Anthony’s SegmentBurgerFi SegmentTotal
Balance as of December 31, 2021
Goodwill$80,684 $123,981 $204,665 
Accumulated impairment losses(49,064)(123,981)(173,045)
Goodwill, net as of January 2, 2023$31,621 $— $31,621 
Goodwill$80,684 $123,981 $204,665 
Accumulated impairment losses(49,064)$(123,981)(173,045)
Goodwill, net as of January 1, 2024$31,621 $— $31,621 

The Anthony’s liquor licenses are considered to have an indefinite life, and in addition to the Initial Public Offering,Company's definite-lived intangible assets, are reviewed for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. During the year ended January 1, 2024, the Company sold 11,500,000 units at a purchase price of $10.00 per Unit, inclusive of 1,500,000 units sold to the underwritersrecognized $0.1 million in gain on March 20, 2018 upon the underwriters’ election to exercise their over-allotment option in full. Each Unit consists of one share of common stock and one warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 8).

NOTE 5. PRIVATE PLACEMENT

Simultaneously with the Initial Public Offering, the Initial Stockholders purchased an aggregate of 400,000 Private Placement Units, at $10.00 per Private Placement Unit for an aggregate purchase price of $4,000,000. On March 20, 2018, the Company consummated the sale of an additional 45,000 Private Placement Units at a priceassets in other income, net, in its consolidated statements of $10.00 per Private Placement Unit, which were purchased by the Sponsor, generating gross proceeds of $450,000. Each Private Placement Unit consists of one share of common stock (“Placement Share”) and one warrant (“Placement Warrant”) to purchase one share of common stock at an exercise price of $11.50. The proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceedsoperations from the sale of a liquor license intangible asset for one of its closed Anthony’s locations with a book value of $0.8 million . For the Private Placement Units will be usedyear ended January 1, 2024, we recorded $0.1 million of impairment charges related to fundthese license agreements; there were no impairment charges recorded for the redemptionyear ended January 2, 2023. See Note 5, “Impairment,” for further information.


Amortization expense for each of the Public Shares (subjectyears ended January 1, 2024 and January 2, 2023 was $8.5 million. The estimated aggregate amortization expense for intangible assets over the next five fiscal years and thereafter is as follows:

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(in thousands)
2024$8,353 
20258,353 
20268,353 
20278,205 
20284,804 
Thereafter106,970 
Total$145,038 


5.     Impairment

The Company recognized non-cash impairment charges of approximately $4.5 million during the requirements of applicable law)year ended January 1, 2024 and the Placement Warrants will expire worthless.

NOTE 6. RELATED PARTY TRANSACTIONS  

Founder Shares

In November 2017, the Company issued an aggregate of 2,875,000 shares of common stock (“Founder Shares”) to Axis Public Ventures for an aggregate purchase price of $25,000. On March 9, 2018, Axis Public Ventures transferred 2,012,500 Founder Shares to the other Initial Stockholders$73.5 million for the same price originally paid for such shares. The Founder Shares included an aggregateyear ended January 2, 2023. This consisted of up to 375,000 shares subject to forfeiture by the Initial Stockholders tofollowing:


(in thousands)Year Ended January 1, 2024Year Ended
January 2, 2023
Goodwill$— $66,569 
Indefinite-lived intangible assets113 — 
Long-lived assets1,794 3,100 
Right-of-use assets2,617 3,846 
Total non-cash impairment charge$4,524 $73,515 

Based on the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Initial Stockholders would own 20%results of the Company’s issuedannual goodwill impairment tests for the year ended January 1, 2024, the Company determined that goodwill was not impaired for the Anthony's and outstanding shares afterBurgerFi reporting units; accordingly, the Initial Public Offering (assumingCompany recorded no goodwill impairment charges.

The Company reviewed the Initial Stockholders didsensitivity of its goodwill impairment test assumptions noting that a 1% increase in its discount rate and a 5% decrease in cash flows would not purchase any Public Sharescause an impairment of its Anthony’s goodwill for the year ended January 1, 2024.

Based on the results of the Company’s interim and annual goodwill impairment tests for the year ended January 2, 2023, the Company determined that its goodwill was impaired for the Anthony’s and BurgerFi reporting units. Accordingly, for the BurgerFi reporting unit, the Company recorded a goodwill impairment charge of approximately $17.5 million; there was no remaining carrying value of the BurgerFi goodwill at January 2, 2023. We also recognized an impairment charge for Anthony’s reporting unit’s goodwill for the year ended January 2, 2023 of $49.1 million.

As part of the annual impairment review of indefinite-lived intangible assets, the Company recorded an impairment charge of $0.1 million for the year ended January 1, 2024, related to the Anthony’s liquor licenses; there were no impairment charges recorded for indefinite-lived intangible assets for the year ended January 2, 2023.

Based on the Company’s review at the end of each reporting period of its long-lived assets and definite-lived intangible assets, it performed impairment testing for the related asset group for which there are independently identifiable cash flows. Based on its impairment testing, the Company determined that certain long-lived assets relating to its right-of-use assets, and property and equipment at certain underperforming corporate-owned restaurants were impaired at the BurgerFi and Anthony’s reporting units. For the year ended January 1, 2024, the Company recorded impairment charges of approximately $3.3 million for the BurgerFi reporting unit, and $1.2 million for the Anthony’s reporting unit. For the year ended January 2, 2023, the Company recorded impairment charges of approximately $6.7 million for the BurgerFi reporting unit, and $0.2 million for the Anthony’s reporting unit.The impairment amount was primarily the result of lower cash flow estimates associated with the licensing agreements, as well as a change in estimate of the Proposed Offeringrelated useful life.

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Notes to Consolidated Financial Statements



As it relates to determining the Placement Shares)fair values of the assets impaired such as goodwill and definite lived intangible assets, refer to Note 13, “Fair Value Measurements. On March 20, 2018,” The Company utilized the income approach to fair value for its long-lived and right-of-use assets and based on the weight of unobservable inputs classifies their fair value measurements as Level 3 of the fair value hierarchy.

6.     Related Party Transactions

The Company is affiliated with various entities through common control and ownership.

The accompanying consolidated balance sheets reflect amounts related to periodic advances between the Company and these entities for working capital and other needs as due from related companies or due to related companies, as appropriate. During 2023, these amounts due were settled as a result of the underwriters’ election to exercise their over-allotment optionJohn Rosatti settlement agreement disclosed in full, 375,000 Founder’s Shares areNote 7, “Commitments and Contingencies,”. These advances were unsecured and non-interest bearing. The fair value of consideration paid in the John Rosatti settlement was $0.9 million and included $0.5 million in cash and the issuance of 200,000 shares of Company common stock valued at $0.4 million. The fair value of net liabilities assumed in the transaction was $0.1 million which included lease liabilities and operating assets and liabilities including property and equipment of two stores, net of pre-existing liabilities accrued. There was no longer subject to forfeiture.

amount due from related companies as of January 1, 2024; there was $0.3 million of amounts due from related companies as of January 2, 2023 in other assets on the Company’s consolidated balance sheets.


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

The Initial Stockholders have agreed

For the year ended January 2, 2023, the Company received royalty revenue from the two operating stores that subject to certain limited exceptions, the Founder Shares will not bewere transferred assigned or sold until the earlier of six months after the dateon January 23, 2023 as a result of the consummationsettlement with the significant stockholder totaling approximately $0.1 million.

The Company leased building space for its former corporate office from an entity under common ownership with a significant stockholder. This lease had a 36 month term, effective January 1, 2020. In January 2022, the Company exercised its right to terminate this lease effective as of July 2022. There was no rent expense the year ended January 1, 2024; for the year ended January 2, 2023, rent expense was approximately $0.1 million.

The Company leases building space for its corporate office from an entity controlled by the Company’s Executive Chairman of the Board (the “Executive Chairman”). In February 2022, the Company amended this lease agreement to, among other things, (1) extend the term to 10 years beginning March 1, 2022 and expiring in 2032, and (2) expand its square footage from approximately 16,500 square feet to approximately 18,500 square feet. For the years ended January 1, 2024 and January 2, 2023, rent expense was approximately $0.7 million and $0.5 million, respectively.

The Company had independent contractor agreement with a Business Combination and the date oncorporation (the “Consultant”) for which the closing priceChief Operating Officer (the “Consultant Principal”) of Lionheart Capital, LLC, an entity controlled by the Company’s Executive Chairman, serves as President. Pursuant to the terms of the Company’s common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing afteragreements, the Business Combination, or earlier if, subsequentConsultant provided certain strategic advisory services to a Business Combination, the Company consummates a liquidation, merger, stockin exchange or other similar transaction which results in allfor total annual cash compensation and expense reimbursements of $0.1 million, payable monthly. Cash compensation for the Consultant Principal was $0.1 million for each of the years ended January 1, 2024 and January 2, 2023. The engagement ended in September of 2023.

