LEGACY EJY, INC. (FORMERLY ENJOY TECHNOLOGY, INC.

)

(~~FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~UNAUDITED~~ DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN SHAREHOLDERS’ DEFICIT~~

~~FOR THE THREE~~REDEEMABLE CONVERTIBLE PREFERRED STOCK AND ~~NINE MONTHS ENDED SEPTEMBER 30, 2021~~

Ordinary Shares

Additional
Paid-in

Capital

Total
Shareholders’
Deficit


Class A

Class B

Accumulated
Deficit


Shares

Amount

Shares

Amount

Balance - December 31, 2020


—


$
—



9,343,750


$
934


$
0


$
(38,301,346
)

$
(38,300,412
)
Accretion of Class A ordinary shares subject to possible redemption

—



—



—



—



—

   (266,102 ) (266,102 )
Net income

—



—



—



—



—

   4,368,352 4,368,352

Balance - March 31, 2021 (Unaudited)


—



—



9,343,750



934



0



(34,199,096
)

(34,198,162
)
Accretion of Class A ordinary shares subject to possible redemption

—



—



—



—



—

   (196,307 ) (196,307 )
Net loss

—



—



—



—



—

   (2,984,151 ) (2,984,151 )

Balance - June 30, 2021 (Unaudited)


—



—



9,343,750



934



0



(37,379,554
)

(37,378,620
)
Net loss

—



—



—



—



—

   (3,388,021 ) (3,388,021 )

Balance - September 30, 2021 (Unaudited)


—


$
—



9,343,750


$
934


$
0


$
(40,767,575
)

$
(40,766,641
)

STOCKHOLDERS’ EQUITY (DEFICIT)

(Amounts in thousands, except share amounts)

(Unaudited)


	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares (1)		Amount		Shares (1)		Amount		Capital			Income			Deficit			Equity
Balances at March 31, 2022		—	$	—		120,111,678	$	12	$	738,908		$	522		$	(697,787	)	$	41,655
Issuance of common stock under stock plan, net of shares withheld for employee taxes		—		—		1,691,503		—		108			—			—			108
Issuance of common stock upon exercise of warrants		—		—		—		—		—			—			—			—
Stock-based compensation		—		—		—		—		5,158			—			—			5,158
Withholding taxes from stock plan		—		—		—		—		(57	)								(57	)
Foreign currency translation adjustments		—		—		—		—		—			(708	)		—			(708	)
Deconsolidation of Enjoy UK										(1,442	)		3,264			—			1,822
Net loss		—		—		—		—		—			—			(83,253	)		(83,253	)
Balances at June 30, 2022		—		—		121,803,181	$	12	$	742,675		$	3,078		$	(781,040	)	$	(35,275	)

Balances at December 31, 2021		—	$	—		119,624,679	$	12	$	734,142		$	724		$	(642,542	)	$	92,336
Issuance of common stock under stock plan, net of shares withheld for employee taxes		—		—		2,136,089		—		226			—			—			226
Issuance of common stock upon exercise of warrants		—		—		42,413		—		—			—			—			—
Stock-based compensation		—		—		—		—		10,279			—			—			10,279
Withholding taxes from stock plan		—		—		—		—		(530	)								(530	)
Foreign currency translation adjustments		—		—		—		—		—			(910	)		—			(910	)
Deconsolidation of Enjoy UK										(1,442	)		3,264			—			1,822
Net loss		—		—		—		—		—			—			(138,498	)		(138,498	)
Balances at June 30, 2022		—		—		121,803,181	$	12	$	742,675		$	3,078		$	(781,040	)	$	(35,275	)


	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares (1)		Amount		Shares (1)		Amount		Capital		Income			Deficit			Equity (Deficit)
Balances at March 31, 2021		52,880,354	$	368,692		21,807,808	$	1	$	44,684	$	880		$	(461,399	)	$	(415,834	)
Issuance of Series C redeemable convertible preferred stock (net of issuance costs)		—		—
Issuance of common stock under stock plan		—		—		667,739		—		1,082		—			—			1,082
Debt extinguishment of convertible loan		—		—		—		—		—		—			—			—
Stock-based compensation		—		—		—		—		1,032		—			—			1,032
Foreign currency translation adjustments		—		—		—		—		—		(100	)		—			(100	)
Net loss		—		—		—		—		—		—			(55,959	)		(55,959	)
Balances at June 30, 2021		52,880,354		368,692		22,475,547	$	1	$	46,798	$	780		$	(517,358	)	$	(469,779	)
														$	-
Balances at December 31, 2020		51,518,255	$	353,692		21,416,436	$	1	$	6,601	$	884		$	(421,933	)	$	(414,447	)
Issuance of Series C redeemable convertible preferred stock (net of issuance costs)		1,362,099		15,000
Issuance of common stock under stock plan		—		—		1,059,111		—		1,505		—			—			1,505
Debt extinguishment of convertible loan		—		—		—		—		36,782		—			—			36,782
Stock-based compensation		—		—		—		—		1,910		—			—			1,910
Foreign currency translation adjustments		—		—		—		—		—		(104	)		—			(104	)
Net loss		—		—		—		—		—		—			(95,425	)		(95,425	)
Balances at June 30, 2021		52,880,354		368,692		22,475,547	$	1	$	46,798	$	780		$	(517,358	)	$	(469,779	)

(1) The shares of the Company’s common and redeemable convertible preferred stock, prior to the Merger (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately 0.34456 established in the Merger as described in Note 4.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~Table of Contents~~

LEGACY EJY, INC. (FORMERLY ENJOY TECHNOLOGY, INC.

)

(~~FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

DEBTOR-IN-POSSESSION)

NOTES TO ~~UNAUDITED~~ CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share amounts or as otherwise indicated)

(Unaudited)

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

~~Note 1 - Description of Organization and Business Operations~~

Legacy EJY, Inc. (formerly Enjoy Technology, Inc.) (the “Company”)~~, formally known as Marquee Raine Acquisition Corp. (see “Merger Agreement” below),~~ was incorporated in the state of Delaware in May 2014, and was headquartered in Palo Alto, California as ~~a Cayman Islands exempted company on October 16, 2020. The Company was formed for the purpose~~ of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). The Company is not limited to a particular industry or sector for purposesJune 30, 2022. As of ~~consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,~~June 30, 2022, the Company ~~is subject to all of the risk~~

~~associated with early stage~~operated mobile stores providing in home delivery, set up and ~~emerging growth companies.~~

~~As of September 30, 2021, the Company had not commenced any operations. All activity~~a full shopping experience for ~~the period from October 16, 2020 (inception) through September 30, 2021 relates to the Company’s formation~~

~~the initial public offering (the “Initial Public Offering”) described below~~technology and identifying a target company for a business combination. The Company will not generate any operating revenues until after the completion of its Business Combination, at the earliest. In the future, the Company may generate

~~non-operating~~

~~income in the form of interest income from the proceeds derived from the Initial Public Offering.~~

The Company’s sponsor is Marquee Raine Acquisition Sponsor LP (the “Sponsor”), a Cayman Islands exempted limited partnership and an affiliate of The Raine Group LLC (together with its affiliates, “The Raine Group”) and Marquee Sports Holdings SPAC I, LLC (“Marquee”). The registration statement for the Company’s Initial Public Offering was declared effective on December 14, 2020. On December 17, 2020, the Company consummated its Initial Public Offering of 37,375,000 Units, including 4,875,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $373.8 million, and incurring offering costs of approximately $19.9 million, of which approximately $13.1 million was deferred underwriting commissions and $0.5 million was deferred legal fees (Note 3).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,316,667 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of approximately $9.5 million (Note 4).

Upon the closing of the Initial Public Offering and the Private Placement, approximately $373.8 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a

~~non-interest~~

~~bearing trust account (“Trust Account”) located~~telecom companies in the United States of America, United Kingdom, and Canada.

On August 31, 2022, the Company filed an amendment to its Certificate of Incorporation with ~~Continental Stock Transfer & Trust Company acting as trustee.~~

~~As of September 30, 2021, the~~

~~net proceeds~~

~~not yet invested. If, in~~ the ~~future, the proceeds are held in an interest-bearing account, then the net proceeds may be invested only in United States “government securities” within the meaning of Section 2(a)(16)~~Secretary of the ~~Investment~~State of Delaware in order to change its name from “Enjoy Technology, Inc.” to “Legacy EJY, Inc.”

Holding Company ~~Act of 1940, as amended, (the “Investment Company Act”) having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule~~

~~2a-7~~

promulgated under the Investment Company Act which invest in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding any deferred underwriting commissions and deferred legal fees) at the time of the signing of the agreement to enter into the Business Combination. However, the Company will only complete a 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.

The Company will provide the holders of the public shares 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 shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public shareholders will be entitled to redeem their public shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share). The

~~per-share~~

amount to be distributed to public shareholders who redeem their public shares will not be reduced by the deferred underwriting commissions and deferred legal fees the Company will pay to the underwriter (as discussed in Note 5). These public shares will be classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Liabilities from Equity” (“ASC 480”).~~Reorganization – In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such completion of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to the amended and restated memorandum and articles of association which the Company adopted upon the completion of the Initial Public Offering (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the

~~Securities and Exchange Commission (the “~~

~~SEC~~

”)

~~and file tender offer~~January 2021, Enjoy Technology, Inc. filed documents with the ~~SEC~~Delaware Secretary of State to effect a holding company reorganization (the “Holding Company Reorganization”), which resulted in a newly formed Delaware corporation, Enjoy Technology Holding Company (“Enjoy Holdings”), owning all the capital stock of Enjoy Technology, Inc. Enjoy Holdings was initially a direct, wholly owned subsidiary of Enjoy Technology, Inc. Pursuant to the Holding Company Reorganization, the newly formed entity (“Merger Sub”), a direct, wholly owned subsidiary of Enjoy Holdings and an indirect, wholly owned subsidiary of Enjoy Technology, Inc., merged with and into Enjoy Technology, Inc., with Enjoy Technology, Inc., surviving as a direct, wholly owned subsidiary of Enjoy Holdings. Each share of each class of Enjoy Technology, Inc., stock issued and outstanding immediately prior to ~~completing a Business Combination. If, however, shareholder approval~~the Holding Company Reorganization was automatically converted into an equivalent corresponding share of Enjoy Holdings stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Enjoy Technology, Inc., stock being converted. Accordingly, upon consummation of the ~~transactions is required by law,~~Holding Company Reorganization, Enjoy Technology, Inc.’s current stockholders became stockholders of Enjoy Holdings. The stockholders of Enjoy Technology, Inc., did not recognize any gain or loss for U.S. federal income tax purposes upon the ~~Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem~~conversion of their shares in ~~conjunction with a proxy solicitation pursuant~~the Enjoy Holdings. Finally, Enjoy Technology, Inc. changed its name to ~~the proxy rules and not pursuant~~Enjoy Technology LLC while Enjoy Holdings changed its name to ~~the tender offer rules. Additionally, each Public Shareholder may elect~~Enjoy Technology, Inc. References to redeem their public shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as defined below) agreed“Legacy Enjoy” refer to ~~vote their Founder Shares (as defined below in Note 4) and any public shares purchased during or after the Initial Public Offering in favor of a Business Combination. Subsequent~~Enjoy Technology, Inc. prior to the completion of the Initial Public Offering, the Company will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material

~~non-public~~

information and (ii) to clear all trades with the Company’s legal counsel prior to execution. In addition, the initial shareholders agreed to waive their redemption rights with respect to their Founder Shares and public shares in connection with the completion of a Business Combination.

Notwithstanding the foregoing, our amended and restated memorandum and articles of association provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”Merger (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A Ordinary Shares sold in the Initial Public Offering, without the prior consent of the Company.

The Company’s Sponsor, officers and directors (the “initial shareholders”) agreed not to propose an amendment to the amended and restated memorandum and articles of association (a) that would modify the substance or timing of the Company’s obligation to redeem 100% of its public shares if the Company does not complete a Business Combination within 24 months from the closing of the Initial Public Offering, or December 17, 2022, (the “Combination Period”) or (b) with respect to any other provision relating to shareholders’ rights or

~~pre-~~

~~Business Combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Class A Ordinary Shares in conjunction with any such amendment.~~

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 not more than ten business days thereafter, redeem the public shares, at a

~~per-share~~

price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account, if such funds are held in an interest-bearing account, and not previously released to the Company to pay its income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (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 the remaining shareholders and the board of directors (the “Board”), liquidate and dissolve, subject in each case, to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

The Sponsor agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or members of the Company’s management team acquire public shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company fails to complete a Business Combination within the Combination Period. The underwriter agreed to waive its rights to its deferred underwriting commissions and deferred legal fees (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the public shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. 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 underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”)below). ~~Moreover, in the event that an~~

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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 (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Comp

~~ny waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.~~

Marquee Raine Acquisition Corp. Merger ~~Agreement~~

– On April 28, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ~~MRAC Merger Sub~~Marquee Raine Acquisition Corp. ((“MRAC”), prior to the closing of the merger and “New Enjoy”, following the closing of the merger), a wholly owned subsidiary of the Company (“Merger Sub”) and Enjoy Technology Operating Corp. (f/k/a Enjoy Technology Inc.), a Delaware corporation (“Legacy Enjoy”). The Merger Agreement was subsequently amended on July 23, 2021 and September 13, 2021 and the domestication transactions contemplated by the Merger Agreement were completed on October 14, 2021. As such, the Company, filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary acc

mpanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which the Company was domesticated and continues as a Delaware corporation, changing its name to “Enjoy Technology, Inc.” (the “Domestication”). After the Domestication, the Company is referred to as “New Enjoy.”

As a result of and upon the effective time of the Domestication, among other things, (1) each then issued and outstanding Class A ordinary share, par value $0.0001 per share, of the Company (the “MRAC Class A Ordinary Shares”), converted automatically, on a

~~one-for-one~~

basis, into a share of common stock, par value $0.0001 per share, of New Enjoy (the “New Enjoy Common Stock”); (2) each then issued and outstanding Class B ordinary share, par value $0.0001 per share, of the Company (the “MRAC Class B Ordinary Shares”) converted automatically, on a

~~one-for-one~~

basis, into a share of New Enjoy Common Stock; (3) each then issued and outstanding warrant of the Company (the “MRAC Warrants”) converted automatically into a warrant to acquire one share of New Enjoy Common Stock (the “New Enjoy Warrants”) pursuant to the Warrant Agreement, dated December 17, 2020, between the Company and Continental Stock Transfer & Trust Company (“Continental”), as warrant agent; and (4) each then issued and outstanding unit of the Company (the “MRAC Units”) was separated and converted automatically into one share of New Enjoy Common Stock and

~~one-fourth~~

~~of one New Enjoy Warrant. No fractional shares were issued upon exercise of the New Enjoy Warrants.~~

publicly traded Special Purpose Acquisition Company. On October 15, 2021 (the “Closing Date”), asthe Company and MRAC consummated the merger transaction contemplated by the Merger Agreement ~~New~~(the “Merger”), following approval at a special meeting of the stockholders of MRAC held on October 13, 2021.

See Note 4, “Reverse Recapitalization” for further details of the Merger.

Wind Down of United Kingdom and Canadian Operations and Restructuring – On June 29, 2022, Enjoy (UK) Limited (“Enjoy UK”), a wholly-owned subsidiary of the Company, commenced a reduction in force with respect to its U.K.-based employees. Similarly on June 30, 2022, Enjoy Technology Canada Ltd. ("Enjoy Canada"), a wholly-owned subsidiary of the Company, commenced a reduction in force with respect to its Canadian-based employees. Enjoy UK and Enjoy Canada filed for bankruptcy proceedings in their respective jurisdictions, on June 30, 2022 and on July 8, 2022, respectively.

Voluntary Petition – On June 30, 2022, (the “Petition Date") the Company and certain of its wholly owned subsidiaries, Legacy EJY Subsidiary LLC (f/k/a Enjoy Technology LLC) and Legacy EJY Operating Corp. (f/k/a Enjoy Technology Operating Corp.) (collectively, the "Debtors") filed voluntary petitions (the "Filings") under Chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for

the District of Delaware (such court, the “Bankruptcy Court” and such cases, the “Chapter 11 Cases”). On July 1, 2022, the Bankruptcy Court entered an order authorizing the joint administration of the Chapter 11 Cases under the caption In re Enjoy Technology, Inc., et al., Case No. 22-10580 (JKS). On July 20, 2022, the Company received approval of its customary motions filed on the Petition Date seeking court authorization to continue business operations during the Chapter 11 proceedings, including among others, the continued payment of employee wages and benefits. As part of the Chapter 11 Cases, the Company and its domestic subsidiaries expect to file in the fourth quarter of 2022 their Chapter 11 plan of liquidation. On September 16, 2022, the Bankruptcy Court entered an order (Docket No. 431) authorizing the Debtors to change the case caption to In re Legacy EJY Inc., et al., Case No. 22-10580 (JKS) to reflect, among other things, the corporate name changes.

See Note 3, "Reorganization in Bankruptcy" for further details.

Asset Sale Agreement – On July 25, 2022, the Company and its domestic subsidiaries entered into an Asset Purchase Agreement (the "Purchase Agreement") with Asurion, LLC (“Asurion”) to sell substantially all of their U.S. assets pursuant to a sale conducted under Section 363 of the U.S. Bankruptcy Code. The 363 Sale (as defined below) was conducted under the provisions of Section 363 and was approved by the Bankruptcy Court on August 12, 2022. Pursuant to the Purchase Agreement, on August 31, 2022, the Company and its domestic subsidiaries completed their sale of substantially all of their U.S. assets to Asurion, LLC (the “363 Sale”) for approximately $110.0 million, subject to various deductions including a $23.8 million holdback amount.

See Note 3, "Reorganization in Bankruptcy" for further details.

Delisting and Transfer of Trading–On July 19, 2022, the Nasdaq Stock Market LLC ("Nasdaq") filed a Form 25 with the U.S. Securities and Exchange Commission (the “SEC”) to delist the Company's common stock, $0.0001 par value per share, and the warrants to purchase common stock, of the registrant from Nasdaq. The delisting became effective July 29, 2022. The deregistration of the common stock and warrants under Section 12(b) of the Exchange Act will become effective 90 days, or such shorter period as the SEC may determine, after the filing date of the Form 25, at which point the common stock and warrants will be deemed deregistered under Section 12(b) of the Exchange Act. The registrant’s common stock and warrants began trading on the OTC Pink Marketplace on July 11, 2022 under the symbols “ENJYQ” and “ENJWQ”, respectively.

Basis of Presentation – The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The condensed consolidated financial statements include the accounts of Legacy EJY, Inc. (formerly Enjoy Technology, Inc.) and its controlled subsidiaries. As permitted for interim reporting, certain footnotes or other financial information that are normally required by U.S. GAAP may be condensed or omitted, unless otherwise required by U.S. GAAP or SEC rules and regulations. These condensed consolidated financial statements were prepared on the same basis as and should be read in conjunction with the Company’s annual consolidated financial statements as of and for the year ended December 31, 2021 and notes thereto included in the Company's fiscal 2021 Annual Report on Form 10-K. In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair statement have been included in these condensed consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation except as described in "Deconsolidation of subsidiaries" below. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or future year. The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited annual consolidated financial statements but does not include all information required by U.S. GAAP for annual consolidated financial statements.

Going Concern – Management has concluded that it is unable to continue as a going concern. See Note 3, "Reorganization in Bankruptcy," for further information. The condensed consolidated financial statements as of and for the periods ended June 30, 2022, have been prepared assuming the Company would continue as a going concern and do not include any adjustments to reflect the possible future effects of the recoverability

and classification of assets, or the amounts and classification of liabilities that may result from the outcome of the bankruptcy proceedings. The Company will apply the liquidation basis of accounting from the date that the liquidation becomes imminent, which criteria had not been met as of June 30, 2022.

Accounting During Bankruptcy –The Company has applied Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC") Topic 852, Reorganizations ("Topic 852"), in the preparation of these unaudited condensed consolidated financial statements. For periods subsequent to the Filings, Topic 852 requires the financial statements to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Due to the timing of the filing of the Chapter 11 Cases on June 30, 2022, the amount of Reorganization items, net ("Reorganization items") for the three and six months ended June 30, 2022 is immaterial and have not been presented as Reorganization items within the unaudited condensed consolidated statements of operations and comprehensive loss.

In addition, prepetition obligations that may be impacted by the Chapter 11 proceedings have been classified as "Liabilities subject to compromise" on the unaudited condensed consolidated balance sheet as of June 30, 2022.

See Note 3, "Reorganization in Bankruptcy," for further information.

Deconsolidation of subsidiaries – Under FASB ASC Topic 810, Consolidation, ("Topic 810"), consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owners, for instance, where the subsidiary is in legal reorganization or bankruptcy in another jurisdiction.

On June 30, 2022, Enjoy UK filed a petition for bankruptcy in the UK, whereby the Company's control of this subsidiary was ceded. The Company will not regain control of Enjoy UK and concluded that it was appropriate to deconsolidate the UK subsidiary effective as of June 30, 2022. The deconsolidation resulted in a net pretax gain of $7.9 million, which related to the deconsolidation of $12.4 million of liabilities, offset by $2.7 million in cash and $1.8 million of equity. The net pretax gain on deconsolidation is recognized within discontinued operations (see Note 16). The Company measured its retained noncontrolling investment at a fair value of zero, as it does not expect to realize any future cash flows from its investment.

Upon the deconsolidation, transactions with the UK subsidiary are no longer eliminated in consolidation and are treated as related party transactions. The related party payable to Enjoy UK amounting to $5.9 million is recognized under liabilities subject to compromise (see Note 3) in the condensed consolidated balance sheet as of June 30, 2022 with a corresponding related party expense in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2022.

On July 8, 2022, Enjoy Canada filed a petition for bankruptcy in Canada, whereby the Company's control of this subsidiary was ceded. The Company will not regain control of Enjoy Canada and concluded that it was appropriate to deconsolidate this subsidiary effective July 8, 2022. The estimated pretax gain on deconsolidation amounts to $5.7 million. As the deconsolidation event occurred subsequent to June 30, 2022, Enjoy Canada is still fully consolidated within these condensed consolidated financial statements.

Reclassifications – In addition to the reclassifications related to discontinued operations, to conform to current presentation, the Company reclassified certain costs within each of its operating expense line items in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021. These changes have no impact on the Company’s previously reported consolidated net loss and comprehensive loss, cash flows, or basic and diluted net loss per share amounts for the periods presented.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Changes to the Company’s significant accounting policies as of and for the six months ended June 30, 2022, as compared to the significant accounting policies described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021, are described below.

Restructuring Expenses – Under ASC 420, Exit or Disposal Cost Obligations, the Company accrues liabilities for one-time termination benefits when the plan of termination, including sufficient detail regarding the type and amount of benefits to be received upon involuntary termination, has been communicated to the impacted employee. If the employees are required to render service beyond the minimum retention period until they are terminated in order to receive the benefits, a liability is recognized ratably over the future service period.

Leases –Under ASC 842, Leases, a contract is or contains a lease when, (1) explicitly or implicitly identified assets have been identified in the contract and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company will determine if an arrangement is a lease at inception of the contract. For all leases (finance and operating leases), as of the lease commencement date the Company recognizes a liability on the balance sheet for our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use. Leases with an initial term of 12 months or less meet the definition of a short-term lease which, as a result of the Company's accounting policy election, are not recorded on the balance sheet; and the lease expense for these leases is recognized on a straight-line basis over the lease term.

The lease liability for each lease is recognized at lease commencement based on the present value of the lease payments not yet paid. The initial balance of the right-of-use asset (“ROU asset”) for each lease is recorded at the amount equal to the initial measurement of lease liability, adjusted for balances of prepaid rent, lease incentives received and initial direct costs incurred.

Total lease payments are discounted to present value using the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate (which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease). Because the Company’s leases generally do not provide an implicit rate, the Company estimates its incremental borrowing rate using information available at the lease commencement date, including but not limited to our credit rating, lease term, and the currency in which the arrangement is denominated.

The Company's lease terms may include periods under options to extend (or not terminate the lease) when it is reasonably certain that we will exercise that option. The Company generally uses the base, non-cancelable lease term when determining the lease assets and liabilities. The Company includes the option to renew (or not terminate) in its determination of the lease term when the option is deemed to be reasonably assured to be exercised. The Company accounts for changes in the expected lease term as a modification of the original contract.

For operating leases, expense is generally recognized on a straight-line basis over the lease term. For any finance leases, interest on the lease liability is recognized using the effective interest method, while the right-of-use asset is amortized on a straight-line basis, from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

See further discussion regarding the Company's accounting for leases following under "Recently Adopted Accounting Pronouncements."

Recently Adopted Accounting Pronouncements

In February 2016, FASB issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in 'Leases (Topic 840)'. ASU 2016-02 modified lease accounting for lessees by requiring recognition of right-of-use assets and lease liabilities for all leases, other than the leases that meet the definition of short-term leases, at the option of the Company. The new lease accounting standard also requires enhanced disclosure about an entity's leasing arrangements, among other changes.

On January 1, 2022, the Company adopted the new lease accounting standard and recognized the cumulative effect of initially applying the guidance as an adjustment to the operating lease right-of-use assets and operating lease liabilities on its condensed consolidated balance sheet on January 1, 2022 without retrospective application to comparative periods. The Company's financial statements for the fiscal quarters and year ending December 31, 2022 and forward shall reflect the application of Topic 842.

Upon adoption:

•

the Company elected the package of practical expedients under Topic 842 which allows for not reassessing (1) whether existing contracts contain leases, (2) the lease classification for existing leases, and (3) whether existing initial direct costs meet the new definition;

•

the Company did not elect the use of hindsight to reassess lease term, or the practical expedient relating to accounting for land easements, which was not applicable to the Company;

•

the Company made an accounting policy election to not recognize right-of-use assets and lease liabilities that arise from short-term leases, which are defined as leases with a lease term of 12 months or less at the lease commencement date; and

•

the practical expedient in ASC Subtopic 842-10 to not separate non-lease components from lease components and instead account for each separate lease component and non-lease components associated with that lease component as a single lease component. The Company elected to apply this expedient to all classes of underlying assets.

Upon adoption, the Company recorded operating lease right-of-use assets and lease liabilities amounting to $43.6 million and $47.1 million, respectively, and corresponding reductions of $2.3 million to deferred rent, $1.2 million to lease incentive liability and $0.1 million to prepaid rent. The Company does not have any material finance leases. The adoption of the new lease accounting standard had no impact on cash provided by or used in operating, investing or financing activities in the Company’s condensed consolidated statements of cash flows.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 changes how entities account for convertible instruments and contracts in an entity’s own equity and simplifies the accounting for convertible instruments by removing the Beneficial Conversion Feature (“BCF”) and Cash Conversion Feature (“CCF”) separation models required under the current guidance. ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for equity classification. Lastly, ASU 2020-06 changes the existing diluted earnings per share (“EPS”) calculation for convertible debt that contains a CCF and increases disclosure requirements for convertible instruments. The ASU is effective for public business entities that meet the definition of a SEC filer, for fiscal years beginning after December 15, 2021,

including interim periods within those fiscal years. The adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and has since issued various amendments. The guidance and related amendments modify the accounting for credit losses for most financial assets and require the use of an expected loss model replacing the currently used incurred loss method. Under this model, entities are required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The guidance is effective for the Company for the year beginning after December 15, 2022. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s condensed consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU was issued to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the following: (1) recognition of an acquired contract liability; and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in this ASU require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination, whereas current GAAP requires that the acquirer measures such assets and liabilities at fair value on the acquisition date. The guidance is effective for the Company for the year beginning after December 15, 2023, with early adoption permitted. The Company will apply the guidance in ASU 2021-08 on a prospective basis for business combinations occurring during the fiscal year in which the Company adopts the amendments.

REORGANIZATION IN BANKRUPTCY

Voluntary Petition – On June 30, 2022, the Debtors filed voluntary petitions under Chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”).

On July 11, 2022, the United States Trustee for Region 3 appointed an official committee of unsecured creditors pursuant to section 1102 of the Bankruptcy Code. Generally, statutory committees and their legal representatives have a right to be heard on all matters that come before the Bankruptcy Court with respect to the Chapter 11 Cases. On July 20, 2022, the Debtors received approval of their customary motions filed on the Petition Date seeking court authorization to continue business operations during the Chapter 11 Cases, including the continued payment of employee wages and benefits.

On July 25, 2022, the Debtors entered into a secured super-priority debtor in possession credit, guaranty and security agreement (the “DIP Credit Agreement”) with Asurion, as lender, pursuant to which the Company borrowed $55.0 million in multiple drawings (the “DIP Loans”) from Asurion on terms and conditions consistent with those set forth in the DIP Credit Agreement. Upon entry by the Bankruptcy Court of the interim order authorizing and approving the DIP Loans on July 1, 2022, the Roll-Up Loans were converted to obligations under the DIP Credit Agreement, and the Company borrowed approximately $20.0 million ($22.5 million less the amount of the Roll-Up Loans) under the DIP Credit Agreement. The Company borrowed the remaining balance of the DIP Loans in the amount of $32.5 million on July 26, 2022, upon entry by the Bankruptcy Court of the final order authorizing and approving the DIP Credit Agreement. The proceeds of the DIP Loans were used by the Company to fund the costs of the administration of the Chapter 11 Cases (including professional fees and expenses and the Section 363 sale processes), for working capital and other general corporate purposes, and to fund interest, fees and other payments related to the DIP Loans and DIP Credit Agreement, in each case subject to the applicable orders of the Bankruptcy Court. The DIP Loans bore interest at a rate of 12% per annum, accruing monthly, and such interest was to be added to the principal amount of the loan and accrue additional interest thereafter and was to be payable in kind. The DIP Loans had a scheduled maturity date of September 30, 2022, and were to be due and payable in full in cash on such date or such earlier date as provided in the DIP Credit Agreement. As described below in “Asset Sale Agreement”,

the DIP Loans were paid in full and the DIP Credit Agreement was terminated as part of the 363 Sale (as defined below).

Asset Sale Agreement – On July 25, 2022, the Debtors entered into an Asset Purchase Agreement (the "Purchase Agreement") with Asurion to sell substantially all of their assets in the United States pursuant to a sale conducted under Section 363 of the U.S. Bankruptcy Code. The Purchase Agreement provides for aggregate consideration in the amount of up to $110.0 million subject to various deductions including a $23.8 million holdback amount (the “Holdback”). The Holdback is comprised of deferred revenue, customer chargebacks, post-closing residuals and inventory losses, and such amount earned, if any, will be released to the Company within eight months following closing of the transaction.

Pursuant to the Purchase Agreement, on August 31, 2022, the Debtors completed their sale of substantially all of their assets in the United States to Asurion for approximately $110.0 million, subject to various deductions including a $23.8 million holdback amount. The 363 Sale was conducted under the provisions of Section 363 and was approved by the Bankruptcy Court on August 12, 2022. In connection with the consummation of the 363 Sale, on August 31, 2022, the obligations under the DIP Loans were repaid in full and such credit agreements were terminated.

Liabilities Subject to Compromise – The accompanying unaudited condensed consolidated balance sheet as of June 30, 2022 includes amounts classified as liabilities subject to compromise, which represent liabilities that have been recorded at their estimated allowed claim amount.

The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each Debtor, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims that are not governmental units were required to file proofs of claim by the deadline, or the bar date, for general claims, which was set by the Bankruptcy Court as September 19, 2022. The governmental bar date has been set as December 27, 2022.

The Debtors are in the process of reviewing, investigating, and reconciling proofs of claims filed against the Debtors with the amounts reflected in their books and records. The Debtors, and/or their successors-in-interest pursuant to a Chapter 11 plan, will continue the claims reconciliation process and object, as necessary, to asserted claims, including on the basis that they have been amended or superseded by subsequently filed proofs of claims, are without merit, have already been paid, are overstated or should be adjusted or expunged for other reasons. As a result of this process, the Debtors may identify additional liabilities that will need to be recorded or reclassified to Liabilities subject to compromise. As part of its ongoing review, the Company is not aware of any claims that may require a material adjustment to the accounts and balances as reported as of June 30, 2022.

The following table summarizes the components of liabilities subject to compromise included on the unaudited condensed consolidated balance sheet as of June 30, 2022 (in thousands):


(in thousands)	June 30, 2022
Accounts payable	$	6,794
Related party payable to Enjoy UK		5,941
Accrued expenses and other current liabilities		2,528
Contract liability(1)		13,359
Related party unsecured promissory note		10,000
Operating lease liabilities		30,226
Liabilities subject to compromise	$	68,848

(1) Contract liability as of June 30, 2022 relates to customer prepayments and customer chargebacks. A contract liability is recognized when the Company receives payment in advance from a customer but the Company has not yet satisfied its performance obligation. In addition, certain of the Company’s contracts contain provisions that allow for a chargeback by the customer of the Company’s fee for selling the incremental service if the Consumer cancels such services within a specified period from the visit. Chargebacks are recognized as a reduction of revenue, in the period such visit occurs, using an estimate derived from historical information regarding Consumer cancelations of specific services as well as real-time information provided by the customer. Chargeback estimates have historically been presented as a reduction to accounts receivables, net, in the consolidated balance sheets as the contractual right of offset existed, however, the amount is presented as liability as of June 30, 2022 given there were no outstanding receivables from the customer at the end of the period.

The Company will continue to evaluate the amount and classification of our pre-petition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of liabilities subject to compromise may change.

As of June 30, 2022, the principal and accrued interest associated with the Bridge Loan (as further discussed in Note 10) were not classified as liabilities subject to compromise as this obligation is fully collateralized.

Reorganization Items, net – Due to the timing of the filing of the Chapter 11 Cases on June 30, 2022, the amount of Reorganization items for the three and six months ended June 30, 2022 is immaterial and have not been presented within the financial statements and related footnote disclosures. There was no cash paid for Reorganization items for the three and six months ended June 30, 2022.

Restructuring Expenses – During the six months ended June 30, 2022, the Company incurred legal and professional fees and executed a reduction in workforce in the United States, U.K. and Canada as part of its restructuring efforts. The reductions in workforce were considered terminations without cause under certain employee’s respective employment agreements, which entitled them to certain termination benefits.

For the three and six months ended June 30, 2022, the Company incurred a total of $13.0 million in costs of which $2.2 million is included within discontinued operations. The following table summarizes the Restructuring expenses:


	Continuing Operations		Discontinued Operations
Legal fees	$	4,985	$	—
Professional fees		2,460		—
Severance		3,397		—
Payments in lieu of notice termination benefits		—		2,153
Total restructuring expenses	$	10,842	$	2,153

There was no restructuring liability balance as of the beginning of period. A significant portion of legal fees and professional fees incurred during the three and six months ended June 30, 2022, was paid as of June 30, 2022. The severance remains outstanding as of June 30, 2022. The termination benefits related to payment in lieu of notice was paid on June 30, 2022.

Condensed Combined Debtor-In-Possession Financial Information – The following condensed combined financial statements include Legacy EJY, Inc., Legacy EJY Operating Corp. and Legacy EJY Subsidiary LLC, which are debtors under US Chapter 11. As of June 30, 2022, Enjoy Canada and Enjoy UK are considered non-Debtor entities.

The financial information for the debtor entities is presented below in an unaudited condensed combined balance sheet as of June 30, 2022:

CONDENSED COMBINED DEBTORS BALANCE SHEET

(Amounts in thousands)

(Unaudited)


	Debtor Entities
	June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	440
Restricted cash		2,530
Accounts receivable, net		1,153
Prepaid expenses and other current assets		7,670
Total current assets		11,793
Property and equipment, net		9,687
Operating lease right-of-use assets		27,157
Intangible assets, net		817
Other assets		4,749
Total assets	$	54,203
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	637
Payable to Enjoy Canada		390
Accrued expenses and other current liabilities		11,371
Bridge Loan		2,500
Total current liabilities		14,898
Derivative warrant liabilities		157
Liabilities subject to compromise		68,848
Total liabilities		83,903
Total stockholders’ equity		(29,700	)
Total liabilities and stockholders’ equity	$	54,203

The results of operations and cash flow activities for the debtor entities while in bankruptcy during the period ended June 30, 2022 are not material to the condensed consolidated financial statements of the Company.