On January 3, 2023 the Company awarded the Consultant Principal a $0.1 million bonus in connection with the Company’s stockholders havingamendment and extension of its Credit Facility and granted the right to exchange theirConsultant Principal 38,000 unrestricted shares of common stock of the Company. On January 3, 2022, the Company granted the Consultant Principal approximately 38,000 unrestricted shares of common stock of the Company. The Company recorded share-based compensation of $0.2 million for cash, securities or other property.

Related Party Advances

the year ended January 1, 2024, and $0.4 million for the year ended January 2, 2023.


On February 24, 2023, the Company entered into a note payable with an affiliate of a significant stockholder for $5.1 million in debt proceeds, and $10.0 million in assumption of existing term loan amounts. See Note 9, “Debt”, for further information.

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On June 3, 2023, the Company entered into a stock purchase agreement with an investing entity for the sale of 2,868,853 shares of Company common stock at an issuance price of $1.22 per share for total proceeds of $3.4 million. Upon the execution of this agreement, the investing entity became a holder of approximately 11% of the Company’s outstanding common stock. During the year ended December 31, 2018,January 1, 2024, the Company received an aggregate of $67,013 in advances fromentered into four franchise agreements with an affiliate of the Sponsor for costs associated with the Initial Public Offering. The advances were non-interest bearing, unsecured and due on demand.this entity. The Company repaidreceived royalty revenue from such franchises related to a significant stockholder totaling approximately $0.1 million for the advancesyear ended January 1, 2024.

7.      Commitments and Contingencies

Litigation

Lion Point Capital, L.P.(“Lion Point”) v. BurgerFi International, Inc. (Supreme Court of the State of New York County of New York, Index No. 653099/2022, filed August 26, 2022. A lawsuit filed by Lion Point against the Company, alleging that the Company failed to timely register Lion Point’s shares in full,violation of the registration rights agreement to which Lion Point is a party, which allegedly resulted in losses in excess of $26.0 million In November 2022, as amended in February 2023, the Company filed its answer to the complaint. On April 13, 2023, Lion Point filed a Motion for Summary Judgment, and accordingly,the Company responded with its reply on June 22, 2023. On October 12, 2023, the Court granted Lion Point’s Motion for Summary Judgment and set a status conference for November 15, 2023 to begin the damages phase of the case. At the November 15, 2023 status conference, the Court set out a schedule for discovery and trial, which schedule is in the process of being amended by counsel for both parties to allow for additional time for settlement discussions. The Company continues to believe that all claims are meritless and plans to vigorously defend these allegations. Management is unable to determine the likelihood of a loss or range of loss, if any, which may result from these proceedings; any losses, however, may be material to the Company's financial position and results of operations.

John Walker, Individually and On Behalf of all Other Similarly Situated v. BurgerFi International, Inc. et al (in the United States District Court, Southern District of Florida, Case No. 023-cv-60657).On April 6, 2023, John Walker, on behalf of himself and other similarly situated plaintiffs, filed a class action lawsuit against the Company and certain current and former executives alleging that the Company violated certain securities laws by making false and misleading statements or failed to disclose that (1) the Company had overstated the effectiveness of its acquisition and growth strategies, and (2) the Company had misrepresented the purported benefits of the Anthony’s acquisition and the post-acquisition business and financial prospects of the Company. On July 20, 2023, the court appointed John Walker and Joseph Poalino as co-lead plaintiffs in the matter. On September 5, 2023, an Order of Dismissal without prejudice was signed. Therefore, no contingent liability has been recorded as of December 31, 2018, there were no advances outstanding.

Promissory Note – Related Party

January 1, 2024.


Second 82nd SM, LLC v. BF NY 82, LLC, BurgerFi International, LLC and BurgerFi International, Inc. (in the Supreme Court of the State of New York County of New York, having index No. 654907/2021 filed August 11, 2021). A lawsuit was filed by Second 82nd SM, LLC (“Landlord”) against BF NY 82, LLC (“Tenant”) whereby Landlord brought a 7 -count lawsuit for, among other things, breach of the lease agreement and underlying guaranty of the lease. The amount of damages Landlord was seeking was approximately $1.5 million, which constituted back rent, late charges, real estate taxes, illuminated sign charges and water/sewer charges. On August 1, 2017,November 3, 2021, the Company issuedfiled a Motion to Dismiss the Complaint. On November 17, 2021, the Tenant filed an affiliate ofAnswer to Landlord’s Complaint and a cross claim against the Sponsor an unsecured promissory note, pursuant toCompany, which the Company borrowedanswered on December 7, 2021. On December 22, 2021, the Company filed its Response in Opposition to Landlord’s Motion for Summary Judgment and Memo in further Support of its Motion to Dismiss. The Company turned over possession of the property in early 2023. On July 5, 2023, the Landlord filed a Motion for Summary Judgment seeking approximately $1.2 million in past due rent payments. On August 14, 2023, the Court entered an aggregate principal amount of $122,839 (the “Promissory Note”). The Promissory Note was non-interest bearingorder granting the Landlord’s Motion for Summary Judgment and payableordered a damages hearing on the earliermotion. On October 2, 2023 a settlement agreement was executed by all parties and the parties filed a stipulation of dismissal with prejudice on October 6, 2023.

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Burger Guys of (i) December 31, 2018, (ii) the consummationDania Pointe, et. al. v. BFI, LLC (Circuit Court of the Initial Public Offering or (iii)15th Judicial Circuit in and for Palm Beach County, Florida, Case No. 50-2021-CA -006501-XXXX-MB filed May 21, 2021). In response to a demand letter issued by BurgerFi to Gino Gargiulo, a former franchisee, demanding that Mr. Gargiulo pay the date on whichbalance owed under an asset purchase agreement wherein BurgerFi sold the Dania Beach, Florida BurgerFi location to Mr. Gargiulo, Mr. Gargiulo filed suit against BurgerFi claiming, in addition to other matters, that no further monies are owed under the asset purchase agreement and alleges that the Company determined not to proceed with the Initial Public Offering. The Promissory Note was repaidis responsible for one of Mr. Gargiulo’s failed franchises in Sunny Isles, Florida, losses he has allegedly sustained at the closinghis Dania Beach location, and reimbursement of the Initial Public Offering.

Administrative Services Agreement

The Company entered into an agreement whereby, commencing on March 13, 2018 through the earlier of the consummation of a Business Combination or the Company’s liquidation, the Company will pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities and administrative support. During the year ended December 31, 2018, the Company incurred $95,000 in fees for these services, which such amount is included in operating costs in the accompanying statements of operations and of which $95,000 is included in accounts payable and accrued expenses in the accompanying balance sheet at December 31, 2018.

Related Party Loans

In order to finance transaction costs in connection with his marketing company. Mr. Gargiulo seeks damages in excess of $2.0 million in the aggregate. The parties attended mediation on January 20, 2022, which ended in an impasse. Mr. Gargiulo amended his complaint in April 2022, which, among other matters, amended the defendant parties. In October 2022, the Company filed an additional motion to dismiss the amended complaint and a Business Combination,motion to stay discovery. In January 2023, Mr. Gargiulo filed a third amended complaint. In March 2023, the Sponsor,Company filed an affiliateanswer to Mr. Gargiulo’s complaint and a counterclaim against Mr. Gargiulo relating to the breach of the Sponsor, orasset purchase agreement discussed above. On November 5, 2023, the Company’s officers, directorsparties attended mediation, which ended in an impasse. Depositions are ongoing and other Initial Stockholders may, buta trial has been set for April 15, 2024. We believe that all Mr. Gargiulo claims are not obligated to, loanmeritless, and the Company fundsplans to vigorously defend these allegations. Management is unable to determine the likelihood of a loss or range of loss, if any, which may result from time to time or atthe case described above, and, therefore, no contingent liability has been recorded as of January 1, 2024; any time, aslosses, however, may be requiredmaterial to the Company's financial position and results of operations.


All Round Food Bakery Products, Inc. v. BurgerFi International, LLC and Neri’s Bakery Products, Inc. et al (Supreme Court Westchester County, New York (Index Number 52170-2020)). In a suit filed in February 2020, the plaintiff, All Round Food Bakery Products, Inc. (“Working Capital Loans”All Round Food”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation alleged breach of a Business Combination, without interest, or, atcontract and lost profits in excess of $1.0 million over the holder’s discretion, up to $1,500,000course of the Working Capital Loans may be converted into units at a price of $10.00 per unit. The units would be identical to the Private Placement Units. In the event that a Business Combination does not close, the Company may use a portion of the 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.

NOTE 7. COMMITMENTS AND CONTINGENCIES

Registration Rights

Pursuant to a registration rights agreement entered into on March 13, 2018, the holders of the Founder Shares, Private Placement Units (and their underlying securities) and any Units that may be issued upon conversion of the Working Capital Loans (and their underlying securities) are entitled to registration rights. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Placement Units or Units issued to the Sponsor, officers, directors or their affiliates in payment of Working Capital Loans made to the Company (in each case, including the underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

Business Combination Marketing Agreement

The Company has engaged EarlyBirdCapital, Inc., the representative of the underwriters in the Initial Public Offering (“EarlyBirdCapital”), as an advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss a potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing securities in connection with the Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with a Business Combination. The Company will pay EarlyBirdCapital a cash fee of $4,025,000 for such services upon the consummation of a Business Combination (exclusive of any applicable finders’ fees which might become payable).  