Impairment of Assets – In connection with the winding down of the UK and Canadian operations, the Company recognized impairment of certain assets as shown below:


	Continuing Operations		Discontinued Operations
Accounts receivable, net	$	889	$	224
Prepaid expenses and other current assets		101		1,102
Property and equipment, net		1,709		3,574
Operating lease right-of-use assets		4,685		6,399
Other assets		443		1,508
Total assets impaired	$	7,827	$	12,807

REVERSE RECAPITALIZATION

On the Closing Date, the Company and MRAC consummated the merger transaction contemplated by the Merger Agreement, following approval at an extraordinary general meeting of the shareholders of ~~the Company~~MRAC held on October 13, 2021 (the “Special Meeting”), whereby Merger Sub merged with and into Legacy Enjoy, the separate corporate existence of Merger Sub ceasing and Legacy Enjoy being the surviving corporation and a wholly owned subsidiary of New Enjoy (the “Merger” and, together with the Domestication, the “Business Combination”).

Immediately prior to the effective time of the Merger, (1) each share of Legacy Enjoy’s (a) Series A preferred stock, par value $0.00001 per share, (b) Series B preferred stock, par value $0.00001 per share, and (c) Series C preferred stock, par value $0.00001 per share (collectively, the “Legacy Enjoy Preferred Stock”), converted into one share of common stock, par value $0.00001 per share, of Legacy Enjoy (the “Legacy Enjoy Common Stock” and, together with Legacy Enjoy Preferred Stock, the “Legacy Enjoy Capital Stock”) (such conversion, the “Legacy Enjoy Preferred Conversion”) and (2) all of the outstanding warrants to purchase shares of Legacy Enjoy Capital Stock were exercised in full, with the exception of the warrant to purchase 336,304 shares of Legacy Enjoy Preferred Stock held by TriplePoint Venture Growth BDC Corporation, which was converted into a warrant to purchase 115,875 shares of New Enjoy Common Stock at an exercise price of $6.90 per share (“TriplePoint Warrant”).

2021.

In connection with the execution of the Merger Agreement, ~~the Company~~MRAC entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) pursuant to which the PIPE Investors agreed to purchase, in the aggregate, approximately 8 million shares of New Enjoy ~~Common Stock~~common stock at ~~$10.00~~$10.00 per share for an aggregate commitment amount of approximately ~~$80~~$80 million (the “PIPE ~~Investment”~~Shares”). Pursuant to the Subscription Agreements, New Enjoy agreed to provide the PIPE Investors with certain registration rights with respect to the ~~shares purchased as part of the~~ PIPE ~~Investment.~~Shares. The PIPE ~~Investment~~investment was consummated substantially concurrently with the closing of the ~~Business Combination (the “Closing”).~~

Merger.

On the Closing Date, certain investors ~~(the “Backstop Investors”)~~ purchased, in the aggregate, 5,500,906 shares of New Enjoy ~~Common Stock~~common stock (the “Backstop Shares”), for a purchase price of ~~$10.00~~$10.00 per share and an aggregate purchase price of approximately ~~$55,009,060,~~$55,009,060, pursuant to the backstop agreements, dated September 13, 2021 (the ~~“Backstop Agreements”~~"Backstop Agreements"). Pursuant to the Backstop Agreements, New Enjoy agreed to provide certain registration rights to the Backstop Investors with respect to the Backstop Shares.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Liquidity~~

~~The Company has historically funded its operations primarily by equity financings and working capital loans~~

Immediately prior to the Business Combination. As of September 30, 2021, the Company’s existing sources of liquidity included cash and cash equivalents of $833,600. The Company has a limited history of operations and has incurred negative cash flows from operating activities and loss from operations in the past as reflected in the accumulated deficit of $40.8 million as of September 30, 2021. The Company expects to continue to incur operating losses due to the investments it intends to make in its business. Upon completioneffective time of the ~~Business Combination,~~Merger, (1) each share of Legacy Enjoy’s (a) Series A preferred stock, par value $0.00001 per share, (b) Series B preferred stock, par value $0.00001 per share, and (c) Series C preferred stock, par value $0.00001 per share (collectively, the ~~Company obtained adequate cash proceeds that will be sufficient to fund operating~~“Enjoy Preferred Stock”), converted into one share of common stock, par value $0.00001 per share, of Legacy Enjoy and, capital expenditure requirements and mitigate the relevant conditions that raise substantial doubt about the Company’s ability to continue as a going concern through at least 12 months from the date of issuance of these financial statements.

~~Risks and Uncertainties~~

~~Management continues to evaluate the impact of the~~

~~COVID-19~~

pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Note 2 - Summary of Significant Accounting Policies~~

~~Basis of presentation~~

~~The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity~~together with ~~accounting principles generally accepted in the United States of America (“GAAP”~~Enjoy Preferred Stock, (the “Enjoy Capital Stock”) ~~for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include~~(2) all of the ~~information and footnotes required by GAAP. MRAC Merger Sub Corp. during~~outstanding warrants to purchase shares of Enjoy Capital Stock were exercised in full, with the three and nine months ended September 30, 2021 did not engage in any economic activity and is not consolidated in the accompanying unaudited condensed consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statementexception of the ~~balances and results for~~warrant to purchase 336,304 shares of Enjoy Preferred Stock held by TriplePoint Venture Growth BDC Corporation, which was converted into a warrant to purchase 115,875 shares of New Enjoy common stock at an exercise price of $6.90 per share.

At the ~~periods presented. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative~~time of the ~~results that may be expected through December 31, 2021~~Merger, eligible Legacy Enjoy equity holders received or ~~any future period.~~

~~The accompanying unaudited condensed consolidated financial statements should be read in conjunction with~~had the ~~audited financial statements and notes thereto included in the Form~~

~~10-K/A~~

~~filed by the Company with the SEC on May 13, 2021.~~

~~Revision~~right to ~~Previously Reported Financial Statements~~

~~In preparation~~receive shares of the Company’s unaudited condensed consolidated financial statements as of and for the quarterly period ended September 30, 2021, the Company concluded it should revise its financial statements to classify allMRAC’s Class A ordinary shares ~~subject~~at a deemed value of $10.00 per share after giving effect to ~~possible redemption~~the exchange ratio of approximately 0.34456 as defined in ~~temporary equity. In accordance with~~ the ~~SEC~~Merger Agreement (“Exchange Ratio”). Accordingly, immediately after giving effect to the Merger, the Backstop investment and ~~its staff’s guidance on redeemable equity instruments in ASC 480, paragraph~~

~~10-S99,~~

~~redemption provisions not solely within~~ the ~~control~~PIPE investment, there were 119,621,866 shares of common stock and 15,776,292 warrants outstanding.

As a result of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A ordinary shares in permanent equity, or total shareholders’ equity. AlthoughMerger transaction, the Company ~~did not specify a maximum redemption threshold, as~~raised gross proceeds of ~~September 30, 2021, its memorandum and articles of association provided that~~$171.0 million, including the ~~Company would not redeem its public shares in an amount that would cause its net tangible assets to be less than~~

~~$5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part~~contribution of net ~~tangible assets. Effective with these condensed consolidated financial statements, the Company revised this interpretation to include temporary equity~~cash held in ~~net tangible assets. Accordingly, effective with this filing, the Company presents all redeemable Class A ordinary shares as temporary equity and to recognize accretion~~MRAC’s trust account from ~~the~~its initial ~~book value to redemption value at the time~~public offering of ~~its Initial Public Offering. The change in the carrying value of the Class A ordinary shares subject to possible redemption at the Initial Public Offering resulted in a decrease of approximately $6.0~~$36.0 million ~~in additional~~

~~paid-in~~

~~capital and a decrease of approximately $34.1 million to accumulated deficit,~~ as well as ~~a reclassification~~additional proceeds from the PIPE Investors and Backstop Investors. The net proceeds were $112.6 million after repayment of 4,006,429 Class A ordinary shares from permanent equity to temporary equity. The Company will present this revision in a prospective manner in all future filings. Under this approach, the previously issued financial statement included as an exhibitcertain loans and transaction costs, of which $10.4 million was direct and incremental to the ~~Company’s Form~~

~~8-K~~

~~filed with~~merger which was accounted for as contra-equity upon the ~~SEC on December 23, 2020, and the previously issued financial statements on Form~~

~~10-K/A~~

~~and Form~~

~~10-Qs~~

~~will not be amended, but historical amounts presented in the current and future filings will be recast to be consistent with the current presentation, and an explanatory footnote will be provided.~~

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~The impact of the revision~~Closing Date. All periods prior to the audited consolidated balance sheet as of December 31, 2020 is a reclassification of $43.3 million from total shareholders’ equity to Class A ordinary shares subject to possible redemption. The impact ofMerger have been retrospectively adjusted using the revision to the unaudited condensed consolidated balance sheets as of March 31, 2021, and June 30, 2021, is a reclassification of $39.2 million and $42.4 million, respectively, from total shareholders’ equity to Class A ordinary shares subject to possible redemption. There is no impact to the reported amounts for total assets, total liabilities, cash flows, net income (loss), or the net income (loss) per share. In connection with the change in presentationExchange Ratio for the Class A ordinary shares subject to possible redemption, the Company has revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classesequivalent number of shares ~~share pro rata in~~outstanding immediately after the ~~income and losses of~~Closing to reflect the ~~Company.~~reverse recapitalization.

FAIR VALUE MEASUREMENTS

~~Emerging growth company~~

As an emerging growth company, the Company 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 with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports 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.

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 an emerging growth 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 unaudited condensed consolidated financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

~~Use of 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues 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 unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these unaudited condensed consolidated financial statements is the determination of the fair value of the warrant liability. Accordingly, the actual results could differ significantly from those estimates.

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. As of September 30, 2021 and December 31, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

~~Principles of Consolidation~~

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Cash and Cash Equivalents~~

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did 0t have any cash equivalents as of September 30, 2021 and December 31, 2020.

~~Fair Value of Financial Instruments~~

~~The fair value of~~following tables summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis in the condensed consolidated financial statements (in thousands):


	Fair Value Measurements at June 30, 2022 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Derivative warrant liabilities - Public	$	94	$	—	$	—	$	94
Derivative warrants liabilities - Private		—		63		—		63
Total financial liabilities	$	94	$	63	$	—	$	157

	Fair Value Measurements at December 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Derivative warrant liabilities - Public	$	3,924	$	—	$	—	$	3,924
Derivative warrants liabilities - Private		—		2,653		—		2,653
Total financial liabilities	$	3,924	$	2,653	$	—	$	6,577

The “Public Warrants” are the redeemable warrants (including those that underlie the units) that were offered and sold by MRAC in its initial public offering and the “Private Warrants” or “Private Placement Warrants” are the warrants issued by MRAC pursuant to a private placement substantially concurrently with the consummation of MRAC’s initial public offering which ~~qualify~~were then assumed by the Company upon the Merger.

The estimated fair value of the public warrants is disclosed as ~~financial instruments under~~a Level 1 fair value measurement as the ~~FASB ASC Topic 820, “Fair Value Measurements” approximates~~public warrants are publicly traded. The estimated fair value of the private warrants is disclosed as a Level 2 fair value measurement as the key inputs to the valuation model are observable from the public warrants' listed price.

The carrying amounts ~~represented~~of the Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities, related party liabilities, and Bridge Loan approximate their fair values due to their short maturities.

As of June 30, 2022 and December 31, 2021, the Company had no transfers in ~~the unaudited condensed consolidated balance sheets.~~

~~Fair Value Measurements~~

~~Fair value is defined as the price that would be received for sale~~or out of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

~~Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;~~

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

Level 3 defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

~~In some circumstances, the inputs used to measure fair value might be categorized within different levels~~ of the fair value ~~hierarchy. In those instances, the~~hierarchy of its assets measured at fair ~~value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.~~

~~Offering Costs Associated with the Initial Public Offering~~

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities are expensed as incurred, presented as

~~non-operating~~

expenses in the unaudited condensed consolidated statements of operations. Offering costs associated with the Public Shares were charged against the carrying value of the Class A ordinary shares subject to redemption upon the completion of the Initial Public Offering. The underwriter also reimbursed approximately $3.0 million to the Company to cover for expenses in connection with the Initial Public Offering.

~~Derivative Warrant Liabilities~~

value.

The Company does not use derivative instruments to hedge its exposures to cash flow, market, or foreign currency risks. ~~The Company~~Management evaluates all of ~~its~~the Company’s financial instruments, including issued ~~stock~~warrants to purchase ~~warrants,~~MRAC’s Class A ordinary shares, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ~~FASB~~ ASC ~~Topic 815, “Derivatives and Hedging” (“ASC 815”).~~815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is

re-assessed

at the end of each reporting period.

~~The~~

All of the Company’s outstanding warrants ~~issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants~~ are recognized as derivative ~~warrant~~ liabilities in accordance with ASC ~~815.~~815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to

re-measurement

at each balance sheet date until exercised, and any change in fair value is recognized as other expense, net in the ~~Company’s unaudited condensed~~ consolidated statements of ~~operations.~~operations and comprehensive loss. The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently beenpublic warrants is measured based on the listed market price of such warrants. The fair value of the ~~Private Placement Warrants has been subsequently~~private placement warrants is estimated based on the listed market price of the ~~Public Warrants.~~public warrants.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following (in thousands):



	June 30, 2022			December 31, 2021
Leasehold improvements	$	14,572		$	13,590
Furniture and fixtures		2,218			2,006
Office equipment		790			537
Computer equipment		107			107
Vehicles		66			66
Vehicle equipment		283			283
		18,036			16,589
Less: accumulated depreciation		(6,640	)		(5,322	)
Less: impairment		(1,709	)		—
Property and equipment, net	$	9,687		$	11,267

Total depreciation expense related to property and equipment, net was $0.9 million and $0.6 million for the three months ended June 30, 2022 and 2021, respectively, and $1.7 million and $1.1 million for the six months ended June 30, 2022 and 2021, respectively.

In connection with the winding down of the Canadian and UK operations, property and equipment amounting to $1.7 million and $3.6 million related to continuing operations and discontinued operations, respectively, were fully impaired on June 30, 2022 (see Note 3 for further details). As discussed in Notes 1 and 16, Enjoy UK was deconsolidated effective June 30, 2022. The amount of property and equipment, net, as of December 31, 2021 related to Enjoy UK is disclosed in Note 16.

On August 31, 2022, substantially all of the remaining property and equipment in the United States were transferred to Asurion as part of the 363 Sale.

INTANGIBLE ASSETS, NET

~~Table~~

Intangible assets, net consist of ~~Contents~~the following (in thousands):



	June 30, 2022			December 31, 2021
Domain Name	$	1,500		$	1,500
Less: accumulated amortization		(683	)		(633	)
Intangible assets, net	$	817		$	867

Total amortization expense was $25 thousand for the three months ended June 30, 2022 and 2021, respectively, and $50 thousand each for the six months ended June 30, 2022 and 2021, respectively.

On August 31, 2022, the intangible assets were transferred to Asurion as part of the 363 Sale.

~~ENJOY TECHNOLOGY, INC.~~LEASES

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Class A Ordinary Shares Subject~~

The Company leases real estate, vehicle fleet and some equipment in the U.S. and internationally. The Company's real estate leases, which are responsible for the majority of the Company's aggregate ROU asset and liability balances, include leases for office space and other facilities. As of June 30, 2022, the Company's real estate and non-real estate leases have remaining lease terms ranging from 12 months to ~~Possible Redemption~~

~~Class A Ordinary Shares subject~~6 years. Some of these leases contain options that allow the Company to ~~mandatory redemption (if any)~~extend or terminate the lease agreement. All of the Company's leases are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A Ordinary Shares (including Class A Ordinary Shares that feature redemption rights that are either within the controloperating leases except for certain immaterial equipment finance leases.

The components of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A Ordinary Shares are classified as shareholders’ equity. The Class A Ordinary Shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021 and December 31, 2020, 37,375,000 Class A Ordinary Shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s unaudited condensed consolidated balance sheets.

~~Effective with the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional~~

~~paid-in~~

~~capital (to the extent available) and accumulated deficit.~~

~~Income Taxes~~

~~Deferred tax assets and liabilities are recognized for the estimated future tax conseque~~

ces attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those tempor

ry differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

~~FASB ASC Topic 740 pres~~

ribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must b

~~more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of S~~

~~ptember 30, 2021. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company rec~~

~~gnizes accrued interest and penalties~~total lease expense related to ~~unrecognized tax benefits~~operating leases are as income tax expense. No amounts were accrued for the payment of interest and penalties as of September 30, 2021. 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 is subject to income tax examinations by major taxing authorities since inception.follows (in thousands):


	For the Three Months Ended June 30, 2022			For The Six Months Ended June 30, 2022
Operating lease cost	$	4,313		$	8,540
Variable lease cost		915			1,807
Short-term lease cost		1,830			3,644
Total		7,058			13,991
Less: Discontinued operations		(1,367	)		(2,723	)
Continuing operations	$	5,691		$	11,268

There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman Islands income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed consolidated financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

~~Net Loss per Ordinary Share~~

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net loss per ordinary share is calculated by dividing the net loss by the weighted average shares of ordinary shares outstanding for the respective period.

The calculation of diluted net loss does not consider the effect of the warrants issued in connection with the Initial Public Offering and Private Placement to purchase an aggregate of 15,660,417 shares of Class A ordinary shares in the calculation of diluted income per share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~The following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net loss per share for each class of ordinary shares:~~

For the Three Months Ended

September 30, 2021

For the Nine Months Ended

September 30, 2021


Class A

Class B

Class A

Class B

Basic and diluted net loss per ordinary share:
Numerator:

Allocation of net loss    (2,710,417 )    (677,604 )    (1,603,056 )    (400,764 )
Denominator:

Basic and diluted weighted average ordinary shares outstanding    37,375,000    9,343,750    37,375,000    9,343,750

Basic and diluted net loss per ordinary share    $ (0.07)    $ (0.07)    $ (0.04)    $ (0.04)

~~Recent Issued Accounting Standards~~

~~In August 2020, the FASB issued Accounting Standard Update (the “ASU”)~~

~~No. 2020-06,~~

~~Debt-Debt with Conversion and Other Options (Subtopic~~

~~470-20)~~

~~and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic~~

~~815-40):~~

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021 using a modified retrospective method for transition. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.