Forward Purchase Agreement

Lion Point has entered into a contingent forward purchasesupply agreement with the Company to purchase, in a private placement for aggregate gross proceeds of $30,000,000, to occur concurrentlyand Neri’s Bakery Products, Inc. (“Neri’s” and together with the consummationCompany, the “Defendants”). The Defendants asserted, among other matters, that the supply agreement amongst the parties, whereby All Round Food was warehousing BurgerFi products produced by Neri’s, was terminated when All Round Food failed to cure its material breach of the Company’s initial Business Combination, 3,000,000 units at $10.00 per unit,supply agreement after due notice. The parties attended several additional court ordered mediations over several months to attempt to resolve the dispute. No resolution was reached in such mediations. However, the court entered an order to dismiss the case with prejudice on substantiallyAugust 15, 2023; therefore, no contingent liability has been recorded as of January 1, 2024.


John Rosatti, as Trustee of the same terms asJohn Rosatti Revocable Trust U/A/D 08/27/2001 (the "JR Trust") v. BurgerFi International, Inc. (In the saleCircuit Court for the Eleventh Judicial Circuit, Florida, File No. 146578749). On March 28, 2022, the JR Trust filed a suit against BurgerFi alleging that the JR Trust suffered losses in excess of Units$10.0 million relating to BurgerFi’s alleged failure to timely file a registration rights agreement. The parties entered into a settlement agreement on January 11, 2023, whereby (i) the Company agreed to pay Mr. Rosatti $0.5 million in cash and issue him 200,000 shares of BFI common stock and, (ii) Mr. Rosatti agreed to transfer the assets and liabilities of the five former JR Trust stores to the Company. This settlement agreement, which the Company values on a net basis to be approximately $0.8 million of value transferred to Mr. Rosatti, resolved all remaining disputes between the parties, and Mr. Rosatti withdrew the related lawsuits against the Company.

Employment Related Claims.

In July 2021, the Company received a demand letter from the attorney of one of its now former hourly restaurant employees. The letter alleges that the former employee was sexually harassed by one of her co-workers. The demand letter claims that the Company discriminated and retaliated against the former employee based on her gender and age and also alleged intentional infliction of emotional distress, negligent hiring, negligent training, and negligent supervision. While the Company entered into a partial settlement with the former employee in December 2022 for a de minimis cash amount relating solely to the discrimination claim, the other claims remain.

In March 2020, the Company received notification of a U.S. Equal Employment Opportunity Commission (the “EEOC”) complaint claiming sexual harassment and assault. On July 5, 2023, the EEOC issued a determination letter declining to investigate the matter further and issued a right to sue letter. On September 29, 2023, the claimant filed a lawsuit. The suit is in the Initial Public Offering. The funds fromearly stages and the saleCompany is currently working through initial responses.

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While the Company believes that all claims of the considerationabove mentioned Employment Related Claims, which are covered under the Company’s insurance policies, are meritless, and it plans to defend these allegations, it is reasonably possible that the Company may ultimately be required to pay substantial damages to the sellersclaimants, which could be up to $0.5 million more in aggregate compensatory damages, attorneys’ fees and costs. Management believes that any liability, in excess of applicable insurance coverages or accruals, which may result from these claims, would not be significant to the initial Business Combination; any excess funds may be used for the working capital needsCompany’s financial position or results of the post-transaction company. This agreement is independent of the percentage of stockholders electing to redeem their Public Sharesoperations.

General Liability and may provide theOther Claims.

The Company with an increased minimum funding level for the initial Business Combination. The contingent forward purchase agreement is subject to conditions,other legal proceedings and claims that arise during the normal course of business, including Lion Point givinglandlord disputes, slip and fall cases, and various food related matters. While it intends to vigorously defend these matters, it is reasonably possible that the Company its irrevocable written consentmay be required to purchasepay substantial damages to the units no later than five days afterclaimants. Management believes that any liability, in excess of applicable insurance coverages or accruals, which may result from these claims, would not be significant to the Company’s financial position or results of operations.

Purchase Commitments

From time to time, the Company notifies Lion Pointenters into purchase commitments for food commodities in the normal course of the Company’s intention to meet to consider entering into a definitive agreement for a proposed Business Combination. Lion Point granting its consent to the purchase is entirely within its sole discretion. Accordingly, if it does not consent to the purchase, it will not be obligated to purchase the units.

NOTE 8. STOCKHOLDERS’ EQUITY

Preferred Stock

On March 13, 2018,business. As of January 1, 2024, the Company filed an Amended and Restated Certificate of Incorporation such thathas $5.7 million in conditional purchase obligations over the next 12 months.


8.     Redeemable Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At December 31, 2018As of January 1, 2024 and 2017,January 2, 2023, there were no2,120,000 shares of redeemable preferred stock outstanding, par value $0.0001 per share (the “Series A Junior Preferred Stock”), outstanding. .

As of January 1, 2024 and January 2, 2023, the value of the redeemable preferred stock was $55.6 million and $51.4 million, respectively and the principal redemption amount was $53.0 million. During the years ended January 1, 2024 and January 2, 2023, the Company recorded non-cash interest expense on the redeemable preferred stock in the amount of $4.2 million and $3.9 million, respectively, related to accretion of the preferred stock to its estimated redemption value.

On November 3, 2021, and as part of the Anthony's acquisition, the Company issued 2,120,000 shares of Series A Junior Preferred Stock. The Series A Junior Preferred Stock is redeemable on November 3, 2027 and accrues dividends at 7% per annum compounded quarterly from June 15, 2024 with such rate increasing by an additional 0.35% per quarter commencing with the three month period ending September 30, 2024; provided, however, that in the event that the Credit Agreement is refinanced or outstanding.

Commonrepaid in full prior to June 15, 2024 and the Series A Junior Preferred Stock

is not redeemed in full on such date, from and after such date, the Series A Junior Preferred Stock shall accrue dividends at 5% per annum, compounded quarterly, until June 15, 2024.


On March 13, 2018,February 24, 2023, the Company filed an Amendedamended and Restated Certificaterestated certificate of Incorporationdesignation, (the “A&R CoD”), which among other matters, added a provision providing that in the event the Company fails to timely redeem any shares of Series A Preferred Stock on November 3, 2027, the applicable dividend rate shall automatically increase to the lesser of (A) the sum of 10% plus the 2% applicable default rate (with such aggregate rate increasing by an additional 0.35% per quarter from and after November 3, 2027), or (B) the maximum rate that may be applied under applicable law, unless waived in writing by a majority of the outstanding shares of Series A Junior Preferred Stock.

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The A&R CoD also added a provision providing that in the event the Company fails to timely redeem any shares of Series A Junior Preferred Stock in connection with a Qualified Financing (as defined in the A&R CoD) or on November 3, 2027 (a “Default”), the Company agrees to promptly commence a debt or equity financing transaction or sale process to solicit proposals for the sale of the Company and its subsidiaries (or, alternatively, the sale of material assets) designed to yield the maximum cash proceeds to the Company available for redemption of the Series A Junior Preferred Stock as promptly as practicable, but in any event, within 12 months from the date of the Default. If on or after November 3, 2026, the Company is aware that it is reasonably unlikely to have sufficient cash to timely effect the redemption in full of the Series A Junior Preferred Stock when first due, the Company shall, prior to such anticipated due date, take reasonable steps to engage an investment banking firm of national standing (and other appropriate professionals) to conduct preparatory work for such a financing transaction and sale process of the Company and its subsidiaries to provide for such transaction to occur as promptly as possible after any failure for a timely redemption of the Series A Junior Preferred Stock.

The Series A Junior Preferred Stock ranks senior to the Common Stock and may be redeemed at the option of the Company at any time and must be redeemed by the Company in limited circumstances. The Series A Junior Preferred Stock shall not have voting rights or conversion rights.

For further discussion of the A&R CoD, including certain board and governance rights included in the A&R CoD, please see Part I, Item 1A Risk Factors “We have significant stockholders whose interests may differ from those of our public stockholders.” and Part III, Item 10 Directors and Executive Officers.