~~Note 3 - Initial Public Offering~~

On December 17, 2020, the Company consummated its Initial Public Offering of 37,375,000 Units, including 4,875,000 Over-Allotment Units at $10.00 per Unit, generating gross proceeds of approximately $373.8

Rent expense was $3.0 million and ~~incurring offering costs of approximately $19.9~~$5.6 million ~~of which approximately $13.1 million was deferred underwriting commissions and $0.5 million was deferred legal fees.~~

~~Each Unit consists of one Class A ordinary share, and~~

~~one-fourth~~

of one redeemable warrant (each, a “Public warrant”). Each Public warrant entitles the holder to purchase 1 Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 7).

~~Note 4 - Related Party Transactions~~

~~Founder Shares~~

On October 28, 2020, the Sponsor paid $25,000 to cover certain expenses on behalf of the Company in exchange for the issuance of 10,062,500 Class B Ordinary Shares, par value $0.0001, (the “Founder Shares”). On November 10, 2020, the Sponsor surrendered 718,750 Founder Shares to the Company for 0 consideration, resulting in an aggregate of 9,343,750 Founder Shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share surrender. The Sponsor agreed to forfeit up to 1,218,750 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriter so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. On December 15, 2020, the underwriter fully exercised its over-allotment option; thus, these Founder Shares were0 longer subject to forfeiture.

The initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (a) one year after the completion of the Business Combination and (b) upon completion of the Business Combination, (x) if the last reported sale price of the Class A Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any

~~30-trading~~

day period commencing at least 150 days after the Business Combination or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the Business Combination that results in all of the shareholders having the right to exchange their Class A Ordinary Shares for cash, securities or other property.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Private Placement Warrants~~

Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,316,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of approximately $9.5 million.

Each whole Private Placement Warrant is exercisable for one whole Class A Ordinary Share at a price of $11.50 per share. A portion of the proceeds from the Private Placement Warrants was 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 Private Placement Warrants will expire worthless. The Private Placement Warrants will be

~~non-redeemable~~

~~and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.~~

The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Business Combination.

~~Related Party Loans~~

On October 28, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover for expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). This loan was

~~0n-interest~~

bearing and payable upon the completion of the Initial Public Offering. Through December 17, 2020, the Company borrowed approximately $128,000 under the Note. The Company repaid the Note in full upon closing of the Initial Public Offering and no longer has access to this facility.

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“working capital loans”). If the Company completes a Business Combination, the Company would repay the working capital loans out of the proceeds of the Trust Account released to the Company. Otherwise, the working capital loans would be repaid only out of funds held outside the Trust Account. 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. Except for the foregoing, the terms of such working capital loans, if any, have not been determined and no written agreements exist with respect to such loans. The working capital loans would either be repaid upon completion of a Business Combination, without interest, or, at the lenders’ discretion, up to $1.5 million of such working capital loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of the September 30, 2021 and December 31, 2020, the Company had 0 borrowings under the working capital loans.

~~Administrative Support Agreement~~

~~Commencing on December 14, 2020, the Company agreed to reimburse the Sponsor for~~

~~out-of-pocket~~

expenses through the completion of the Business Combination or the Company’s liquidation. Office space and administrative support services provided to the Company by the Sponsor will be provided free of charge. In addition, executive officers and directors, or any of their respective affiliates, including Ricketts SPAC Investment LLC and Raine Securities LLC and other entities affiliated with Marquee and The Raine Group, will be reimbursed for any reasonable fees and

~~out-of-pocket~~

expenses incurred in connection with activities on the Company’s, behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or their affiliates. Any such payments prior to a Business Combination will be made using funds held outside the Trust Account. As of and for the three and ~~nine~~six months ended ~~September~~June 30, 2021, ~~there~~respectively. The Company has updated the amount of rent expense for the six months ended June 30, 2021 disclosure to include fleet vehicle lease expense that was previously inadvertently omitted.

The short-term lease cost disclosed above reasonably reflects the Company’s ongoing short-term lease commitments.

The following table provides balance sheet information related to the Company's operating leases (in thousands):


	June 30, 2022
Assets
Operating lease right-of-use assets	$	27,157

Liabilities
Operating lease liabilities, current	$	1,255
Operating lease liabilities, non-current		3,718
Total operating lease liabilities	$	4,973

Total operating lease liabilities amounting to $30.2 million as of June 30, 2022 were ~~0 amounts incurred~~included as liabilities subject to compromise (see Note 3 for further details).

The following table provides supplemental cash flow information related to the Company's operating leases (in thousands):


	For The Six Months Ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Cash flow from financing activities	$	—
Cash flow from operating activities		3,416
Supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets:
Lease liabilities arising from obtaining new ROU assets during the period		3,730
Weighted average remaining lease term		3.18
Weighted average discount rate		3.73	%

The maturities of lease liabilities as of June 30, 2022 were as follows (in thousands):


For the year	Operating leases
2022	$	6,558
2023		10,356
2024		9,218
2025		7,179
2026		4,163
Thereafter		480
Total undiscounted lease payments		37,954
Less: portion representing interest		(2,755	)
Net		35,199
Operating lease liability presented under liabilities subject to compromise		(30,226	)
Total lease liability		4,973

Operating lease right-of-use assets amounting to $4.7 million and $6.4 million related to continuing operations and discontinued operations, respectively, were fully impaired on June 30, 2022 (see Note 3 for further details).

As part of the Chapter 11 Cases and 363 Sale, many of the Debtors’ leases have been assumed and assigned to Asurion or otherwise rejected pursuant to Section 365 of the Bankruptcy Code, which was approved by the Bankruptcy Court.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):



	June 30, 2022		December 31, 2021
Accrued salaries and wages	$	10,656	$	7,342
Deferred rent		—		3,524
Accrued payables		261		4,238
Accrued tax		177		101
Accrued vacation and benefits		1,180		1,181
Accrued other		2		112
Total accrued expenses and other current liabilities	$	12,276	$	16,499

As discussed in Notes 1 and 16, Enjoy UK was deconsolidated effective June 30, 2022. The amount of accrued ~~under the terms~~expenses and other current liabilities as of ~~such agreement.~~

December 31, 2021 related to Enjoy UK is disclosed in Note ~~5 - Commitments and Contingencies~~16.

10.

~~Registration~~SHORT-TEM DEBT

Related Party Unsecured Promissory Note

On May 11, 2022, the Company issued a promissory note in an aggregate principal amount of $10.0 million (the “Note”) to Ron Johnson, chair of the Company’s board of directors, former Chief Executive Officer, and ~~Shareholder Rights~~

a beneficial owner of greater than 5% of the Company’s common stock (the “Holder”). The ~~holders~~Note was approved by the Audit Committee of ~~Founder Shares, Private Placement Warrants~~the Company’s board of directors pursuant to the Company’s Related Party Transaction Policy. The Note has a scheduled maturity date of November 11, 2022 and ~~warrants that~~is repayable upon written demand of the Holder at any time on or after such date. The Note bears interest at a rate of 10% per annum, compounding quarterly and payable at maturity. The Company may ~~be issued upon conversion~~prepay the Note at any time without premium or penalty. The Note contains customary representations and warranties and events of ~~working capital loans (and any Class A Ordinary Shares issuable~~default, including certain “change of control” events involving the Company. The Note does not restrict the incurrence of future indebtedness by the Company, and shall become subordinated in right of payment and lien priority upon the ~~exercise~~request of any future senior lender.

The Note was originally secured by substantially all of the Private Placement Warrants and warrants that may be issued upon conversion of working capital loans) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon completionassets of the Initial Public Offering. These holders were entitled to certain demand and “piggyback” registration rights. However, the registration and shareholder rights agreement provide that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable

~~lock-up~~

~~period for the securities to be registered. The Company will bear the expenses incurred in~~Company. In connection with the ~~filing~~Bridge Credit Agreement on June 29, 2022 as further discussed below, the Company entered into an amended and restated promissory note with the Holder, which amended and restated the Note to, among other things, remove the collateral pledge and subordinate the note to indebtedness owing to the lender. The Holder’s security interest in the assets of ~~any~~the Company granted under the Note was terminated thereafter, and as a result the amount of unsecured promissory note has been included in liabilities subject to compromise as of June 30, 2022 (see Note 3 for further details).

The interest expense related to the Note for the three and six months ended June 30, 2022 was $0.1 million.

Bridge Loan

On June 29, 2022, the Debtors, as borrowers, entered into a senior secured credit, guaranty and security agreement (the “Bridge Credit Agreement”) with Asurion, as lender, pursuant to which the Debtors borrowed $2.5 million (the “Bridge Loan”) from Asurion. The Bridge Loan had a scheduled maturity date of July 8, 2022 and was due and payable in full on such ~~registration statements.~~

~~Table~~date or such earlier date as provided in the Bridge Credit Agreement unless the Bridge Loan was converted to loans under the DIP Credit Agreement. The Bridge Loan bore interest at a rate of ~~Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Underwriting Agreement~~

12% per annum, compounded monthly, and such interest was to be added to the principal amount of the Bridge Loan and accrue additional interest thereafter and was payable in kind. The Company ~~granted~~and all of its domestic subsidiaries were jointly and severally liable for the ~~underwriter a~~

~~45-day~~

~~option from~~Bridge Loan, and the ~~final prospectus relating~~Bridge Loan was secured by all assets of the Company and its domestic subsidiaries. On July 1, 2022, the

outstanding amount of the Bridge Loan was converted to obligations under the DIP Credit Agreement (the “Roll-Up Loans”). See discussions in Note 3.

The interest expense related to the ~~Initial Public Offering~~Bridge Loan for the three and six months ended June 30, 2022 was $2.0 thousand.

11.

STOCK WARRANTS

Warrant liabilities consist of the following (in thousands):


	June 30,		December 31,
	2022		2021
Public Warrants	$	94	$	3,924
Private Placement Warrants		63		2,653
Total warrant liabilities	$	157	$	6,577

The Company recognized a $3.8 million gain for the three months ended June 30, 2022 and $6.4 million gain for the six months ended June 30, 2022 related to purchase up to 4,875,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On December 15, 2020, the underwriter fully exercised its over-allotment option.

a change in fair value of warrant liabilities. The ~~underwriter was entitled to an underwriting discount of $0.20 per unit, or approximately $7.5 million~~gain is recorded under other expense, net in the ~~aggregate, paid upon the closing~~consolidated statements of ~~the Initial Public Offering. The underwriter also reimbursed approximately $3.0 million to the Company to cover for expenses in connection with the Initial Public Offering.~~

~~In addition, $0.35 per unit, or approximately $13.1 million in the aggregate will be payable to the underwriter for deferred underwriting commissions~~operations and $0.01 per unit, or approximately $0.5 million in the aggregate will be payable to the attorneys for deferred legal fees. The deferred fees will become payable to the underwriter and attorneys from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

~~Note 6 – Class A Ordinary Shares Subject to Possible Redemption~~

The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 500,000,000 ordinary shares with a par value of $0.0001 per share. As of September 30, 2021, there were 37,375,000 Class A ordinary shares outstanding, all of which were subject to possible redemption.

~~Class A ordinary shares subject to possible redemption reflected on the condensed consolidated balance sheet is reconciled on the following table:~~

Gross proceeds    $ 373,750,000
Less:
Fair value of Public Warrants at issuance    (14,015,630 )
Offering costs allocated to Class A ordinary shares subject to possible redemption    (19,939,990 )
Plus:
Accretion on Class A ordinary shares subject to possible redemption amount    33,955,620

Class A ordinary shares subject to possible redemption    $ 373,750,000

~~Note 7 - Derivative Warrant Liabilities~~

~~As of September 30, 2021 and December 31, 2020, the Company has 9,343,750 and 6,316,667~~ comprehensive loss.

Public Warrants and Private Placement Warrants ~~respectively, outstanding.~~

~~Warrants may only be exercised for a whole number~~— As of ~~shares. The warrants will become exercisable on the later of (a)~~June 30, ~~days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that~~2022, the Company has ~~an effective registration statement under the Securities Act covering the Class A Ordinary Shares issuable upon exercise of the~~9,343,750 public warrants and ~~a current prospectus relating to them is available (or the Company permits holders to exercise their~~6,316,667 private placement warrants ~~on a cashless basis and such cashless exercise is exempt from registration under the Securities Act).~~ outstanding.

The Company agreed that as soon as practicable, but in no event later than twenty (20) business days after the closing of the Business Combination, the Company will use its commercially reasonable efforts to file with the SEC a registration statement covering the Class A Ordinary Shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A Ordinary Shares until the warrants expire or are redeemed, as specified in the warrant agreement

provided that if the Class A Ordinary Shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement. If a registration statement covering the Class A Ordinary Shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Our~~Company’s warrants have an exercise price of ~~$11.50~~$11.50 per ~~whole~~ share, subject to adjustment, and will expire on October 15, 2026, five years after the completion of ~~a Business Combination~~the Merger, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A Ordinary Shares or equity-linked securities for capital raising purposes in connection with the closing of the Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by the Company and, (i) in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the initial shareholders or such affiliates, as applicable, prior to such issuance, and (ii) to the extent that such issuance is made to Marquee and The Raine Group or their respective affiliates, without taking into account the transfer of Founder Shares or private Placement warrants (including if such transfer is effectuated as a surrender to the Company and subsequent reissuance by to the Company) by the Sponsor in connection with such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from

uch issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Business Combination on the date of the completion of the Business Combination (net of redemptions), and (z) the volume-weighted average trading price of the Class A Ordinary Shares during the 20 trading day period starting on the trading day prior to the day on which the Company completes its Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices described under “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption of warrants when the price per Class A Ordinary Share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 100% and 180% of the hig

~~er of the Market Value and the Newly Issued Price, respectively.~~

Redemption of warrants when the price per ~~Class A Ordinary Share~~share equals or exceeds ~~$18.00.~~

$18.00.

~~Once the warrants become exercisable, the~~•

The Company may redeem the outstanding warrants (except with respect to the ~~Private Placement Warrants)~~private placement warrants):

•

in whole and not in part;

•

at a price of ~~$0.01~~$0.01 per warrant;

•

upon a minimum of 30 days’ prior written notice of redemption; and

•

if, and only if, the last reported sale price of ~~Class A Ordinary Shares~~our common stock for any 20 trading days within a

-trading

day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds ~~$18.00~~$18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like).

The Company will not redeem the warrants as described above unless a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering the ~~Class A Ordinary Shares~~common stock issuable upon exercise of the warrants is effective and a current prospectus relating to ~~those Class A Ordinary Shares~~that common stock is available throughout the

30-day

redemption period. If and when the warrants become redeemable by the Company, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable

state securities laws.

Except as set forth below, none of the ~~Private Placement Warrants~~private placement warrants will be redeemable by the Company so long as they are held by ~~the~~Marquee Raine Acquisition Sponsor LP (the "Sponsor) or its permitted transferees.

Redemption of warrants when the price per ~~Class A Ordinary Share~~share equals or exceeds ~~$10.00.~~

~~Once the warrants become exercisable, the~~$10.00.

The Company may redeem the outstanding warrants (except as described herein with respect to the ~~Private Placement Warrants)~~private placement warrants):

•

in whole and not in part;

•

at ~~$0.10~~$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption

provided

that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of ~~the Class A Ordinary Shares;~~our common stock;

•

if, and only if, the Reference Value equals or exceeds ~~$10.00~~$10.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and

•

if the Reference Value is less than ~~$18.00~~$18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), the ~~Private Placement Warrants~~private placement warrants must also concurrently be called for redemption on the same terms (except as described herein with respect to a holders’ ability to cashless exercise its warrants) as the outstanding warrants, as described above.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The “fair market value” of ~~the Class A Ordinary Shares~~our common stock for the above purpose shall mean the volume-weighted average price of ~~Class A Ordinary Shares~~our common stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 ~~Class A Ordinary Shares~~ shares of common stock per warrant (subject to adjustment).

12.

IfCOMMON STOCK

As of June 30, 2022 and December 31, 2021, the Company had ~~not completed the Business Combination within the Combination Period~~common stock outstanding of 121,803,181 shares and119,624,679 shares, respectively. As of both June 30, 2022 and December 31, 2021, the Company ~~liquidated the funds held in the Trust Account,~~was authorized to issue 500,000,000 shares of common stock.

Each share of common stock is entitled to one vote. The holders of ~~warrants would not~~common stock are also entitled to receive ~~any~~dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. No such ~~funds~~dividends have been declared since the Company’s inception.

As of each balance sheet date, the Company had reserved shares of common stock for issuance in connection with the following:



	June 30, 2022		December 31, 2021
Exercise of Public Warrants and Private Placement Warrants		15,660,417		15,660,417
Warrants to purchase redeemable convertible and common stock preferred stock		—		115,875
Awards outstanding under the equity incentive plans		18,405,234		14,401,983
Awards available for future grant under the equity incentive plans		9,256,261		6,673,256
Awards available for future grant under the employee stock purchase plan		3,881,838		2,383,437
Total		47,203,750		39,234,968

13.

STOCK-BASED COMPENSATION

2014 Equity Incentive Plan

In June 2014, the Company adopted the 2014 Equity Incentive Plan (“the 2014 Plan”), which provided for the issuance of incentive stock options, nonstatutory stock options, stock appreciation rights, and restricted stock to eligible participants. Options granted under the 2014 Plan may be either incentive stock options or nonqualified stock options. Incentive stock options (ISO) may be granted only to the Company’s employees (including officers and directors). Nonqualified stock options (NSO) may be granted to the Company’s employees and consultants.

Under the 2014 Plan, options to purchase common stock awards were granted at no less than 100% of the fair value of the Company’s common stock on the date of the grant, as determined by the board of directors (100% of fair value for incentive stock options and 110% of fair value in certain instances). All options granted through June 30, 2022 and December 31, 2021 have been at 100% of the fair value of the Company’s common stock. Options generally vest with respect to ~~their warrants, nor would they receive any distribution from the Company’s assets held outside~~25% of the ~~Trust Account~~shares one year after the options’ vesting commencement date, and the remainder vest in equal monthly installments over the following 36 months or the entire options vest in equal monthly installments over 48 months. Options generally vest over a four-year period and must be exercised within ten years after grant. In the event of voluntary or involuntary termination of employment with the ~~respect~~Company for any reason, with or without cause, all unvested options are forfeited and all vested options must be exercised within a 90-day period or they are forfeited, although the board of directors can approve an extension of the exercise period beyond the 90 day limit. The Company has not granted any stock appreciation rights as of June 30, 2022 and December 31, 2021.

Upon adoption of the 2021 Equity Incentive Plan, the 2014 Plan was terminated, and no further grants will be made under the 2014 Plan. Any awards granted under the 2014 Plan will remain subject to ~~such warrants. Accordingly,~~ the ~~warrants may expire worthless. On~~terms of the 2014 Plan and the applicable award agreement.

2021 Equity Incentive Plan

In October ~~15,~~ 2021, the Company ~~obtained adequate~~adopted the 2021 Equity Incentive Plan (the "2021 Plan"), which provided for the issuance of incentive stock options, nonstatutory stock options, stock appreciation rights, and restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to eligible participants. Options granted under the 2021 Plan may be either incentive stock options or nonqualified stock options. Incentive stock options (ISO) may be granted only to the Company’s employees (including officers and directors). Nonqualified stock options (NSO) may be granted to the Company’s employees and

consultants.

As of June 30, 2022, only restricted stock units have been granted under the 2021 Plan. A restricted stock unit award may be settled by cash, ~~proceeds~~delivery of shares of the Company’s common stock, a combination of cash and shares as determined by the board of directors, or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement or by the board of directors, restricted stock unit awards that have not vested will be ~~sufficient~~forfeited once the participant’s continuous service ends for any reason.

2021 Employee Stock Purchase Plan

In October 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP will allow eligible employees to ~~fund operating and capital expenditure requirements and mitigate the relevant conditions that raise substantial doubt about~~purchase shares of the Company’s ~~ability~~common stock at a discounted price, through payroll deductions of up to ~~continue~~IRS allowable limit per calendar year. Once an offering date to purchase shares has been established, the purchase price will be set at the lower of (i) an amount equal to 85% of the fair value of the shares of the Company’s common stock on the offering date or (ii) 85% of the fair value of the shares of the Company’s common stock on the applicable purchase date. As of June 30, 2022, the Company has not granted any purchase rights under the ESPP.

The Company recognized stock-based compensation expense on all awards in the following categories in the consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of revenue	$	24	$	37	$	69	$	53
Operations and technology		1,330		263		2,649		489
General and administrative		3,675		732		6,917		1,368
Stock-based compensation expense - continuing operations		5,029		1,032		9,635		1,910
Stock-based compensation expense - discontinued operations		129		—		644		—
Total stock-based compensation expense	$	5,158	$	1,032	$	10,279	$	1,910

Stock Options

A summary of the status of the stock options as of June 30, 2022, and changes during the six months then ended is presented below (in thousands except share and per share amounts):


	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Balance at December 31, 2021		8,843,297			4.12		6.75	$	16,632
Options granted		—
Options exercised		(137,437	)		1.65
Options cancelled		(935,919	)		6.64
Balance at June 30, 2022		7,769,941			3.87		6.02	$	38
Options exercisable as of June 30, 2022		5,906,004			2.83
Vested and expected to vest—June 30, 2022		7,769,941		$	3.87

The total intrinsic value of options exercised during the three months ended June 30, 2022 and 2021 was $0.1 million and $5.4 million, respectively, and $0.1 million and $8.3 million for the six months ended June 30, 2022 and 2021, respectively.

The Company records compensation expense on a ~~going concern through~~straight-line basis over the vesting period. As of June 30, 2022 and 2021, there was approximately $8.6 million and $18.4 million, respectively, of total unrecognized stock-based compensation expense related to unvested employee options, which is expected to be recognized over a weighted-average period of 2.5, and 3.4 years, respectively.

Restricted Stock Units (RSU)

The following table summarizes information pertaining to RSUs during the six months ended June 30, 2022 (in thousands, except for weighted-average grant-date fair value):


	Number of RSUs			Weighted-Average Grant Date Fair Value per Share
Nonvested at December 31, 2021		5,184,830		$	5.57
Granted		9,800,037			2.68
Vested		(1,850,234	)		3.80
Cancelled/forfeited		(2,499,340	)		3.47
Nonvested at June 30, 2022		10,635,293		$	3.70

The fair value of the RSUs is based on the market value of the underlying shares at ~~least 12 months from~~ the date of ~~issuance of these financial statements.~~

~~Note 8 - Shareholders’ Deficit~~

~~Preference Shares~~

~~-The Company is authorized~~grant. The RSU grants’ vesting periods are subject to ~~issue 5,000,000 preference shares with~~ a ~~par value of $0.0001 per share and with such designations, voting and other rights and preferences as may be determined from time to time by~~service-based condition. The service-based vesting requirements are satisfied either: a) 25% vesting on the ~~Company’s Board. As of September 30, 2021 and December 31, 2020, there were 0 preference shares issued or outstanding.~~

~~Class~~

~~A Ordinary Shares~~

~~-The Company is authorized to issue 500,000,000 Class A Ordinary Shares with a par value of $0.0001 per share. Holder~~first anniversary of the ~~Company’s Class A ordinary shares are entitled to one vote~~vesting commencement date, and the remaining 75% vesting in substantially equal quarterly installments for three years thereafter; b) one-third vesting on each ~~share. As~~ of ~~September 30, 2021 and December 31, 2020, there were 37,375,000 Class A ordinary shares issued and outstanding,~~the first three anniversaries of the vesting commencement date; or c) awards vest in substantially equal quarterly installments for four years following the vesting start date, all subject to ~~possible redemption and therefore classified as temporary equity (See Note 6).~~

~~Class~~

~~B Ordinary Shares~~

-continued service through each vesting date. The Company ~~is authorized~~records compensation expense related to ~~issue 50,000,000 Founder Shares. On October 28, 2020,~~RSUs on a straight-line basis over the ~~Company issued 10,062,500 Founder Shares~~vesting period.

As of June 30, 2022, there was a total of $37.4 million of unrecognized stock-based compensation expense related to RSUs.

14.

INCOME TAXES

The effective tax rate from continuing operations for the three months ended June 30, 2022 and 2021 was 0.0% and 0.1%, respectively, and the six months ended June 30, 2022 and 2021 was 0.0% and 0.2%, respectively. The effective tax rate differs from the federal statutory income tax rate primarily due to the ~~Sponsor. On November 10, 2020,~~full

valuation allowance recorded on our net federal and state deferred tax assets. The provision for the ~~Sponsor surrendered 718,750 Founder Shares~~three and six months ended June 30, 2022 is comprised of income taxes in foreign jurisdictions.

The Company applies the discrete method provided in ASC 740 to calculate its interim tax provision.

15.

NET LOSS PER SHARE

The following table sets forth the computation of net loss per common share (in thousands except share and per share amounts):


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator:
Net loss from continuing operations	$	(69,145	)	$	(47,717	)	$	(116,433	)	$	(80,986	)
Net loss from discontinued operations	$	(14,108	)	$	(8,242	)	$	(22,065	)	$	(14,439	)
Denominator:
Weighted-average common shares outstanding—basic and diluted		120,719,489			22,079,802			120,260,245			21,919,563
Net loss per share continuing operations—basic and diluted	$	(0.57	)	$	(2.16	)	$	(0.97	)	$	(3.69	)
Net loss per share discontinued operations—basic and diluted	$	(0.12	)	$	(0.37	)	$	(0.18	)	$	(0.66	)

The Company’s potentially dilutive securities, which include public warrants, private placement warrants, restricted stock units, stock options to purchase common stock and warrants to purchase redeemable convertible preferred stock and common stock, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:


	Six Months Ended June 30,
	2022		2021
Conversion of redeemable convertible preferred stock		—		52,880,354
Public Warrants and Private Placement Warrants		15,660,417		—
Warrants to purchase redeemable convertible preferred stock		—		279,328
Options to purchase common stock		7,769,941		10,530,781
Restricted stock units		10,635,293		717,699
Conversion of convertible loan		—		9,848,683
Total common stock equivalents		34,065,651		74,256,846

The shares of the Company's common and redeemable convertible preferred stock, prior to the ~~Company for 0 consideration, resulting~~Merger (as defined in ~~an aggregate of 9,343,750 Founder Shares outstanding. All shares and associated amounts~~Note 1) have been retroactively restated to reflect the ~~share surrender. Of~~exchange ratio of approximately 0.34456 established in the ~~9,343,750 Founder Shares outstanding, up to 1,218,750 shares were subject to forfeiture to the extent that the underwriter’s over-allotment option was not exercised~~Merger as described in ~~full or in part, so that the initial shareholders would collectively own approximately 20% of the Company’s issued and outstanding ordinary shares (See~~ Note ~~4). On December 15, 2020, the underwriter fully exercised its over-allotment option; thus, these Founder Shares were 0 longer subject to forfeiture.~~4.

16.

SEGMENT INFORMATION AND DISCONTINUED OPERATIONS

Prior to the ~~Business Combination, only holders~~deconsolidation of Enjoy UK, the Company managed its operations through two operating and reportable segments that were based on geographic location: North America (United States and Canada operations) and Europe (United Kingdom operations by Enjoy UK). Enjoy UK was deconsolidated on June

30, 2022 due to the Company's ceding of its controlling interest as a result of Enjoy UK's insolvency filing. The deconsolidation event resulting from the disposition of controlling interest constitutes a disposal of a segment deemed to be a strategic shift having major effect on the Company’s operations and financial results, and accordingly the results of operations of Enjoy UK are presented as discontinued operations in the condensed statements of operations and comprehensive loss. Consequently, the results of North American operations are presented as continuing operations.

Entity-wide Disclosures

The Company’s revenue distribution for its North American operations was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
United States		94	%		87	%		92	%		85	%
Canada		6	%		13	%		8	%		15	%
		100	%		100	%		100	%		100	%

During the three months ended June 30, 2022 and 2021, there were two and three customers, respectively, with revenues individually in excess of 10% of total consolidated net revenues, which are reported under continuing operations and discontinued operations. Net revenues for these customers were approximately $15.9 million and $3.2 million in the three months ended June 30, 2022 and approximately $14.0 million, $3.7 million, and $2.3 million in the three months ended June 30, 2021. During the three months ended June 30, 2022, one customer is reflected in the North American operations and one customer is reflected in the European operations. During three months ended June 30, 2021 two customers are reflected in the North American operations and one customer is reflected in the European operations.

During the six months ended June 30, 2022 and 2021, there were three customers with revenues individually in excess of 10% of total consolidated net revenues, which are reported under continuing operations and discontinued operations. Net revenues for these customers were approximately $31.7 million, $6.5 million, and $5.0 million in the six months ended June 30, 2022 and approximately $25.5 million, $7.5 million, and $4.8 million in the six months ended June 30, 2021. During the six months ended June 30, 2022, two customers are reflected in the North American operations and one customer is reflected in the European operations. During six months ended June 30, 2021 two customers are reflected in the North American operations and one customer is reflected in the European operations.

Income (loss) from Discontinued Operations


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue		3,206			3,704			6,467			7,534
Operating expenses:
Cost of revenue		4,651			6,172			9,654			11,703
Operations and technology		4,370			4,023			8,898			7,684
General and administrative		1,163			1,727			2,819			2,703
Impairment charges		12,807			—			12,807			—
Restructuring expenses		2,153			—			2,153			—
Total operating expenses		25,144			11,922			36,331			22,090
Loss from operations		(21,938	)		(8,218	)		(29,864	)		(14,556	)
Interest expense		(14	)		(13	)		(28	)		(25	)
Gain on deconsolidation		7,853			—			7,853			—
Other income (expense), net		—			(15	)		—			197
Loss before provision for income taxes		(14,099	)		(8,246	)		(22,039	)		(14,384	)
Provision/(benefit) for income taxes		9			(4	)		26			55
Loss from discontinued operations		(14,108	)		(8,242	)		(22,065	)		(14,439	)

Restructuring expenses noted in the above table relate to payments in lieu of notice termination benefits.

Assets and Liabilities of Discontinued Operations as of December 31, 2021


	December 31,
	2021
Current assets:
Cash and cash equivalents	$	991
Accounts receivable, net		2,501
Prepaid expenses and other current assets		832
Total current assets		4,324
Noncurrent assets:
Property and equipment, net		4,678
Other assets		1,703
Total noncurrent assets		6,381
Total assets	$	10,705
Current liabilities:
Accounts payable	$	1,039
Accrued expenses and other current liabilities		3,611
Total current liabilities		4,650
Total liabilities		4,650

17.

EMPLOYEE BENEFIT PLANS

In January 2016, the Company adopted a 401(k) Plan that qualifies as a deferred salary arrangement under Section 401 of the ~~Founder Shares~~Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pretax earnings not to exceed the maximum amount allowable. The Company has not made any matching contributions under the 401(k) Plan as of June 30, 2022 and 2021.

The Company also maintained a Group Personal Pension Plan (the “GPP Plan”) for all eligible employees in the Company’s United Kingdom offices. The GPP Plan was a defined contribution plan in which employees were eligible to contribute a portion of their salaries, subject to a maximum annual amount as established by Her Majesty’s Revenue and Customs. In 2022 and 2021, the Company matched 3% of employee

contributions. The Company contributed $0.1 million to the GPP Plan in the form of matching contributions in the three month periods ended June 30, 2022 and 2021, respectively, and $0.2 million each for the six months ended June 30, 2022 and 2021.

On September 22, 2022, the Bankruptcy Court entered an order authorizing the implementation of a key employee incentive program (the “KEIP”), approving the terms of the KEIP, and granting related relief. The KEIP provides cash incentive payments to the Debtors’ Chief Legal Officer and Corporate Secretary (the “KEIP Participant”). Under the KEIP, the Debtors will ~~have~~provide payments of (i) $250,000 upon the ~~right~~consummation of the 363 Sale (the “Sale KEIP Award”); (ii) $50,000 to ~~vote~~$350,000 upon the effective date of the Debtors’ Chapter 11 plan (the “Winddown KEIP Award”), depending on the ~~appointment of directors. Holders~~effective date of the ~~Founder Shares~~Debtors’ Chapter 11 plan; and (iii) $250,000 if general unsecured creditors receive 100% recovery, to be paid upon final distribution to creditors or such time as the post-effective date debtors’ administrator or trustee determines is appropriate (the “Additional KEIP Award,” and together with the Sale KEIP Award and Winddown KEIP Award, the “KEIP Award”). The Winddown KEIP Award will be in the amount of $350,000 if the effective date of the Debtors’ Chapter 11 plan is prior to December 1, 2022, with a $25,000 reduction per week after such date. The KEIP Award would not be ~~entitled to vote on the appointment of directors during such time. In addition, prior~~payable to the ~~completion of a Business Combination, holders of a majority~~KEIP Participant, or otherwise would be subject to claw back, if the KEIP Participant does not remain employed by the Debtors until the effective date of the ~~Founder Shares may remove a member~~Debtors’ Chapter 11 plan. The KEIP Award is not in lieu of the ~~Board for any reason. These provisions~~KEIP Participant’s entitlement to contractual severance.

18.

COMMITMENTS AND CONTINGENCIES

Standby Letters of ~~the amended and restated memorandum and articles~~Credit – As of ~~association may only be amended by a special resolution passed by not less than~~

~~two-thirds~~

of the ordinary shares who attend and vote at the general meeting, which shall include the affirmative vote of a simple majority of the Founder Shares. With respect to any other matter submitted to a vote of the shareholders, including any vote in connection with the Business Combination, except as required by law, holders of the Class A Ordinary Shares and Founder Shares will vote together as a single class, with each share entitling the holder to one vote.

The Founder Shares will automatically convert into Class A Ordinary Shares on the first business day following the completion of the Business Combination at a ratio such that the number of Class A Ordinary Shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an

~~as-converted~~

basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of the Initial Public Offering, plus (ii) the sum of (a) the total number of ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued by the Company in connection with or in relation to the completion of the Business Combination, excluding (1) any Class A Ordinary Shares or equity-linked securities exercisable for or convertible into Class A Ordinary Shares issued, or to be issued, to any seller in the Business Combination and (2) any Private Placement Warrants issued to the Sponsor or any of its affiliates upon conversion of working capital loans, minus (b) the number of Class A Ordinary Shares redeemed by public shareholders in connection with the Business Combination. In no event will the Founder Shares convert into Class A Ordinary Shares at a rate of less than one to one.

~~Table of Contents~~

~~ENJOY TECHNOLOGY, INC.~~

~~(FORMERLY KNOWN AS MARQUEE RAINE ACQUISITION CORP.)~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 9 - Fair Value Measurements~~

~~The following table presents information about the Company’s liabilities measured at fair value on a recurring basis as of September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021, the Company had several letters of credit outstanding related to its operating leases and ~~indicates~~workers compensation totaling $2.5 million and $1.7 million, respectively. Collateral for all standby letters of credit are included in restricted cash in the ~~fair value hierarchy~~consolidated balance sheet as of June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, security deposits to landlords totaling $2.5 million and $3.7 million, respectively, are included in other noncurrent assets in the ~~valuation techniques~~consolidated balance sheet.