9.     Debt
(in thousands)January 1,
2024
January 2,
2023
Term loan$53,253 $54,507 
Related party note payable15,100 10,000 
Revolving line of credit— 4,000 
Other notes payable701 780 
Finance lease liability1,576 933 
Total Debt$70,630 $70,220 
Less: Unamortized debt discount related party note(612)(765)
Less: Unamortized debt issuance costs(978)(1,441)
Total Debt, net$69,040 $68,014 
Less: Short-term borrowing, including finance leases(52,834)(4,985)
Total Long-term borrowings, including finance leases and related party note$16,206 $63,029 

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Credit Agreement

On November 3, 2021, as further amended as described below and as part of the Anthony’s acquisition, the Company joined a credit agreement with a syndicate of commercial banks (as amended, the “Credit Agreement”). The Credit Agreement, which has a maturity date of September 30, 2025 (the “Maturity Date”), provides the Company with lender financing structured as a $57.8 million term loan and a $4.0 million revolving loan. The terms of the Credit Agreement require the Company to repay the principal of the term loan in quarterly installments of approximately $0.8 million with the balance due at the Maturity Date. The principal amount of revolving loans is due and payable in full on the Maturity Date. The loan and revolving line of credit are secured by substantially all of the Company’s assets and incurred interest on outstanding amounts of 6.75% through December 31, 2023 and incur interest of 7.25% through June 15, 2024 and 7.75% from June 16, 2024 though the Maturity Date.

Effective March 9, 2022, certain of the covenants of (i) the Company and Plastic Tripod, Inc., as the borrowers (the "Borrowers"), and (ii) the subsidiary guarantors (the "Guarantors") party to the Credit Agreement were amended (such amendment herein referred to as the “Twelfth Amendment”). Pursuant to the terms of the Twelfth Amendment, the Borrowers and Guarantors agreed to pay incremental deferred interest of 2% per annum, in the event that the obligations under the Credit Agreement were not repaid on or prior to June 15, 2023; provided, however, that if no event of default had occurred and was continuing then (i) no incremental deferred interest would be due if all of the obligations under the Credit Agreement had been paid on or prior to December 31, 2022, and (ii) only 50% of the incremental deferred interest would be owed if all of the obligations under the Credit Agreement had been paid from and after January 1, 2023 and on or prior to March 31, 2023.

The Credit Agreement was further amended on December 7, 2022 (such amendment herein referred to as the “Thirteenth Amendment”) by amending certain covenants of the Credit Agreement and extending the maturity date of June 15, 2024 to September 30, 2025. The amendment also provided for periodic increases to the annual rate of interest changing the rate per annum to (i) 5.75% from January 1, 2023 through June 15, 2023; (ii) 6.75% per annum from June 16, 2023 through December 31, 2023; (iii) 7.25% per annum from January 1, 2024 through June 15, 2024; and (iv) 7.75% per annum from and after June 16, 2024 through the Maturity Date. In addition, the 2% incremental deferred interest implemented on March 9, 2022 was reduced to 1% beginning January 3, 2023 and was eliminated at December 31, 2023.

The terms of the Thirteenth Amendment also provided for a change in the timing of paying approximately $0.3 million of deferred interest payments previously scheduled to be paid on June 16, 2023 to be paid monthly from January to June 2023, while deferring the balance of deferred interest amount of approximately $1.3 million from June 15, 2023 to December 31, 2023. The Borrowers and Guarantors also agreed to obtain $5.0 million in net cash proceeds from (i) a shelf registration and equity issuance by not later than January 2, 2023, or (ii) issuance of unsecured subordinated debt by not later than January 30, 2023, referred to as the “Initial New Capital Infusion Covenant”.

Under the terms of the Thirteenth Amendment, certain modifications were made to the accounting definitions in the Credit Agreement to bring such definitions in line with Company practices and needs.

In addition, under the terms of the Thirteenth Amendment, the Borrowers and Guarantors agreed to reset their consolidated senior lease-adjusted leverage ratio and fixed charge coverage ratio as follows:
(a) maintain a quarterly consolidated senior lease-adjusted leverage ratio greater than (i) 7.00 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2022, (ii) 7.00 to 1.00 as of the end of the fiscal quarter ending on or about March 31, 2023, and (iii) 6.50 to 1.00 as of the end of the fiscal quarter ending on or about June 30, 2023 and the end of each fiscal quarter thereafter;
(b) maintain a quarterly minimum fixed charge coverage ratio of 1.10 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2022 and the end of each fiscal quarter thereafter; and
(c) the liquidity requirement of the Credit Agreement remained unchanged; provided, that in the event the Company had not received by January 2, 2023 at least $5.0 million in net cash proceeds as a result of shelf registration and equity issuance then the required liquidity amount as of January 2, 2023 would be reduced to $9.5 million.

The consolidated senior lease-adjusted leverage ratio, fixed charge coverage ratio and liquidity are computed in accordance with the Credit Agreement.

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If upon delivery of the quarterly financial statements, the consolidated fixed charge coverage ratio as of the end of any fiscal quarter of the Company ending after January 2, 2023 was less than 1.15 to 1.00, then Borrowers and Guarantors agreed to engage a consulting firm to help with certain operational activities and other matters as reasonably determined by the lenders; provided, that, if after delivery of the quarterly financial statements, (i) the consolidated fixed charge coverage ratio as of the end of each of the two prior consecutive fiscal quarters of the Company was greater than 1.15 to 1.00, and (ii) the consolidated senior lease-adjusted leverage ratio as of the end of each of the two prior consecutive fiscal quarters of the Company was less than the correlative amount of the consolidated senior lease-adjusted leverage ratio required for the financial covenants for such fiscal quarters by 0.25 basis points or more, then retention of the consulting firm shall not be required during the following fiscal quarter.

On February 1, 2023, the Credit Agreement was amended through the Fourteenth Amendment and subsequently on February 24, 2023 further amended through the Fifteenth Amendment resulting in the Company and its subsidiaries entering into a Secured Promissory Note (the “Note”) with CP7 Warming Bag L.P., an affiliate of L. Catterton Fund L.P., as lender (the “Junior Lender”), pursuant to which the Junior Lender continued that certain delayed draw term loan (the “Delayed Draw Term Loan”) of $10.0 million, under the Credit Agreement, which is junior subordinated secured indebtedness, and also provided $5.1 million of new junior subordinated secured indebtedness, to the Company (collectively the “Junior Indebtedness”), for a total of $15.1 million in junior subordinated secured debt on terms reasonably acceptable to the Required Lenders (as defined in the Credit Agreement), including, without limitation, that (i) such indebtedness shall not mature until at least two years after the maturity date of the credit facility of September 30, 2025; (ii) no payments of cash interest shall be made on such indebtedness until after the repayment in full of the obligations under the Credit Agreement; and (iii) no scheduled or voluntary payments of principal shall be made until after the repayment in full of the obligations under the Credit Agreement.

The Note, which accrues interest at 4% per annum (i) is secured by a second lien on substantially all of the assets of the Borrowers and the Guarantors pursuant to the terms of the Note and that certain Guaranty and Security Agreement, dated February 24, 2023, by and among the Guarantors and the Junior Lender, (ii) is subject to the terms of that certain Intercreditor and Subordination Agreement dated February 24, 2023, by and between the Administrative Agent and the Junior Lender and acknowledged by the Borrowers and the Guarantors, and (iii) matures on the date that is the second anniversary of the maturity date under the Credit Agreement (the “Junior Maturity Date”), or September 30, 2027.

Under the terms of the Note, no payments of cash interest or payments of principal shall be due until the Junior Maturity Date, and no voluntary prepayments may be made on the Junior Indebtedness prior to the Junior Maturity Date until after the repayment in full of the obligations under the Credit Agreement. The Company had $14.5 million outstanding under the Note as of January 1, 2024; this amount is included in Related party note payable in the consolidated balance sheets.

On July 7, 2023, the Credit Agreement was amended through the Sixteenth Amendment, which amended the definition of EBITDA for the purposes of expanding the scope of non-recurring items that may be included in the determination of Adjusted EBITDA, as well as modifications to the timeline for when a management consultant must be engaged.

In addition, under the terms of the Sixteenth Amendment, the Borrowers and Guarantors agreed to reset their consolidated senior lease-adjusted leverage ratio and fixed charge coverage ratio as follows:
(a) maintain a quarterly consolidated senior lease-adjusted leverage ratio greater than (i) 7.00 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2023, (ii) 6.75 to 1.00 as of the end of each of the fiscal quarters ending on or about March 31, 2024, June 30, 2024 and September 30, 2024, and (iii) 6.50 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2024 and the end of each fiscal quarter thereafter; and
(b) maintain a quarterly minimum fixed charge coverage ratio of (i) 1.00 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2023, (ii) 1.05 to 1.00 as of the end of each of the fiscal quarters ending March 31, 2024, June 30, 2024 and September 30, 2024, and (iii) 1.10 to 1.00 as of the end of the fiscal quarter ending on or about December 31, 2024 and the end of each fiscal quarter thereafter.

As of January 1, 2024, the Company was not in compliance with the minimum liquidity requirement of the Credit Agreement,which constitutes a breach of the Credit Agreement and an event of default. Accordingly, the outstanding balance of the Credit Agreement is included in short-term borrowings together with the short term borrowings, including finance leases in the accompanying consolidated balance sheets.

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The Company is not forecasted to have the readily available funds to repay the debt if the lenders do call the debt, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.

The Company has been actively engaged in discussions with its lenders to explore potential solutions regarding the default event and its resolution. We cannot, however, predict the results of any such negotiations.