Legal Matters – The Company is party to certain claims in the normal course of business. While the results of these claims cannot be predicted with any certainty, the Company believes that the final outcome of these matters will not have a material adverse effect on the condensed consolidated financial position and results of operations. The Company ~~utilized to determine~~records a liability when it believes that it is probable that a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. There were no such ~~fair value.~~

~~September~~material matters as of June 30, ~~2021~~

Description

Quoted Prices in Active
Markets

(Level 1)

Significant Other
Observable Inputs

(Level 2)

Significant Other
Unobservable Inputs

(Level 3)

Liabilities:

Derivative warrant liabilities - Public    $ 12,520,630    $ 0       $ 0
Derivative warrant liabilities - Private    $ 0      $ 8,464,330    $ 0

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~

~~References to the “Company,” “our,” “us” or “we” refer to Marquee Raine Acquisition Corp.~~ Operations

The following discussion ~~and analysis~~ of ~~the Company’s~~our financial condition and results of operations should be read ~~in conjunction~~together with ~~the~~our financial statements, related notes and ~~the notes thereto contained~~other financial information appearing elsewhere in this ~~report. Certain information contained in the~~Quarterly Report. The following discussion ~~and analysis set forth below includes~~may contain forward-looking statements that ~~involve risks~~reflect our plans, estimates and ~~uncertainties.~~

~~Cautionary Note Regarding Forward-Looking Statements~~

~~This Quarterly Report on Form~~

~~10-Q~~

includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause ourbeliefs. Our actual results ~~levels of activity, performance or achievements to be~~could differ materially ~~different~~ from ~~any future results, levels of activity, performance or achievements expressed or implied by such~~those discussed in the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that ~~might~~could cause or contribute to ~~such a discrepancy~~these differences include ~~but~~those discussed below, elsewhere in this Quarterly Report, particularly in Part II, Item 1A, “Risk Factors”. Our historical results are not ~~limited to, those described in our other SEC filings.~~

~~Overview~~

We are a blank check company incorporated as a Cayman Islands exempted company on October 16, 2020. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We are an emerging growth company and, as such, we are subject to allnecessarily indicative of the ~~risks associated with emerging growth companies.~~

results that may be expected for any period in the future.

Recent Developments

Voluntary Petition and Completion of Disposition of Assets

On ~~April 28, 2021, we entered into an Agreement~~June 30, 2022 (the “Petition Date”), the Company and ~~Plan~~certain of ~~Merger (the “Merger Agreement”) with MRAC Merger Sub Corp., a~~its wholly owned ~~subsidiary of the Company (“Merger Sub”)~~subsidiaries, Legacy EJY Subsidiary LLC (f/k/a Enjoy Technology LLC) and ~~Enjoy Technology~~Legacy EJY Operating Corp. (f/k/a Enjoy Technology ~~Inc.~~Operating Corp.)~~, a~~ (together with the Company, the “Debtors”) filed voluntary petitions (the “Filings”) under Chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware ~~corporation (“Legacy Enjoy”~~(such court, the “Bankruptcy Court” and such cases, the “Chapter 11 Cases”). ~~The Merger Agreement was subsequently amended on July 23, 2021~~

During the Chapter 11 Cases we operate our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code and ~~September 13, 2021 and~~orders of the ~~domestication~~Bankruptcy Court. In general, as debtors-in-possession under the Bankruptcy Code, the Debtors are authorized to continue to operate as an ongoing business but may not engage in transactions ~~contemplated~~outside the ordinary course of business without the prior approval of the Bankruptcy Court. After we filed our Chapter 11 petitions, the Bankruptcy Court granted certain relief requested by the ~~Merger Agreement were completed on October 14, 2021. As~~Debtors enabling us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such ~~we filed a notice~~orders, authorizing us to pay employee wages and benefits, to pay taxes and certain governmental fees and charges, to continue to operate our cash management system in the ordinary course, and to pay the prepetition claims of ~~deregistration~~certain of our vendors.

For the duration of the Chapter 11 Cases, our operations are subject to the risks and uncertainties associated with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which the Company was domesticated and continuesChapter 11 process as ~~a Delaware corporation, changing its name to “Enjoy Technology, Inc.~~described in Item 1A. “Risk Factors.” ~~(the “Domestication”). After the Domestication, the Company is referred to as “New Enjoy.”~~

As a result of these risks and ~~upon~~uncertainties, the ~~effective time~~amount and composition of our assets and liabilities could be significantly different following the outcome of the ~~Domestication, among other things, (1) each then issued~~Chapter 11 Cases, and ~~outstanding Class A ordinary share, par value $0.0001 per share,~~the description of our operations, properties and liquidity and capital resources included in this Quarterly Report may not accurately reflect its operations, properties and liquidity and capital resources following the Chapter 11 Cases.

On July 25, 2022, the Debtors entered into an Asset Purchase Agreement (the “Purchase Agreement) with Asurion, LLC (the “Lender”) to sell substantially all of their assets pursuant to a sale conducted under Section 363 of the Bankruptcy Code. The Bankruptcy Court approved the 363 Sale on August 12, 2022 and the 363 Sale was completed on August 31, 2022. Pursuant to the Purchase Agreement, the Debtors completed the 363 Sale for approximately $110.0 million, subject to various deductions, including a $23.8 million holdback amount. In accordance with the requirement in the Purchase Agreement to discontinue the use of the Company’s prior name (and any other trade names) following the 363 Sale, the Company ~~(the “MRAC Class A Ordinary Shares”), converted automatically,~~changed its name to Legacy EJY, Inc. on a

~~one-for-one~~

~~basis,~~August 31, 2022.

Financing Arrangements

On June 29, 2022, the Debtors, as borrowers, entered into a ~~share~~senior secured credit, guaranty and security agreement (the “Bridge Credit Agreement”) with Asurion, pursuant to which the Debtors borrowed $2.5 million (the “Bridge Loan”) from the Lender. The Bridge Loan had a scheduled maturity date of ~~common stock, par value $0.0001~~July 8, 2022 and was due and payable in full on such date or such earlier date as provided in the Bridge Credit Agreement unless the Bridge Loan was converted to loans under the DIP Credit Agreement (as defined below) as further described below. The Bridge Loan bore interest at a rate of 12% per ~~share, of New Enjoy (the “New Enjoy Common Stock”); (2) each then issued~~annum, compounded monthly, and ~~outstanding Class B ordinary share, par value $0.0001 per share,~~such interest was to be added to the principal amount of the ~~Company (the “MRAC Class B Ordinary Shares”) converted automatically, on a~~

~~one-for-one~~

~~basis, into a share of New Enjoy Common Stock; (3) each then issued~~Bridge Loan and accrue additional interest thereafter and was payable in kind. On July 1, 2022, the outstanding ~~warrant~~amount of the Bridge Loan was converted to obligations under the DIP Credit Agreement (the “Roll-Up Loans”).

In connection with the Bridge Credit Agreement on June 29, 2022, the Company entered into an amended and restated promissory note (the ~~“MRAC Warrants”~~“Note”) ~~converted automatically into a warrant to acquire one share~~with Ron Johnson (the “Holder”), which amended and restated the secured promissory note, dated as of ~~New Enjoy Common Stock~~May 11, 2022 (the ~~“New Enjoy Warrants”~~“Original Note”) ~~pursuant to the Warrant Agreement, dated December 17, 2020,~~for an aggregate principal amount of $10.0 million, between the Company and ~~Continental Stock Transfer & Trust Company (“Continental”), as warrant agent;~~the Holder to, among other things, remove the collateral pledge and ~~(4) each then issued and outstanding unit~~subordinate the note to indebtedness owing to the Lender. The Holder’s security interest in the assets of the Company ~~(the “MRAC Units”)~~granted under the Original Note was ~~separated and converted automatically into one share of New Enjoy Common Stock and~~

~~one-fourth~~

~~of one New Enjoy Warrant. No fractional shares were issued upon exercise~~terminated thereafter. The Note was approved by the Audit Committee of the ~~New Enjoy Warrants.~~

Company’s board of directors pursuant to the Company’s Related Party Transaction Policy.

On ~~October 15, 2021~~July 25, 2022, the Debtors, as borrowers, entered into a secured super-priority debtor in possession credit, guaranty and security agreement (the ~~“Closing Date”~~“DIP Credit Agreement”), with Asurion, as ~~contemplated~~lender, pursuant to which the Debtors borrowed $55.0 million in multiple drawings (the “DIP Loans”) from the Lender on terms and conditions consistent with those set forth in the DIP Credit Agreement. Upon entry by the ~~Merger~~Bankruptcy Court of the interim order authorizing and approving the DIP Loans on July 1, 2022, (i) the Roll-Up Loans were converted to obligations under the DIP Credit Agreement, ~~New Enjoy consummated~~and (ii) the ~~merger transaction contemplated~~Debtors borrowed approximately $20.0 million ($22.5 million less the amount of the Roll-Up Loans) under the DIP Credit Agreement. The Debtors borrowed the remaining balance of the DIP Loans in the amount of $32.5 million on July 26, 2022, upon entry by the ~~Merger Agreement, following approval at an extraordinary general meeting~~Bankruptcy Court of the ~~shareholders~~final order authorizing and approving the DIP Credit Agreement. The proceeds of the DIP Loans were used by the Debtors (i) to fund the costs of the administration of the Chapter 11 Cases (including professional fees and expenses and the Section 363 sale processes), (ii) for working capital and other general corporate purposes, and (iii) to fund interest, fees and other payments related to the DIP Loans and DIP Credit Agreement, in each case subject to the applicable orders of the Bankruptcy Court. The DIP Loans bore interest at a rate of 12% per annum, accruing monthly, and such interest was added to the principal amount of the loan and accrued additional interest thereafter and was payable in kind. In connection with the consummation of the 363 Sale, on August 31, 2022, the obligations under the DIP Credit Agreement were repaid in full and such credit agreement was terminated.

Nasdaq Delisting

On the Petition Date, we received written notice from the staff of Nasdaq notifying us that, as a result of the Filings and in accordance with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, our common stock and warrants were no longer suitable for listing on Nasdaq. Trading of our common stock and warrants were suspended at the opening of business on July 11, 2022 and a Form 25-NSE was filed with the SEC on July 19, 2022, which removed our common stock and warrants from listing on Nasdaq. Our common stock and warrants began trading on the OTC Pink Marketplace on July 11, 2022 under the symbols “ENJYQ” and “ENJWQ”, respectively.

Restructuring and Reduction in Force

In June 2022, we executed a reduction in force in the U.K. and Canada of approximately 411 and 145 employees, respectively, representing approximately 25% of our global workforce as of June 30, 2022, as part of our restructuring efforts. In connection with the reduction in force, the Company incurred approximately $2.2 million in expenses in the form of cash-based expenditures, substantially all of which was related to payment in lieu of notice termination benefits. The charges were recognized in the quarter ended June 30, 2022 and we did not modify the affected employees’ stock awards to accelerate the vesting of such awards or to otherwise modify such awards in a manner that would result in such charges.

Upon filing of bankruptcy in the U.S., the Company recognized $3.4 million as of June 30, 2022 related to employee severance. The Company executed a reduction in force in the U.S. in August and September 2022. As of October 3, 2022, only 10 employees remained to execute the process of winding down the Company.

The Company also incurred legal and professional fees totaling to $7.4 million for the three and six months ended June 30, 2022, as part of its restructuring efforts.

Deconsolidation of the Subsidiaries

On June 30, 2022, Enjoy UK filed for bankruptcy in the UK, whereby our control of this subsidiary was ceded. We will not regain control of Enjoy UK and concluded that it was appropriate to deconsolidate the UK subsidiary effective as of June 30, 2022. The deconsolidation resulted in a net pretax gain of $7.9 million, which related to the

deconsolidation of liabilities of $12.4 million, offset by cash of $2.7 million and equity of $1.8 million. The net pretax gain on deconsolidation is recognized within discontinued operations.

On July 8, 2022, Enjoy Canada filed for bankruptcy in Canada, whereby our control of this subsidiary was ceded. We will not regain control of Enjoy Canada and concluded that it was appropriate to deconsolidate this subsidiary effective July 8, 2022. The estimated pretax gain on deconsolidation amounts to $5.7 million. As the deconsolidation event occurred subsequent to June 30, 2022, Enjoy Canada is still recognized within our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Prior to the deconsolidation of Enjoy UK, we managed our operations through two operating and reportable segments that were based on geographic location: North America (United States and Canada operations) and Europe (United Kingdom operations by Enjoy UK). Enjoy UK was deconsolidated on June 30, 2022 due to our ceding of our controlling interest as a result of Enjoy UK's insolvency filing. The deconsolidation event resulting from the disposition of controlling interest constitutes a disposal of a segment, accordingly the results of operations of Enjoy UK are presented as discontinued operations in our unaudited condensed statements of operations and comprehensive loss included elsewhere in this Quarterly Report. Consequently, the results of North American operations are presented as continuing operations.

Overview

As discussed under “Recent Developments” above, on June 30, 2022, the Company filed the Chapter 11 Cases and on August 31, 2022, we completed the sale of substantially all of our U.S. assets. The discussion of our business and results of operations for the three and six months ended June 30, 2022 below reflect our historical operations prior to such developments as described under “Recent Developments” above.

The Company was incorporated in the state of Delaware in May 2014, and was headquartered in Palo Alto, California as of June 30, 2022. As of June 30, 2022, the Company operated Mobile Stores providing in home delivery, set up and a full shopping experience for companies.

As of June 30, 2022, we operated in over 70 locations across the United States and Canada.

The Company started with a simple question, “What if the best of the store could come to you?” Over the last eight years we built and optimized our Mobile Store, a new channel that pairs the convenience of online shopping with the personal touch of an in-store retail experience brought together in the comfort of end customers’ (the "Consumer") homes.

Over the past twenty five years, eCommerce has disrupted the retail industry in virtually every category, shifting commerce from physical stores to the home. While eCommerce channels greatly expanded choices and increased convenience with fulfillment to customers’ doorsteps, they have not addressed the importance of an interactive shopping experience that customers desire for products, such as technology. As of June 30, 2022, the Company provided set-up and activation, and also assisted customers in purchasing hardware, accessories, and subscription services in the comfort of the home. This Mobile Store shopping experience created a unique and deep retail experience for Consumers that does not exist with traditional retail channels.

As of June 30, 2022, we maintained multi-year contractual relationships with leading telecommunications and technology companies, which are our "Business Partners" or "Customers." Our revenue stemmed from a variety of service, set-up and delivery fees that were paid to us by our Customers. During a visit from our Mobile Store, the Consumer paid for products and services directly to our Customers via secure mobile point-of-sale devices. On confirmation of the purchase, our Customers then remitted our fees directly to us.

As of June 30, 2022, the Company delivered a broad assortment of telecommunications and technology products and accessories, which are provided by our Customers. Our mobile retail sales team (“Experts”) provided set-up, activation and demonstration of the products we delivered. We assisted Consumers in evaluating and selecting a myriad of accessories, media sources, protection, broadband, and other services. We also assisted in the trade-in and upgrade of our customers’ products. We strove to deliver our customers’ products with same-day or next-day frequency, matching the speed of traditional eCommerce channels but with an experience.

Consumers initiated their purchase on our Customers’ eCommerce sites, service centers or retail locations. The Consumer selected at-home delivery and a delivery window. Consumer orders flowed seamlessly from our Customers’ eCommerce sites to the Company via deeply integrated technology platforms. This resulted in near-zero Consumer acquisition costs for the Company.

Our inventory was 100% consigned to us by our Customers and maintained in secure warehouses at our market locations. These warehouse locations also served as the base of operations for our Mobile Store fleets and as the operating center for the market in which they served. Our warehouses also provided meeting, training and support services for our Experts. Our warehouses and Mobile Store vehicle fleet were fully leased. As of June 30, 2022, we operated in over 70 locations which provide access to over 50% of the population in the markets that we served, representing over 200 million addressable consumers.

Our business was enabled by highly sophisticated, proprietary sets of technology applications, systems and data science tools. To deliver and optimize millions of retail experiences, we built our technology platform from the ground up to support customer integrations, smart logistics and a variety of solutions to empower our Experts in providing the best and most personalized experience for every Consumer.

Our Experts were central to the at-home retail experience we provided for Consumers. Our Experts were 100% employees of the Company and had the skills and training to be deeply knowledgeable about the products and services that we offered. We believe our Experts brought a world-class and deeply engaging shopping experience to Consumers.

Key Performance Metrics

We regularly reviewed several metrics related to our continuing operations, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. The reasons we believe these key performance metrics are useful to investors are provided below.

Daily Mobile Stores – Daily Mobile Stores represent the number of Mobile Stores we operate on a given day. This is calculated by dividing the total number of visit-serving Expert shifts in a given reporting period by the number of calendar days in that period. A visit-serving Expert shift is defined as an Expert that is scheduled to serve Consumers on a given day. We believe this is the primary measure of scale and growth of our retail footprint.

Daily Revenue Per Mobile Store – Daily Revenue Per Mobile Store is defined as the average daily revenue generated per Daily Mobile Store. This metric is calculated by dividing the revenue generated in a given reporting period by the product of Daily Mobile Stores and the number of days in that given reporting period. We believe growth in Daily Revenue Per Mobile Store is a key driver for increasing the Company’s profitability.

Mobile Store Profit (Loss) and Mobile Store Margin – Mobile Store Profit (Loss) is a measure prepared in accordance with GAAP and is defined as revenue less cost of revenue. Mobile Store Margin is Mobile Store Profit (Loss) as a percentage of revenue. We view this metric as an important measure of business performance as it captures Mobile Store profitability and provides comparability across reporting periods.

Adjusted EBITDA – Adjusted EBITDA is defined as net loss from continuing operations, adjusted for interest expense, provision for income taxes, depreciation and amortization, stock-based compensation, loss on convertible loans, one time transaction related costs, interest income and other expenses not considered a core part of our operations. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted EBITDA is a non-GAAP measure. Refer to the “Non-GAAP Measures” section below for further discussion

The following tables present our key performance metrics for the continuing operations for the period presented (in thousands except Daily Mobile Stores amounts):


	Three Months Ended June 30,
	2022			2021
Daily Mobile Stores		592			438
Daily Revenue Per Mobile Store	$	352		$	431
Mobile Store Loss	$	(7,489	)	$	(2,525	)
Mobile Store Margin		(39.5	)%		(14.7	)%
Loss from operations	$	(73,151	)	$	(29,096	)
Adjusted EBITDA	$	(42,576	)	$	(27,176	)

	Six Months Ended June 30,
	2022			2021
Daily Mobile Stores		621			433
Daily Revenue Per Mobile Store	$	351		$	385
Mobile Store Loss	$	(16,532	)	$	(5,648	)
Mobile Store Margin		(41.6	)%		(17.3	)%
Loss from operations	$	(123,023	)	$	(58,912	)
Adjusted EBITDA	$	(87,036	)	$	(55,330	)

Results of Operations

Components of Results of Operations

Revenue

Revenue consists of service fees paid to us by our Customers for bringing their products and services to Consumers. These fees are comprised of fixed service fees per visit and variable fees based on the sale of accessories, solutions and subscription services. The composition of these fees and the rate of services paid vary by Customer per the terms of our contracts with them. Our fees are reduced by chargebacks and consigned inventory that is lost, damaged or stolen. Chargebacks are based upon Consumer cancellation of services and subscriptions within a pre-specified timeframe.

Cost of revenue

Cost of revenue primarily consists of salaries, benefits and other expenses related to the Company’s Experts, fleet vehicle costs, and other expenses directly related to the performance of each Expert field visit. These expenses have increased in proportion to the growth of our Mobile Stores.

Operations and technology

Operations and technology expenses primarily consist of technology, facility and overhead costs directly related to the operation of our Mobile Stores. This includes lease and operating expenses for our warehouses, inventory management and storage, facility supplies and depreciation expense. We also include costs for employees who directly or indirectly support our Experts, including supervisory and operations management, inventory management, fulfillment and research and development costs.

General and administrative

General and administrative expenses primarily consist of personnel-related expenses for our general corporate functions. This includes our leadership team, employees involved in finance, human resources, legal and workplace services, enterprise and financial information technology systems and marketing.

Impairment charges

Impairment charges primarily consist of expenses related to the impairment of Enjoy Canada's assets.

Related party expense

Upon the deconsolidation, transactions with the UK subsidiary are no longer eliminated in consolidation and are treated as related party transactions and recognized in the condensed consolidated financial statements.

Restructuring expenses

Restructuring expenses primarily consist of expenses related to legal fees, professional fees, and severance and termination benefits associated with reduction in workforce as part of its restructuring efforts.

Loss on convertible loans

Unrealized loss on convertible loans consists of the change in the fair value of our convertible loans. The convertible loans were converted to common stock as part of the Merger.

Interest income

Interest income consists of interest earned on our cash and cash equivalents.

Interest expense

Interest expense includes mainly the interest incurred on our outstanding indebtedness, as well as amortization of deferred financing costs, mainly debt origination and commitment fees.

Other income, net

Other income during the periods presented consisted primarily of fair value gains and losses related to the issued stock warrants as well as gains and losses from foreign currency transactions.

Income tax provision

Our provision for income taxes consists of state minimum taxes in the United States and foreign taxes. We have a full valuation allowance for our net United States federal and state deferred tax assets primarily consisting of net operating loss carryforwards, accruals, and reserves.

Discontinued operations

Our loss from discontinued operations represents the after tax loss of Enjoy UK where the workforce was reduced and operations were ceased. On June 30, 2022, Enjoy UK filed for insolvency in the UK.

Comparison of Results of Operations

Comparison of the Three and Six Months Ended June 30, 2022 and 2021

The following table is a reference for the discussion that follows:


	Three Months Ended June 30,						Change						Six Months Ended June 30,						Change
(dollars in thousands)	2022			2021			$			%			2022			2021			$			%
Revenue	$	18,960		$	17,161		$	1,799			10.5	%	$	39,723		$	32,677		$	7,046			21.6	%
Operating expenses:
Cost of revenue*		26,449			19,687			6,762			34.3	%		56,255			38,325			17,930			46.8	%
Operations and technology*		22,555			17,499			5,056			28.9	%		45,359			33,071			12,288			37.2	%
General and administrative*		18,497			9,071			9,425			103.9	%		36,522			20,193			16,329			80.9	%
Impairment charges		7,827			—			7,827			100.0	%		7,827			—			7,827			100.0	%
Related party expense		5,941			—			5,941			100.0	%		5,941			—			5,941			100.0	%
Restructuring expenses		10,842			—			10,842			100.0	%		10,842			—			10,842			100.0	%
Total operating expenses		92,111			46,257			45,854			99.1	%		162,746			91,589			71,157			77.7	%
Loss from operations		(73,151	)		(29,096	)		(44,055	)		151.4	%		(123,023	)		(58,912	)		(64,111	)		108.8	%
Loss on convertible loans		—			(17,361	)		17,361			(100.0	)%		—			(19,226	)		19,226			(100.0	)%
Interest expense		(193	)		(1,398	)		1,205			(86.2	)%		(217	)		(2,792	)		2,575			(92.2	)%
Interest income		25			2			23			1150.0	%		27			4			23			575.0	%
Other income, net		4,173			175			3,998			2284.6	%		6,796			97			6,699			6906.2	%
Loss before provision for income taxes		(69,146	)		(47,678	)		(21,468	)		45.0	%		(116,417	)		(80,829	)		(35,588	)		44.0	%
Provision for income taxes		(1	)		39			(40	)		(102.6	)%		16			157			(141	)		(89.8	)%
Net loss from continuing operations		(69,145	)		(47,717	)		(21,428	)		44.9	%		(116,433	)		(80,986	)		(35,447	)		43.8	%
Net loss from discontinued operations		(14,108	)		(8,242	)		(5,866	)		71.2	%		(22,065	)		(14,439	)		(7,626	)		52.8	%
Net loss	$	(83,253	)	$	(55,959	)	$	(27,294	)		48.8	%	$	(138,498	)	$	(95,425	)		(43,073	)		45.1	%

* In addition to the reclassifications related to discontinued operations, to conform to current presentation, the Company reclassified certain costs within each of its operating expense line items in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021. These changes have no impact on the Company’s previously reported consolidated net loss and comprehensive loss, cash flows, or basic and diluted net loss per share amounts for the periods presented.

Revenue

Revenue for the three months ended June 30, 2022 compared to the respective prior period increased by $1.8 million, or 10.5%, primarily due to an increase in our Daily Mobile Store count of 154 stores to 592 from 438 in 2021, partially offset by a decrease in our Daily Revenue Per Mobile Store of $79 to $352 for the three months ended June 30, 2022, down from $431 for the same period in 2021. The decrease in Daily Revenue Per Mobile Store was due to fewer deliveries than anticipated following the launch of the Smart Last Mile platform.

Revenue for the six months ended June 30, 2022 compared to the respective prior period increased by $7.0 million, or 21.6%, primarily due to an increase in our Daily Mobile Store count of 188 stores to 621 from 433 in 2021, partially offset by a decrease in our Daily Revenue Per Mobile Store of $34 to $351 for the six months ended June 30, 2022, down from $385 for the same period in 2021. The decrease in Daily Revenue Per Mobile Store was due to fewer deliveries than anticipated following the launch of the Smart Last Mile platform.

Cost of revenue

Cost of revenue for the three months ended June 30, 2022 compared to the respective prior period increased $6.8 million or 34.3%, primarily due to an increase in our Daily Mobile Store count by 154 stores to 592 from 438 in

2021. During 2021 we expanded our geographic market coverage within the United States and Canada and initiated services for a new Customer in the United States. Increased Mobile Stores were supported by a higher number of Experts, resulting in higher total salary and benefit costs. A greater number of Daily Mobile Stores also increased expenses associated with vehicle leases, fuel, vehicle insurance and other direct expenses. Cost of revenue, as a percentage of revenue, for the three months ended June 30, 2022 increased to 139.5%, compared to 114.7% for the three months ended June 30, 2021.

Cost of revenue for the six months ended June 30, 2022 compared to the respective prior period increased $17.9 million or 46.8%, primarily due to an increase in our Daily Mobile Store count by 188 stores to 621 from 433 in 2021. During 2021 we expanded our geographic market coverage within the United States and Canada and initiated services for a new Customer in the United States. Increased Mobile Stores were supported by a higher number of Experts, resulting in higher total salary and benefit costs. A greater number of Daily Mobile Stores also increased expenses associated with vehicle leases, fuel, vehicle insurance and other direct expenses. Cost of revenue, as a percentage of revenue, for the six months ended June 30, 2022 increased to 141.6%, compared to 117.3% for the six months ended June 30, 2021.

Operations and technology

Operations and technology expenses for the three months ended June 30, 2022 compared to the respective prior period increased $5.1 million, or 28.9%, primarily due to investments in our warehouse network to support our market expansions and our increased Mobile Store count. The total number of our warehouses increased by 10, to 71 during the three months ended June 30, 2022, from 61 for the three months ended June 30, 2021. The increase in the number of and relocation of certain warehouses we operated during 2022 versus 2021 increased our warehouse lease expenses, salaries and benefits associated with market-level Expert supervisory, training and development activities and facility investments. Expenses associated with developing the technologies that support our Mobile Store operations also increased as we expanded functions and features that support our global operations. Operations and technology expense as a percentage of revenue for the three months ended June 30, 2022 increased to 119.0%, from 102.0% for the three months ended June 30, 2021.

Operations and technology expenses for the six months ended June 30, 2022 compared to the respective prior period increased $12.3 million, or 37.2%, primarily due to investments in our warehouse network to support our market expansions and our increased Mobile Store count. The total number of our warehouses increased by 10, to 71 during the six months ended June 30, 2022, from 61 for the six months ended June 30, 2021. The increase in the number of warehouses we operated during 2022 versus 2021 increased our warehouse lease expenses, salaries and benefits associated with market-level Expert supervisory, training and development activities and facility investments. Expenses associated with developing the technologies that support our Mobile Store operations also increased as we expanded functions and features that support our global operations. Operations and technology expense as a percentage of revenue for the six months ended June 30, 2022 increased to 114.2%, from 101.2% for the six months ended June 30, 2021.

General and administrative

General and administrative expense for the three months ended June 30, 2022 compared to the respective prior period increased $9.4 million, or 103.9%, primarily due to increases of $3.0 million in stock-based compensation expense due to increased headcount, $0.8 million of payroll and other related costs, $0.6 million in computer software related costs, $1.8 million in dues and insurance, $3.2 million for professional and legal services, each due to scaling the business and market expansion. General and administrative expense as a percentage of revenue for the three months ended June 30, 2022 compared to the respective prior period increased to 97.6% from 52.9%.

General and administrative expense for the six months ended June 30, 2022 compared to the respective prior period increased $16.3 million, or 80.9%, primarily due to increases of $5.5 million in stock-based compensation expense due to increased headcount, $1.9 million of payroll and other related costs, $1.1 million in computer software related costs, $3.0 million in dues and insurance, $4.8 million for professional and legal services, each due to scaling the business and market expansion. General and administrative expense as a percentage of revenue for the six months ended June 30, 2022 compared to the respective prior period increased to 91.9% from 61.8%.

Impairment charges

Impairment charges for the three months ended June 30, 2022 compared to the respective prior period increased to $7.8 million in 2022 from $0 primarily due to the impairment of the Enjoy Canada's assets.

Related party expense

Upon the deconsolidation, transactions with the UK subsidiary are no longer eliminated in consolidation and are treated as related party transactions. The related party payable to Enjoy UK amounting to $5.9 million is recognized under liabilities subject to compromise in the condensed consolidated balance sheet as of June 30, 2022 with a corresponding related party expense in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2022.

Restructuring expenses

Restructuring expenses consisting of legal fees, professional fees, and severance for the three months ended June 30, 2022 compared to the respective prior period increased to $10.8 million in 2022 from $0 primarily due to the filing of the Chapter 11 Cases.

Loss on convertible loans

Loss on convertible loans for the three months ended June 30, 2022 compared to the respective prior period decreased to $0 in 2022 from $17.4 million as the convertible loans we had with certain investors converted to common stock as part of the Merger.

Loss on convertible loans for the six months ended June 30, 2022 compared to the respective prior period decreased to $0 in 2022 from $19.2 million as the convertible loans we had with certain investors converted to common stock as part of the Merger.

Interest income

Interest income for the three months ended June 30, 2022 compared to the respective prior period increased $23 thousand, or 1,150.0%, primarily due to the decrease in the amount of cash held in interest bearing accounts.

Interest income for the six months ended June 30, 2022 compared to the respective prior period increased $23 thousand, or 575.0%, primarily due to the decrease in the amount of cash held in interest bearing accounts.

Interest expense

Interest expense for the three months ended June 30, 2022 compared to the respective prior period was lower by $1.2 million in 2021 due to interest related to our loan with Blue Torch Finance, LLC, which was repaid in the fourth quarter of 2021.

Interest expense for the six months ended June 30, 2022 compared to the respective prior period was lower by $2.6 million in 2021 due to interest related to our loan with Blue Torch Finance, LLC, which was repaid in the fourth quarter of 2021.

Other income, net

Other income, net for the three months ended June 30, 2022 compared to the respective prior period increased $4.0 million primarily due to the change in fair value of the stock warrants.

Other income, net for the six months ended June 30, 2022 compared to the respective prior period increased $6.7 million primarily due to the change in fair value of the stock warrants.

Provision for income taxes

The provision for income taxes for the three months ended June 30, 2022 compared to the respective prior period decreased $40 thousand. Provision for income taxes as a percentage of revenue was 0.0% for the three months ended June 30, 2022 and 0.2% for the three months ended June 30, 2021.

The provision for income taxes for the six months ended June 30, 2022 compared to the respective prior period decreased $141 thousand. Provision for income taxes as a percentage of revenue was 0% for the six months ended June 30, 2022 and 0.5% for the six months ended June 30, 2021.

Discontinued Operations

Net loss from discontinued operations was $14.1 million and $22.1 million for the three and six months ended June 30, 2022, respectively, which include impairment charges of $12.8 million and restructuring expenses of $2.2 million, net of net pretax gain on ~~October 13,~~deconsolidation of $7.9 million recognized during the second quarter of 2022.

Net loss from discontinued operations was $8.2 million and $14.4 million for the three and six months ended June 30, 2021, ~~(the “Special Meeting”), whereby Merger Sub merged~~respectively.

For more information about Enjoy UK's bankruptcy, see Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Non-GAAP Measures

In addition to net loss from continuing operations, which is a measure presented in accordance with GAAP, management believes that Adjusted EBITDA provides relevant and ~~into Legacy Enjoy,~~useful information to management and investors to assess our performance. Adjusted EBITDA is a supplemental measure of the ~~separate corporate existence~~Company’s performance that is neither required by nor presented in accordance with GAAP. This measure is limited in its usefulness and should not be considered a substitute for GAAP metrics such as loss from operations, net loss, or any other performance measures derived in accordance with GAAP and may not be comparable to similar measures used by other companies.

Adjusted EBITDA represents net loss from continuing operations adjusted for interest, taxes, depreciation and amortization, stock-based compensation expense, impairment charges, related party expense, restructuring expenses and certain expenses and income not considered a core part of ~~Merger Sub ceasing~~our operations.

We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings (loss) before the impact of investing and ~~Legacy Enjoy being~~financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:

•

Is widely used by analysts, investors and competitors to measure a company’s operating performance;

•

Is a financial measurement that is used by rating agencies, lenders, and other parties to evaluate our credit worthiness; and

•

Is used by our management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting.

The reconciliations of net loss from continuing operations to Adjusted EBITDA for the ~~surviving corporation~~three and six months ended June 30, 2022 and 2021 are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Net loss from continuing operations	$	(69,145	)	$	(47,717	)	$	(116,433	)	$	(80,986	)
Add back:
Interest expense		193			1,398			217			2,792
Provision for income taxes		(1	)		39			16			157
Depreciation and amortization		936			605			1,742			1,161
Stock-based compensation		5,029			1,032			9,635			1,910
Loss on convertible loans		—			17,361			—			19,226
Impairment charges		7,827			—			7,827			—
Related party expense		5,941			—			5,941			—
Restructuring expenses		10,842			—			10,842			—
Transaction-related costs (1)		—			283			—			511
Deduct:
Interest income		(25	)		(2	)		(27	)		(4	)
Other income, net		(4,173	)		(175	)		(6,796	)		(97	)
Adjusted EBITDA	$	(42,576	)	$	(27,176	)	$	(87,036	)	$	(55,330	)

(1)

Includes costs associated with the Merger.

Liquidity and Capital Resources

Since inception, we have incurred net losses and cash outflows from operations. The Company had cash and cash equivalents of $1.0 million and an accumulated deficit of $781.0 million as of June 30, 2022 and a ~~wholly owned subsidiary~~net loss of ~~New Enjoy (the “Merger” and, together~~$138.5 million for the six months ended June 30, 2022.

On the Petition Date, we voluntarily initiated the Chapter 11 Cases in Bankruptcy Court. During the Chapter 11 Cases we operate our business as debtors-in-possession in accordance with the ~~Domestication,~~applicable provisions of the ~~“Business Combination”).~~

~~Immediately prior~~Bankruptcy Code and orders of the Bankruptcy Court. After we filed our Chapter 11 petitions, the Bankruptcy Court granted certain relief enabling us to conduct our business activities in the ordinary course, including, among other things and subject to the ~~effective time~~terms and conditions of such orders, authorizing us to pay employee wages and benefits, to pay taxes and certain governmental fees and charges, to continue to operate our cash management system in the ordinary course, and to pay the prepetition claims of certain of our vendors.

On June 29, 2022, the Debtors, as borrowers, entered into the Bridge Credit Agreement with Asurion, as the Lender, pursuant to which the Debtors borrowed $2.5 million from the Lender. On July 1, 2022, the outstanding amount of the Merger, (1) each share of Legacy Enjoy’s (a) Series A preferred stock, par value $0.00001 per share, (b) Series B preferred stock, par value $0.00001 per share, and (c) Series C preferred stock, par value $0.00001 per share (collectively,Bridge Loan was converted to obligations under the ~~“Legacy Enjoy Preferred Stock”), converted~~DIP Credit Agreement.