The terms of the Credit Agreement as amended require the Company to repay the principal of the term loan in quarterly installments; however due to event of default we classified all of the principal as payable within the next 12 months as follows:


(in thousands)
2024$53,253 
2025— 
2026— 
202715,100
Total$68,353 

The Delayed Draw Term Loan (as continued, amended and restated on February 24, 2023) is a non-interest bearing loan and, accordingly, was recorded at fair value as part of the Anthony’s acquisition which resulted in a debt discount of approximately $1.3 million; this amount is being amortized over the period of the Delayed Draw Term Loan.. The Company recorded $0.2 million and $0.5 million for the years ended January 1, 2024 and January 2, 2023 respectively, as amortization of the debt discount which is included within interest expense in the accompanying consolidated statements of operations. Beginning February 24, 2023, the Junior Indebtedness bears interest at 4%. The Company recorded interest expense of $0.5 million for the year ended January 1, 2024.

The loan and revolving line of credit under the Credit Agreement are secured by substantially all of the Company’s assets and incur interest on outstanding amounts at the following rates per annum through maturity:

Time PeriodInterest Rate
From January 1, 2024 through June 15, 20247.25 %
From June 16, 2024 through maturity7.75 %

For the years ended January 1, 2024 and January 2, 2023, the Company had $1.0 million and $0.9 million, respectively, of deferred financing costs in connection with Credit Agreement. Amortization expense associated with deferred financing costs, in the amount of $0.5 million for each of the years ended January 1, 2024 and January 2, 2023, is included in interest expense in the accompanying consolidated statements of operations.

Other Notes Payable

Other notes payable relates to (i) a note payable to an individual, issued in connection with the Company’s acquisition of a franchised restaurant, which accrues interest over a 7-year amortization period with interest at 7.0% with a maturity date of June 1, 2024, and (ii) an Economic Injury Disaster Loan from the Small Business Administration (“SBA”), payable over a 30-year amortization period with interest at 3.7% with a maturity date of July 25, 2052, which is primarily for one corporate-owned restaurant.

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Interest expense consists of the following for the periods shown:

(in thousands)Year Ended January 1, 2024Year Ended
January 2, 2023
  Interest on credit agreement$3,751 $3,814 
  Interest on related party note502 — 
  Amortization of debt issuance costs520 514 
  Amortization of related party note discount153510 
  Non-cash interest on redeemable preferred stock4,2113,892 
  Other interest expense (income)(309)(71)
Total$8,828 $8,659 







10.    Leases

The Company has entered into various lease agreements. For the years ended January 1, 2024 and January 2, 2023, rent expense was approximately $16.5 million and $16.2 million, respectively. The Company’s lease agreements expire on various dates through 2032 and have renewal options.

On January 1, 2022, the Company adopted ASU 2016-02. Results for reporting periods beginning on or after January 1, 2022 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 “Leases”, the accounting standard then in effect.

Upon transition, on January 1, 2022, the Company recorded the following increases (decreases) to the respective line items on the consolidated balance sheets:

(in thousands)Adjustment as of January 2, 2022
Prepaid expenses$(773)
Operating right-of-use asset, net57,385 
Finance right-of-use asset, net855 
Deferred rent(900)
Short-term operating lease liability9,457 
Short-term finance lease liability143 
Long-term operating lease liability49,149 
Long-term finance lease liability712 

A summary of finance and operating lease right-of-use assets and liabilities as of January 1, 2024 and January 2, 2023 is as follows:

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(in thousands)ClassificationJanuary 1, 2024January 2, 2023
Operating LeasesOperating right-of-use asset, net$46,052 $45,741 
Finance LeasesProperty and equipment, net1,116 852 
Total right-of-use assets$47,168 $46,593 
Operating leases:
Short-term operating lease liability$10,111 $9,924 
Long-term operating lease liability44,631 40,748 
Finance leases:
Short-term borrowings, including finance226 150 
Long-term borrowings, including finance1,350 783 
Total lease liabilities$56,318 $51,605 


The components of lease expense for the periods shown is as follows:

(in thousands)ClassificationYear Ended January 1, 2024Year Ended
January 2, 2023
Operating lease costOccupancy and related expenses$13,051 $12,969 
Pre-opening costs93 — 
Store closure costs75 — 
Lease asset impairmentAsset impairment2,617 3,846 
Finance lease costs:
Amortization of right-of use assetsDepreciation and amortization expense282 258 
Interest on lease liabilitiesInterest expense85 63 
Less: Sublease incomeOccupancy and related expenses(204)(194)
Total lease cost$15,999 $16,942 




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The maturity of the Company's operating and finance lease liabilities as of January 1, 2024 is as follows:

(in thousands)Operating LeasesFinance Leases
202413,828 $362 
202513,270 348 
202611,523 319 
20279,881 287 
20288,245 263 
2029 and thereafter9,884 554 
Total undiscounted lease payments66,631 2,133 
Less: present value adjustment(11,889)(557)
Total net lease liabilities$54,742 $1,576 

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates.

A summary of lease terms and discount rates for finance and operating leases is as follows:

Year Ended January 1, 2024
Weighted-average remaining lease term (in years):
Operating Leases5.5
Finance Leases6.6
Weighted-average discount rate:
Operating Leases7.6 %
Finance Leases9.6 %



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11.     Income Taxes

The (benefit) from provision for income taxes is set forth below:

(in thousands)January 1, 2024January 2, 2023
Current:
U.S. Federal$— $— 
State13 35 
Total current income tax expense$13 $35 
Deferred:
U.S. Federal(6,117)(10,002)
State(499)(1,469)
Total deferred income tax benefit(6,616)(11,471)
Valuation allowance6,538 11,341 
Total deferred income tax benefit, net of valuation allowance(78)(130)
Income tax benefit$(65)$(95)
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The reconciliation of income tax computed at the U.S. federal statutory rate of 21% to the Company’s effective tax rate is set forth below:

(in thousands)January 1, 2024January 2, 2023
Income tax provision at the U.S. federal statutory rate$(6,462)$(21,741)
Permanent differences1,434 870 
Share-based compensation(33)(463)
State income taxes, net of federal benefit(675)(1,640)
Change in warrant liability(3)(527)
Goodwill impairment— 11,471 
True-up221 1,983 
Change in valuation allowance6,538 11,342 
Change in rate13 (249)
Tax credits(1,098)(1,141)
Total income tax benefit$(65)$(95)

The components of the Company's deferred tax liabilities at January 1, 2024 and January 2, 2023 are set forth below:

(in thousands)January 1, 2024January 2, 2023
Deferred tax assets (liabilities):
Allowance for doubtful accounts$30 $40 
Goodwill3,503 4,625 
Fixed Assets2,307 2,164 
Deferred franchise fees187 277 
Deferred rent— — 
Stock compensation1,210 1,730 
Net operating losses, Federal17,116 13,649 
Net operating losses, State3,264 2,691 
Deferred payroll taxes— — 
Interest expense7,309 5,351 
Lease liability14,128 13,104 
Tax credits2,951 1,854 
Other1,418 1,599 
     Gross deferred tax assets53,423 47,084 
Valuation allowance(29,166)(22,629)
     Net deferred tax assets24,257 24,455 
Intangible assets(13,571)(13,878)
Lease ROU asset(11,832)(11,800)
Fixed assets— — 
     Deferred tax liabilities(25,403)(25,678)
Total net deferred tax liabilities$(1,146)$(1,223)

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As of January 1, 2024, the Company’s federal net operating loss carryforwards for income tax purposes was $81.5 million. On a tax-effected basis, the Company also had net operating losses of $3.3 million related to various state jurisdictions. $71.9 million of the federal net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income. The remaining amount of the federal net operating loss carryforwards will expire at varying dates through 2038.

Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, the utilization of net operating loss carryforwards and tax credits may be limited as a result of a cumulative change in stock ownership of more than 50% over a three year period. The Company underwent such a change and consequently, the utilization of a portion of the net operating loss carryforwards and tax credits is subject to certain limitations.

Section 382 of the Internal Revenue Code limits the Company’s ability to utilize certain tax deductions to offset taxable income in future years, due to the existence of a Net Unrealizable Built-In Loss at the time of the change in control. Such a limitation will be effective for a five-year period subsequent to the change in control. In the event the Company has Recognized Built-In Losses (“RBIL”) during the five-year period, those losses will be limited; losses exceeding the annual limitation are carried forward as RBIL carryovers. As of January 1, 2024 the Company has approximately $3.7 million of RBIL carryovers, which carry forward indefinitely.

In assessing the realizability of deferred income tax assets, ASC 740 requires that a more likely than not standard be met. If the Company determines that it is more likely than not that deferred income tax assets will not be realized, a valuation allowance must be established. The realization of deferred tax assets depends on the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies when making this determination. The Company has experienced cumulative losses in recent years which is significant negative evidence that is difficult to overcome in order to reach a determination that a valuation allowance is not required. Based on the Company's evaluation of its deferred tax assets, a valuation allowance of approximately $29.2 million has been recorded against the deferred tax asset.

The following table summarizes the Company's unrecognized tax benefits at January 1, 2024 and January 2, 2023:

(in thousands)January 1, 2024January 2, 2023
Beginning balance$229 $660 
Additions based on tax positions related to the current year— — 
Additions for tax positions of prior years— — 
Reductions for positions of prior years(229)(431)
Ending balance$— $229 

The statute of limitations for the Company’s state tax returns varies, but generally the Company’s federal and state income tax returns from its 2020 fiscal year forward remain subject to examination.

12.     Stockholders' Equity

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share. At December 31, 2018January 1, 2024 and 2017,January 2, 2023, there were 3,789,55826,832,691 shares and 2,875,00022,257,772 shares of common stock outstanding, respectively.

In addition to the CEO Awards, as defined below, as an inducement to employment, effective as of July 10, 2023, the Company issued the CEO 63,500 shares of the Company’s common stock, which such shares are subject to Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”).

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Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors.

As of January 1, 2024 and January 2, 2023, there were 2,120,000 shares of preferred stock outstanding. See Note 8, “Redeemable Preferred Stock,” for further information.

Warrants

As of January 1, 2024 and January 2, 2023, the Company had the following warrants and options outstanding: 15,063,800 warrants outstanding, excluding 11,030,442 and -0- shareseach exercisable for one share of common stock subject to possible redemption, respectively.

at an exercise price of $11.50 including 11,468,800 in public warrants, 3,000,000 in private placement warrants (“Private Placement Warrants”), 445,000 in Private Warrants

and 150,000 in Working Capital Warrants. The Public Warrants will becomepublic warrants expire in December 2025. There were no warrants exercised during the years ended January 1, 2024 and January 2, 2023.


The public warrants became exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Offering;BurgerFi acquisition, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrantspublic warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of Business Combination, warrantWarrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.



OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

The Company may redeem the Public Warrants:

in whole and not in part;

at a price of $0.01 per warrant;

at any time during the exercise period;

upon a minimum of 30 days’ prior written notice of redemption; and

if, and only if, the last sale price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders.

if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.

public warrants:


in whole and not in part;
at a price of $0.01 per warrant;
at any time during the exercise period;
upon a minimum of 30 days' prior written notice of redemption;
if, and only if, the last sale price of the Company's common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.

If the Company calls the Public Warrantspublic warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrantspublic warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.


The Private Placement Warrants, will bePrivate Warrants and Working Capital Warrants (collectively, the“Other Warrants”) are identical to the Public Warrants underlying the Units sold in the Initial Public Offering,public warrants, except that the PlacementOther Warrants and the common stock issuable upon the exercise of the PlacementOther Warrants will not bebecame transferable, assignable or salable until after the completion of a Business Combination,the BurgerFi acquisition, subject to certain limited exceptions. Additionally, the PlacementOther Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the PlacementOther Warrants are held by someone other than the initial purchasers or their permitted transferees, the PlacementOther Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

public warrants. Due to this provision, the Other Warrants are accounted for as liabilities.



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Notes to Consolidated Financial Statements



Unit Purchase Options

The Company had an outstanding Unit Purchase Option

On March 13, 2018, the Company sold EarlyBirdCapital (and its designees), for $100, Agreement with an optioninvestor, to purchase up to 750,000 Units (Units include one common share and one warrant per Unit) exercisable at $10.00 per Unit (or an aggregate exercise price of $7,500,000) commencing on the later of March 13, 2019 and the consummation of a Business Combination.Unit. The unit purchase option may be(“UPO”) could have been exercised for cash or on a cashless basis, at the holder’s option, and expiresoption; however, it expired on on March 17, 2023 without being exercised, and there were no UPO exchanges between January 2, 2023 and March 17, 2023. The Units issuable upon exercise of this option are identical to those offered in the Initial Public Offering.


Share-Based Compensation

The Company accountedhas the ability to grant stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance compensation awards to current or prospective employees, directors, officers, consultants or advisors under the Plan. The Plan was established to benefit the Company and its stockholders, by assisting the Company to attract, retain and provide incentives to key management employees, directors, and consultants of the Company, and to align the interests of such service providers with those of the Company’s stockholders. Accordingly, the Plan provides for the unit purchase option, inclusivegranting of Non-qualified Stock Options, Incentive Stock Options, RSU Awards, Restricted Stock Awards, Stock Appreciation Rights, Performance Stock Awards, Performance Unit Awards, Unrestricted Stock Awards, Distribution Equivalent Rights or any combination of the receiptforegoing.

The initial aggregate number of $100 cash payment, as an expenseShares that were issuable under the Plan was 2,000,000 Shares. Provisions under the Plan allow for the aggregate number of Shares reserved for Awards under the Plan (other than Incentive Stock Options) to automatically increase on January 1 of each year, for a period of not more than 10 years, commencing on January 1 of the Initial Public Offering resultingyear following the year after the date the Plan became effective in a charge directlyan amount equal to stockholders’ equity.5% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, provided that the Compensation Committee of the board of directors (the “Compensation Committee”) may determine prior to the first day of the applicable fiscal year to lower the amount of such annual increase.

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The Company grants RSUs with service conditions, PSUs with performance and market conditions and unrestricted stock awards. RSUs granted with service conditions generally vest over 4 years. Performance conditions are based on key performance indicators, and market conditions include an index to the market value of the stock price of the Company. The fair value of the unit purchase optionRSUs and PSUs granted is determined using the fair market value of the Company’s common stock on the date of grant, as set forth in the applicable Plan document.

The following table summarizes activity of RSUs and PSUs issued under the Plan during the year ended January 1, 2024:

Service ConditionPerformance ConditionMarket Condition
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Non-vested at January 2, 2023162,000 $14.65 1,051,100 $12.62 232,500 $5.34 
Granted330,960 1.30 496,000 1.19 — — 
Vested(358,595)5.25 (283,487)13.66 (52,500)$6.40 
Forfeited(84,365)1.59 (191,063)5.85 (140,000)5.38 
Non-vested at January 1, 202450,000 $15.70 1,072,550 $8.27 40,000 3.37 


Service Condition RSUs

The Company grants RSUs with service conditions to certain officers and key employees. The vesting of these awards is contingent upon meeting the requisite service period. The fair value of these RSU awards granted is determined using the fair market value of the Company’s common stock on the date of grant. During the years ended January 1, 2024 and January 2, 2023, the Company recognized share-based compensation expense of approximately $1.1 million and $2.1 million, respectively, in relation to these awards.

Performance Condition PSUs

The Company grants performance-condition PSUs to certain officers and employees of the Company. The vesting of these PSU awards is contingent upon meeting one or more defined operational or financial goals.

The fair values of the PSU awards granted was determined using the fair market value of the Company’s common stock on the date of grant. Share-based compensation expense recorded for these PSU awards is reevaluated at each reporting period based on the probability of the achievement of the goal. Certain goals were achieved as of January 1, 2024 and January 2, 2023; accordingly, the Company recognized share-based compensation expense of approximately $2.9 million and $3.7 million, respectively, in relation to these awards.

Market Condition PSUs

The Company grants market-condition PSUs to certain members of senior management of the Company. The vesting of these awards is contingent upon meeting one or more defined market conditions tied to the share price of BurgerFi common stock outstanding.

The fair value of market condition awards granted was estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that the market conditions will be achieved and is applied to the trading price of the Company’s common stock on the date of grant. In January 2022 and July 2021, the Company modified the terms related to certain market condition awards that the Compensation Committee previously approved. As a result of these modifications, the Company recorded additional share-based compensation of $0.2 million during the year ended January 2, 2023.

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The input variables are noted in the table below:

Year Ended
 January 2, 2023
Risk-free interest rate0.4% - 4.1%
Expected life in years2
Expected volatility57.3% - 65.9%
Expected dividend yield *—%
* The Monte Carlo method assumes a reinvestment of dividends.

Share-based compensation expense is recorded ratably for market condition PSUs during the requisite derived service period and is not reversed, except for forfeitures, at the vesting date regardless of whether the market condition is met. The Company recognized a reversal of share-based compensation expense due to forfeitures of approximately $0.1 million for the year ended January 1, 2024; for the year ended January 2, 2023, the Company recognized $0.6 million in share-based compensation expense in relation to these awards.

Unrestricted Stock Awards

On January 3, 2023, the Company issued 1,141,750 unrestricted shares to the Executive Chairman and two senior executives of the Company, as well as 38,000 unrestricted shares to the Consultant Principal (see Note 6,”Related Parties”). The Company recognized approximately $1.5 million of share based-compensation for the year ended January 1, 2024.


Restricted Stock Unit Awards - Inducement Awards

On July 10, 2023, the Company issued awards of RSUs and PSUs to the Chief Executive Officer (“CEO Awards”) and the Chief Financial Officer (“CFO Awards”) as part of an inducement to enter into employment agreements with the Company (“Inducement Awards”). The Inducement Awards are not part of the Plan.

Terms of the Inducement Awards are as follows:

The CEO Awards are comprised of 500,000 time-based RSUs which, subject to continuous employment, vest in equal tranches of 100,000 units per year, and 500,000 PSUs, which, subject to continuous employment and the achievement of certain performance criteria, vest in equal tranches of 100,000 units per year.

The CFO Awards are comprised of 200,000 time-based RSUs which, subject to continuous employment, vest in equal tranches of 40,000 units per year, and 200,000 PSUs, which, subject to continuous employment and the achievement of certain performance criteria, vest in equal tranches of 40,000 units per year.

Performance ConditionService Condition
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Non-vested at January 2, 2023 $  $ 
Granted700,000 $1.57 700,000 $1.57 
Vested— — — — 
Forfeited— — — — 
Non-vested at January 1, 2024700,000 $1.57 700,000 $1.57 
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Vesting for the Inducement Awards is over a 5-year period. Share based compensation expense related to the Inducement Awards recognized during the year ended January 1, 2024 was $0.2 million; there was no share-based compensation expense recognized during the year ended January 2, 2023. As of January 1, 2024, there was approximately $1.9 million of total unrecognized compensation cost related to unvested Inducement Awards to be recognized over a weighted average period of 3.2 years.

Share-based compensation expense recognized for awards under the Plan (RSUs,PSUs and unrestricted stock awards) and the Inducement Awards during the years ended January 1, 2024 and January 2, 2023 was $5.6 million and $10.2 million, respectively. As of January 1, 2024, there was approximately $2,633,621 (or $3.51 per Unit)$8.5 million of total unrecognized compensation cost related to unvested RSUs and PSUs under the Plan and Inducement Awards to be recognized over a weighted average period of 2.3 years.







13.     Fair Value Measurements

Fair values of financial instruments are estimated using public market prices, quotes from financial institutions, and other available information. The fair values of cash equivalents, receivables, net, accounts payable and short-term debt approximate their carrying amounts due to their short duration.

The following tables summarize the fair values of financial instruments measured at fair value on a recurring basis as of January 1, 2024 and January 2, 2023.

Items Measured at Fair Value at January 1, 2024 - Debt Instruments
(in thousands)Quoted prices in active market for identical assets (liabilities) (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)
Warrant liability182 
Total$$182$
Items Measured at Fair Value at January 2, 2023
(in thousands)Quoted prices in active market for identical assets (liabilities) (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)
Warrant liability$195 
Total$$195$

In estimating its fair value disclosures for financial instruments, the Company uses the following methods and assumptions:
Cash and cash equivalents: The carrying amount reported in the consolidated balance sheets for these items approximates fair value due to their liquid nature.
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Accounts receivable, inventory, other current assets, accounts payable, accrued expenses and other current liabilities: The carrying value reported on the consolidated balance sheets for these items approximates their fair value, which is the likely amount for which the receivable or liability with short settlement periods would be transferred from/to a market participant with a similar credit standing as the Company’s.
Short-term borrowings: The fair value of the Company’s short-term borrowings under the Credit Agreement approximates between $20 million to $40 million and its carrying value was $53.3 million as of January 1, 2024. The fair value is estimated using Level 3 inputs based on quoted prices for those or similar instruments. The Company has been actively engaged in discussions with its lenders to explore potential solutions regarding the default event and its resolution. The fair value of the short-term borrowings are highly sensitive to the results of any such negotiations and may differ significantly from the fair value amount disclosed. Refer to Note 9, “Debt,” for further discussion.

Warrant liability: The fair value of the Company warrant liability is measured at fair value on a recurring basis, classified as Level 2 in the fair value hierarchy. The fair values of the Other Warrants are determined using the publicly-traded price of the Company’s common stock on the valuation dates of $0.86 on December 29, 2023, the last trading day before January 1, 2024 and $1.26 on December 30, 2022, the last trading day before January 2, 2023. The fair value is calculated using the Black-Scholes option-pricing model. The fair value ofBlack-Scholes model requires us to make assumptions and judgments about the unit purchase option granted tovariables used in the underwriters was estimated as ofcalculation, including the date of grant using the following assumptions: (1)expected term, expected volatility, of 35%, (2) risk-free interest rate, of 2.65%dividend rate and (3) expected life of five years.service period. The optioncalculated warrant price for private warrants was $0.05 and such units purchased pursuant to$0.05 on January 1, 2024 and January 2, 2023, respectively. The input variables for the option, as well as the common stock underlying such units, the warrants included in such units, and the shares underlying such warrants, have been deemed compensation by FINRA andBlack-Scholes are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of Initial Public Offering except to any underwriter and selected dealer participatingnoted in the Initial Public Offeringtable below:

January 1, 2024January 2, 2023
Risk-free interest rate4.25 %4.14 %
Expected life in years2.03.0
Expected volatility98.0 %68.0 %
Expected dividend yield%%

Assets and their bona fide officers or partners. The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from March 13, 2018 with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of common stock at a price below its exercise price.


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

NOTE 9. INCOME TAX

The Company’s provision for income taxes was deemed to be immaterial as of December 31, 2017.

The Company did not have any significant deferred tax assets or liabilities as of December 31, 2018 and 2017.

The income tax provision for the year ended December 31, 2018 consists of the following:

Federal   
Current $276,750 
Deferred  (4,074)
     
State    
Current $ 
Deferred   
Other  4,074 
Income tax provision $276,750 

As of December 31, 2018, the Company did not have any U.S. federal and state net operating loss carryovers (“NOLs”) available to offset future taxable income.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2018 is as follows:

Statutory federal income tax rate21.0%
State taxes, net of federal tax benefit0.0%
Other0.3%
Income tax provision21.3%


OPES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities. The Company’s tax returns since inception remain open and subject to examination.

NOTE 10. FAIR VALUE MEASUREMENTS 

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. 

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The following table presents information about the Company’s assets that are measured at fair value on a recurringnon-recurring basis at December 31, 2018include the Company’s long-lived assets and 2017,definite-lived intangible assets. In determining fair value, the Company uses an income-based approach. As a number of assumptions and indicatesestimates were involved that are largely unobservable, they are classified as Level 3 inputs within the fair value hierarchyhierarchy. Assumptions used in these forecasts are consistent with internal planning, and include revenue growth rates, royalties, gross margins, and operating expense in relation to the current economic environment and the Company’s future expectations.


14.      Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the valuation inputschief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is the Company utilized to determine such fair value:

Description Level  December 31,
2018
  December 31,
2017
 
Assets:            
Marketable securities held in Trust Account  1  $117,740,109  $ 

NOTE 12. SUBSEQUENT EVENTS 

CODM. The Company evaluated subsequent eventshas two operating and reportable segments: BurgerFi and Anthony’s.


BurgerFi. BurgerFi is a fast-casual “better burger” concept with franchised and corporate-owned restaurants as offering burgers, hot dogs, crispy chicken, frozen custard, hand-cut fries, shakes, beer, wine and more.

Anthony’s. Anthony’sis a pizza and wing brand concept centered around a coal fired oven, and its menu offers “well-done” pizza, coal fired chicken wings, homemade meatballs, and a variety of handcrafted sandwiches and salads.

The CODM measures segment income based on Adjusted EBITDA and believes that the adjusted measure provides a baseline for analyzing business trends. The Company defines Adjusted EBITDA as net loss before goodwill impairment, asset impairment, employee retention credits, share-based compensation expense, depreciation and amortization expense, interest expense (which includes accretion on the value of preferred stock and interest accretion (on the related party note), restructuring costs, merger, acquisition and integration costs, legal settlements, store closure costs, gain on change in value of warrant liability, pre-opening costs, (gain) loss on sale of assets and income tax expense (benefit).

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Table of Contents
BurgerFi International Inc., and Subsidiaries
Notes to Consolidated Financial Statements



External sales are derived principally from food and beverage sales, royalty and franchise revenue.

The Company does not rely on any major customers as a source of sales, and the customers and long-lived assets of our segments are predominantly in the U.S. There were no material transactions that occurred afteramong the balance sheet date upCompany’s segments.

The following table presents segment revenue and a reconciliation of adjusted EBITDA to net loss by segment:


ConsolidatedAnthony’sBurgerFi
(in thousands)January 1,
2024
January 2,
2023
January 1,
2024
January 2,
2023
January 1,
2024
January 2,
2023
Revenue by Segment$170,100$178,720$125,637$128,819 $44,463 $49,901 
Net Loss$(30,708)$(103,432)$(3,132)(53,057)$(27,576)(50,375)
Goodwill impairment66,56949,06417,505 
Asset impairment charges4,5246,9461,2402563,2846,690 
Employee retention credits(2,626)(2,626)
Share-based compensation expense5,61210,2391885,42410,239 
Depreciation and amortization expense13,15417,1384,5447,5678,6109,571 
Interest expense8,8288,6594,7664,8164,0623,843 
Restructuring costs2,6571,4591,0687631,589696 
Merger, acquisition and integration costs8182,7871271546912,633 
Legal settlements5641,62399354651,588 
Store closure costs5871,949303162841,933 
(Gain) on change in value of warrant liability(13)(2,511)(13)(2,511)
Pre-opening costs203474203474 
(Gain) loss on sale of assets(93)(15)(94)19 1(34)
Income tax (benefit) expense(65)(95)(61)(335)(4)240 
Adjusted EBITDA$6,068 $9,164 $9,048 $9,298 $(2,980)$(134)



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Table of Contents
BurgerFi International Inc., and Subsidiaries
Notes to Consolidated Financial Statements



The following table summarizes information for the Company’s capital expenditures, long lived assets (including property and equipment, net and operating lease right-of-use assets), and total assets by segment as of and for the years ended January 1, 2024 and January 2, 2023:

(in thousands)January 1, 2024January 2, 2023
Capital Expenditures:
BurgerFi$1,573 $1,428 
Anthony’s930 $1,089 
Total$2,503 $2,517 
Long-lived assets:
BurgerFi$19,184 $20,093 
Anthony’s42,989 $45,019 
Total$62,173 $65,112 
Total Assets:
BurgerFi$120,792 $136,810 
Anthony’s137,684 $139,970 
Total$258,476 $276,780 






93

Table of Contents
BurgerFi International Inc., and Subsidiaries
Notes to Consolidated Financial Statements





15.     Subsequent Events

In addition to the date thattransactions and events disclosed throughout the financial statements, were issued. Based upon this review,below are additional events that occurred subsequent to January 1, 2024.

On January 23, 2024, the Company didreceived a notice (the “Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that the Company is not identifyin compliance with the minimum bid price requirement set forth in Nasdaq Listing Rules 5450(a)(1) (the “Bid Price Rule”) for continued listing. The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notice has no immediate effect on the listing of the Company’s common stock or warrants on the Nasdaq Global Market.

In accordance with the Compliance Period Rule, the Company has 180 calendar days to regain compliance. If at any subsequent eventstime before the end of this 180-day period, or through July 22, 2024, the closing bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to the Staff’s discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H), the Staff will provide written notification that the Company has achieved compliance with the Bid Price Rule. If the Company does not regain compliance during this 180-day period, it may be eligible for additional time to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(ii) by transferring to the Nasdaq Capital Market.

The Company intends to continue to monitor the closing bid price of its common stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by the Staff, the Staff will provide notice that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will be successful in maintaining the listing of its common stock on the Nasdaq Global Market, or, if transferred, on the Nasdaq Capital Market.


Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this Form 10-K, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act. We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of January 1, 2024.

Management’s Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this Annual Report on Form 10-K. In making its assessment of the effectiveness of internal control, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO criteria”) in Internal Control-Integrated Framework (2013). Our internal control over financial reporting is designed to provide reasonable assurance to management and to our Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
94


(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and             
dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures are
being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of January 1, 2024.

Limitations on Effectiveness of Controls and Procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.

Changes in Internal Control Over Financial Reporting. There have been no changes in the Company’s internal control over financial reporting during the quarter ended January 1, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

On March 27, 2024, the Board determined that the Company’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) will be held virtually by means of remote communication on or about June 6, 2024, or as otherwise set forth in the Company’s notice and proxy statement for the 2024 Annual Meeting. Stockholders of record at the close of business on April 9, 2024 will be entitled to notice of, and to vote at, the 2024 Annual Meeting.

Because the date of the 2024 Annual Meeting has changed by more than thirty (30) days from the date of the Company’s 2023 annual meeting of stockholders (the “2023 Annual Meeting”), the Company is including this disclosure to provide the due date for the submission of any qualified stockholder proposals or qualified stockholder director nominations.

As the 2024 Annual Meeting is scheduled to be held before the 1-year anniversary of the 2023 Annual Meeting, and the date of 2024 Annual Meeting was set after the deadline (February 2, 2024) had already passed for the receipt of proposals to be included in the 2024 Annual Meeting proxy statement pursuant to Rule 14a-8, the Company has determined that it is reasonable to not change the original deadline for the receipt of proposals to be included in the 2024 Annual Meeting proxy statement.

In accordance with the Company’s second amended and restated bylaws (the “Bylaws”), any stockholder who intends to submit a proposal to be considered at the 2024 Annual Meeting, including nominations of persons for election to our Board and other business, but not intended to be included in the Company’s proxy statement for the 2024 Annual Meeting, and other than in accordance with Rule 14a-8, must ensure that such proposal or nomination is delivered to or mailed and received at the principal executive offices of the Company no later than the close of business on April 22, 2024, the first business day followingthe tenth day following the date of this public announcement of the date of the 2024 Annual Meeting.

Stockholder proposals must comply with all applicable requirements set forth in the rules and regulations of the Securities and Exchange Commission, Delaware law and the Company’s Bylaws. Any proposal submitted after the above deadlines will be considered untimely and not properly brought before the 2024 Annual Meeting.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.
95

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required adjustmentby this item is incorporated herein by reference from the Company’s definitive proxy statement for its 2024 Annual Meeting of Stockholders to be filed no later than 120 days after January 1, 2024. We refer to this proxy statement as the “BFI Definitive Proxy Statement.”


Item 11. Executive Compensation.

The information required by this item will be contained in the BFI Definitive Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item, will be contained in the BFI Definitive Proxy Statement and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be contained in the BFI Definitive Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

Our independent registered public accounting firm is KPMG LLP, Miami, FL, Auditor Firm ID: 185.

The information required by this item will be contained in the BFI Definitive Proxy Statement and is incorporated herein by reference.
96

PART IV

Item 15. Exhibits and, Financial Statement Schedules.

(a) We have filed the following documents as part of this Annual Report on Form 10-K:

1.The financial statements listed in the "Index to Financial Statements" in Item 8. Financial Statements and Supplementary Data are filed as part of this report.

2.Financial statement schedules are omitted because they are not applicable, or disclosurethe required information is shown in the financial statements.

F-17

statements or notes thereto.


3.Exhibits included or incorporated herein: See below.

Exhibit Index
Exhibit
Number
Description
2.1
2.2
2.3
2.4
3.1
3.2
3.3
4.1*
4.2
4.3
4.4
10.1
10.2
10.3
10.4+
97

10.5 +
10.6
10.7
10.8
10.9+
10.10+
10.11+
10.12+
10.13+

10.14+
10.15
10.16+
10.17+
10.18+
10.19+
10.20+
10.21+
10.22+
10.23+
98

10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
99

10.34
10.35
10.36
10.37+
10.38+
10.39+
10.40+
10.41+
10.42+
10.43+
10.44+
10.45+
10.46+
10.47+
10.48+
21.1*
23.1*
31.1*
100

31.2*
32.1**
32.2**
97.1*
101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104The cover page from the Company’s Annual Report on form 10-K for the year ended January 1, 2024 has been formatted in Inline XBRL.
___________________________
*    Filed herewith.
**    Furnished.
+    Indicates a management contract or a compensatory plan or agreement.

Item 16. Form 10-K Summary

None.
101

SIGNATURES


Pursuant to the requirements of the Section 13 or 15 orand 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized on the 1st day ofauthorized.

Dated: April 2019.

10, 2024

OPES ACQUISITION CORP.
BurgerFi International, Inc.
By:By:/s/ José Antonio Cañedo WhiteCarl Bachmann
Carl BachmannJosé Antonio Cañedo White
Chief Executive Officer

In accordance with


Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


NameTitleTitleDate

/s/ José Antonio Cañedo WhiteCarl Bachmann
Carl Bachmann

Chief Executive Officer

(Principal Executive Officer)

April 1, 2019

10, 2024
José Antonio Cañedo White (Principal Executive Officer) 

/s/ Miguel Angel Villegas VargasChristopher Jones
Christopher Jones

Chief Financial Officer

(Principal Accounting and Financial Officer)

April 1, 2019 

10, 2024
Miguel Angel Villegas Vargas (Principal financial and accounting officer)

/s/ Gonzalo Gil WhiteOphir Sternberg
Ophir Sternberg

Executive Chairman of the Board

of Directors

April 1, 2019 

10, 2024
Gonzalo Gil White 
/s/ Vivian Lopez-Blanco
Vivian Lopez-Blanco
DirectorApril 10, 2024
/s/ Gregory Mann
Gregory Mann
DirectorApril 10, 2024

/s/ Adolfo Rios OlivierAllison Greenfield
Allison Greenfield
Director

Director 

April 1, 2019 

10, 2024
Adolfo Rios Olivier 
/s/ Andrew Taub
Andrew Taub
DirectorApril 10, 2024

/s/ Martha (Stormy) ByorumDavid Heidecorn
David Heidecorn
Director

Director 

April 1, 2019 

Martha (Stormy) Byorum 
/s/ Rodrigo Lebois MateosDirector April 1, 2019 

Rodrigo Lebois Mateos

10, 2024

102