On July 25, 2022, subsequent to the fiscal quarter end, the Debtors, as borrowers, entered into ~~one share of common stock, par value $0.00001 per share, of Legacy Enjoy (the “Legacy Enjoy Common Stock” and, together~~the DIP Credit Agreement with ~~Legacy Enjoy Preferred Stock,~~Asurion, as the ~~“Legacy Enjoy Capital Stock”) (such conversion,~~lender, pursuant to which the ~~“Legacy Enjoy Preferred Conversion”) and (2) all~~Debtors borrowed an additional $52.5 million from the Lender. The proceeds of the DIP Loans were used by us (i) to fund the costs of the administration of the Chapter 11 Cases (including professional fees and expenses and the Section 363 sale processes), (ii) for working capital and other general corporate purposes, and (iii) to fund interest, fees and other payments related to the DIP Loans and DIP Credit Agreement, in each case subject to the applicable orders of the Bankruptcy Court. Pursuant to the Purchase Agreement, the Debtors completed the 363 Sale for approximately $110.0 million, subject to various deduction including a $23.8 million holdback amount. In connection with the consummation of the 363 Sale, on August 31, 2022, the obligations under the DIP Credit Agreement of $55 million outstanding ~~warrants to purchase shares of Legacy Enjoy Capital Stock~~ were ~~exercised~~repaid in full with the ~~exception~~proceeds of the ~~warrant~~363 Sale and such credit agreement was terminated.

During the Chapter 11 process, we expect that proceeds from the 363 Sale, together with cash on hand, if any, will be our primary source of capital to ~~purchase 336,304 shares~~fund our wind-down and any other capital needs. We are unable to determine at

this time whether this will be adequate for us to meet our obligations as they become due. Our liquidity is dependent upon, among other things: (i) our ability to develop, confirm and consummate a Plan or other alternative liquidating transaction, and (ii) the cost, duration and outcome of ~~Legacy~~the Chapter 11 Cases.

The following table presents the Company’s cash and cash equivalents, restricted cash, and accounts receivable, net, for the periods presented:


(in thousands)	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	956	$	84,845
Restricted cash		2,530		1,710
Accounts receivable, net		1,153		7,476

Cash Flows

The following table presents cash provided by (used in) operating, investing, and financing activities during the periods presented:


	Six Months Ended June 30,
(in thousands)	2022			2021
Net cash used in operating activities	$	(91,688	)	$	(71,844	)
Net cash used in investing activities		(4,377	)		(1,389	)
Net cash provided by financing activities		12,196			73,758
Effect of exchange rate on cash, cash equivalents and restricted cash		(191	)		(320	)
Net decrease in cash, cash equivalents and restricted cash	$	(84,060	)	$	205

Operating Activities

During the six months ended June 30, 2022, operating activities from continuing operations used $79.5 million of cash, resulting from our net loss of $116.4 million, offset by net cash provided by changes in our operating assets and liabilities of $11.8 million and net non-cash charges of $25.1 million. Net cash provided by changes in our operating assets and liabilities for the six months ended June 30, 2022, consisted primarily of a $5.4 million decrease in accounts receivable, a $4.6 million increase in prepaid expenses and other current assets, a decrease in operating lease liabilities of $6.7 million, and an increase in chargeback liability of $13.4 million, .

During the six months ended June 30, 2022 operating activities from discontinued operations used $12.2 million of cash.

During the six months ended June 30, 2021, operating activities from continuing operations used $57.8 million of cash, resulting from our net loss of $81.0 million, along with net cash provided by changes in our operating assets and liabilities of $0.2 million, and net non-cash charges of $23.0 million. Net cash provided by changes in our operating assets and liabilities were insignificant individually and in the aggregate. Non-cash charges consisted primarily of $1.2 million in depreciation and amortization, $1.9 million in stock-based compensation, and $19.2 million in fair market revaluation of our convertible debt.

During the six months ended June 30, 2021 operating activities from discontinued operations used $14.1 million of cash.

Investing Activities

During the six months ended June 30, 2022, investing activities from continuing operations used $1.7 million of cash, resulting from the purchases of property and equipment. During the six months ended June 30, 2022, the deconsolidation of Enjoy ~~Preferred Stock held~~UK cash and cash equivalents amounting to $2.7 million resulted to cash outflow from investing activity related to discontinued operations.

During the six months ended June 30, 2021, investing activities used $1.4 million of cash, resulting from the purchases of property and equipment which are all related to continuing operations.

Financing Activities

During the six months ended June 30, 2022, financing activities from continuing operations provided $12.2 million of cash, primarily due to tax related withholding of common stock and borrowings under the Bridge Credit Agreement and related party promissory note. There were no financing activities related to discontinued operations.

During the six months ended June 30, 2021, financing activities from continuing operations provided $73.8 million of cash, resulting primarily from proceeds from the issuance of redeemable convertible preferred stock of $15.0 million and the issuance of convertible loan of $60.2 million offset by ~~TriplePoint Venture Growth BDC Corporation,~~insignificant other financing activities. There were no financing activities related to discontinued operations.

Financing Arrangements

On May 11, 2022, we issued a promissory note in an aggregate principal amount of $10.0 million (the “Original Note”) to Ron Johnson, chair of the Company’s board of directors, former Chief Executive Officer, and a beneficial owner of greater than 5% of the Company’s common stock (the “Holder”). The Original Note was approved by the Audit Committee of the Company’s board of directors pursuant to the Company’s Related Party Transaction Policy. The Original Note has a scheduled maturity date of November 11, 2022 and is be repayable upon written demand of the Holder at any time on or after such date. The Original Note bears interest at a rate of 10% per annum, compounding quarterly and payable at maturity. We may prepay the Original Note at any time without premium or penalty. The Original Note contains customary representations and warranties and events of default, including certain “change of control” events involving us. The Original Note does not restrict the incurrence of future indebtedness by us, and shall become subordinated in right of payment and lien priority upon the request of any future senior lender.

On June 29, 2022, we entered into the Bridge Credit Agreement with Asurion, pursuant to which we borrowed $2.5 million under the Bridge Loan from the Lender. The Bridge Loan had a scheduled maturity date of July 8, 2022 and was due and payable in full on such date or such earlier date as provided in the Bridge Credit Agreement unless the Bridge Loan is converted to loans under the DIP Credit Agreement. The Bridge Loan bore interest at a rate of 12% per annum, compounded monthly, and such interest was to be added to the principal amount of the Bridge Loan and accrue additional interest thereafter and was payable in kind. On July 1, 2022, the outstanding amount of the Bridge Loan was converted ~~into a warrant~~ to ~~purchase 115,875 shares~~obligations under the DIP Credit Agreement.

The Original Note was originally secured by substantially all of ~~New Enjoy Common Stock at an exercise price~~the assets of ~~$6.90 per share (“TriplePoint Warrant”).~~

PART

~~II-OTHER~~

II — OTHER INFORMATION

Item 1. Legal Proceedings

~~None.~~

We have in the past and may in the future be subject to legal proceedings, claims and regulatory actions in the ordinary course of business. We do not anticipate that the ultimate liability, if any, arising out of any such matter will have a material effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors

~~Factors~~

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could ~~cause~~decline due to any of these risks, and, as a result, you may lose all or part of your investment.

In the course of conducting our ~~actual results~~business operations, we are exposed to ~~differ materially from those in this report include~~a variety of risks. Any of the risk factors ~~described~~we describe below have affected or could materially adversely affect our business, financial condition and results of operations. The market price of shares of our common stock could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occurs. Certain statements in “Risk Factors” are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”

We will not be able to continue as a going concern and holders of our common stock could suffer a total loss of their investment.

We have concluded that we will not continue as a going concern. It is likely that our equity securities will be canceled and extinguished in connection with the Chapter 11 Cases, and that the holders thereof would not be entitled to receive, and would not receive or retain, any property or interest in property on account of such equity interests.

Trading in our ~~Amendment No. 1~~common stock and warrants during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. It is likely that our equity securities will be canceled or that holders of such equity will not receive any distribution with respect to, or be able to recover any portion of, their investments.

It is likely that our ~~Annual Report~~equity securities will be canceled, or that holders of such equity will not receive any distribution with respect to, or be able to recover any portion of, their investments. Any trading in our common stock and warrants during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our common stock or warrants. See “–We will not be able to continue as a going concern and holders of our common stock could suffer a total loss of their investment.”

We are subject to the risks and uncertainties associated with theChapter 11 Cases.

During the Chapter 11 Cases, we plan to wind down our business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 of the Bankruptcy Code. As a consequence of filing the Chapter 11 Cases, we will be subject to the risks and uncertainties associated with bankruptcy. These risks include, but are not limited to, the following:

•

our ability to successfully develop, prosecute, confirm and consummate a Plan with respect to the Chapter 11 Cases;

•

our ability to obtain the Bankruptcy Court’s approval with respect to motions or other requests made to the Bankruptcy Court in the Chapter 11 Cases, including maintaining strategic control as debtors-in-possession;

•

the possibility that actions and decisions of our creditors and other third parties with interests in the Chapter 11 Cases may be inconsistent with our plans;

•

the high costs of bankruptcy proceedings and related fees, particularly if delays in the Chapter 11 Cases increase fees and costs;

•

our ability to motivate and retain key employees throughout the Chapter 11 Cases; and

•

the ability of third parties to seek and obtain court approval to terminate or shorten the exclusivity period for us to propose and confirm a Plan, to appoint a Chapter 11 trustee, or to convert the Chapter 11 Cases to Chapter 7 cases.

Because of the risks and uncertainties associated with a voluntary filing for relief under Chapter 11 of the Bankruptcy Code and the related proceedings, we cannot accurately predict or quantify the ultimate impact that events that occur during the Chapter 11 Cases may have on ultimate recovery for stakeholders, including creditors. As mentioned above, it is likely that holders of our equity securities will not recover any portion of their investments.

If we are not able to obtain confirmation of a Plan, we could be required to liquidate under Chapter 7 of the Bankruptcy Code.

If confirmation by the Bankruptcy Court of a Chapter 11 Plan does not occur, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of claims and interests or upon the showing of cause, the Bankruptcy Court may convert our Chapter 11 Cases to cases under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code.

Our common stock and warrants have been delisted from Nasdaq and experience the risks of trading in an over-the-counter market.

On the Petition Date, we received notification from Nasdaq that our common stock and warrants are no longer suitable for listing on Nasdaq. Trading of our common stock and warrants were suspended at the opening of business on July 11, 2022 and a Form ~~10-K/A for the year ended December 31, 2020~~25-NSE was filed with the SEC on ~~May 13, 2021. As~~July 19, 2022 to delist the common stock and warrants from Nasdaq. The delisting became effective July 29, 2022. The deregistration of the common stock and warrants under 12(b) of the Exchange Act will become effective 90 days, or such shorter period as the SEC may determine, after the filing date of the Form 25. Upon deregistration of our common stock and warrants under Section 12(b) of the Exchange Act, our common stock and warrants will remain registered under Section 12(g) of the Exchange Act.

As a result of the suspension and expected delisting, our common stock and warrants began trading exclusively on the OTC Pink Marketplace under the symbols “ENJYQ” and “ENJWQ”, respectively on July 11, 2022. We can provide no assurance that our common stock and warrants will continue to trade on this market, whether broker-dealers will continue to provide public quotes of our common stock and warrants on this market, whether the trading volume of our common stock and warrants will be sufficient to provide for an efficient trading market or whether quotes for our common stock and warrants will continue on this market in the future, which could result in significantly lower trading volumes and reduced liquidity for investors seeking to buy or sell our common stock and warrants. Furthermore, because of the limited market and generally low volume of trading in our common stock and warrants, the price of our common stock and warrants could be more likely to be affected by broad market fluctuations, general market conditions, changes in the markets’ perception of our securities, and announcements made by us or third parties with interests in the Chapter 11 Cases.

We depend on a few highly skilled key employees to navigate the Chapter 11 Cases, and if we are unable to retain, manage, and appropriately compensate them, the outcome of the Chapter 11 Cases could be adversely affected.

Our ability to consummate a successful Plan is based on continued service of our senior management team and other key employees, and on our ability to continue to motivate and appropriately compensate key employees. We may not be able to retain the services of our key employees, work for us on an at-will basis, in the future. If our key

employees fail to work together effectively and to execute our plans and strategies, the Chapter 11 Cases could be prolonged or adversely affected.

We identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective 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 us.

As previously disclosed, in connection with the preparation of our previously issued financial statements, material weaknesses in our internal control over financial reporting were identified and continue to exist as of June 30, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified are as follows:

•

We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient number of professionals with (i) an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. Additionally, the lack of a sufficient number of professionals resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.

•

We did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls were not sufficient to respond to changes to the risks of material misstatement to financial reporting.

These material weaknesses contributed to the following additional material weaknesses:

•

We did not design and maintain effective controls over the segregation of duties related to journal entries and account reconciliations. Specifically, certain personnel have the ability to both (i) create and post journal entries within our general ledger system and (ii) prepare and review account reconciliations.

•

We did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of the financial statements. Specifically, we did not design and maintain: (i) program change management controls for all financial systems to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications and data to appropriate personnel; (iii) computer operations controls to ensure that critical batch jobs are monitored, and data backups are authorized and monitored; and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. These IT deficiencies did not result in a misstatement to the financial statements, however, the deficiencies, when aggregated, could impact our ability to maintain effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

The material weaknesses described above did not result in a misstatement to our annual or interim consolidated financial statements. However, each of these material weaknesses could result in a misstatement of our financial statement accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

The Company’s management had expended a substantial amount of effort and resources for the remediation of the previously identified material weaknesses. However, during the period ended June 30, 2022 we paused remediation efforts given the Company’s filing for bankruptcy as discussed further in Note 3, “Reorganization in bankruptcy”, to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form

~~10-Q,~~

~~there have been no~~ 10-Q. We had taken the following actions towards remediation of the material ~~changes~~weaknesses prior to pausing remediation efforts.

•

We hired personnel with appropriate level of knowledge, training, and experience in accounting and finance to improve our financial accounting and reporting departments and our internal control over financial reporting. We provided financial reporting and internal control training to enhance employees’ competence and experience required to fulfill their roles and responsibilities.

•

We initiated performing a risk assessment over our financial reporting and our internal control over financial reporting, including identification of financially relevant systems and business processes at the ~~risk factors disclosed~~financial statement assertion level, and to identify controls to address the identified risks.

•

We planned to design and implement controls over the preparation and review of journal entries and account reconciliations, including controls over the segregation of duties. We began to strengthen controls related to segregation of duties related to financial accounting and reporting systems.

•

We made progress in ~~our Amendment No. 1 to our Annual Report on Form~~

~~10-K/A~~

~~filed with~~designing controls specifically for IT general controls including controls over the ~~SEC on May 13, 2021.~~users' authorization, provisioning and monitoring of user access rights and privileges, change management processes and procedures, batch job and data backup authorization and monitoring, and program development approval and testing.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~

Proceeds

None.

Item 3. Defaults ~~upon~~Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other ~~Information.~~

Information

None.

Item 6. ~~Exhibits.~~

Exhibits


Exhibit Number	Description	Schedule/Form	File No.	Exhibit	Filing Date
3.1	Certificate of Incorporation of the Company.	8-K	001-39800	3.1	October 22, 2021
3.1.1	Certificate of Amendment of Certificate of Incorporation of the Company.	8-K	001-39800	3.1	September 1, 2022
3.2**	Amended and Restated Certificate of Incorporation of the Company.
3.3	Bylaws of the Company.	8-K	001-39800	3.2	October 22, 2021
10.1	Amended and Restated Promissory Note, dated as of June 29, 2022, by and among the Company and Ron Johnson.	8-K	001-39800	10.1	May 16, 2022
10.2	Senior Secured Credit, Guaranty and Security Agreement, dated June 29. 2022, by and between the Company, Enjoy Technology Operating Corp., Enjoy Technology LLC, the other Loan Parties party thereto, and Asurion, LLC.	8-K	001-39800	10.1	June 30, 2022
10.3	Commitment Letter, dated June 29, 2022, by and between Asurion LLC, the Company, Enjoy Technology Operating Corp. and Enjoy Technology LLC.	8-K	001-39800	10.2	June 30, 2022
10.4**	Engagement Letter, dated July 5, 2022, by and between the Company and AP Services, LLC.
10.5***	Asset Purchase Agreement by and between Asurion, LLC, the Company, Enjoy Technology Operating Corp. and Enjoy Technology LLC, dated July 25, 2022.	8-K	001-39800	10.1	July 29, 2022
10.6**	First Amendment to Asset Purchase Agreement by and between Asurion, LLC, the Company, Enjoy Technology Operating Corp. and Enjoy Technology LLC, dated August 1, 2022.
10.7	Second Amendment to Asset Purchase Agreement by and between Asurion, LLC, the Company, Enjoy Technology Operating Corp. and Enjoy Technology LLC, dated August 28, 2022.	8-K	001-39800	10.2	September 1, 2022
10.8***	Secured Super-Priority Debtor in Possession Credit, Guaranty and Security Agreement and between Asurion, LLC, the Company, Enjoy Technology Operating Corp. and Enjoy Technology LLC, dated July 25, 2022.	8-K	001-39800	10.2	July 29, 2022
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


~~Exhibit~~ ~~Number~~ 101.INS**		~~Description~~ Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document
101.SCH
~~3.1~~		~~Certificate of Incorporation of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on October 22, 2021).~~

~~3.2~~		~~Bylaws of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on October 22, 2021).~~

31.1*		~~Certification of Principal Executive Officer Pursuant to Rules~~ ~~13a-14(a)~~ ~~and~~ ~~15d-14(a)~~ ~~under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

31.2*		~~Certification of Principal Financial Officer Pursuant to Rules~~ ~~13a-14(a)~~ ~~and~~ ~~15d-14(a)~~ ~~under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32.1*		~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~		~~XBRL Instance Document~~

~~101.SCH~~		Inline XBRL Taxonomy Extension Schema Document
101.CAL
~~101.CAL~~		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
~~101.DEF~~		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
~~101.LAB~~		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
~~101.PRE~~		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
~~104~~		Cover Page Interactive Data File ~~(formatted as~~(embedded within the Inline XBRL ~~and contained in Exhibit 101)~~Document)


* These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

~~Table~~

* These certifications are furnished to the SEC pursuant to Section 906 of ~~Contents~~

the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, ae amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

** Filed herein.

*** Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules (or similar attachments) have been omitted. The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule (or similar attachment) upon request by the SEC. Pursuant to Item 601(a)(6) of Regulation S-K, certain personally identifiable information contained in this document, marked by brackets as [***] has been omitted.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, ~~hereunto~~thereunto duly authorized.


			~~ENJOY TECHNOLOGY,~~ LEGACY EJY, INC.

Date: ~~November 12, 2021~~October 14, 2022	By:	~~By:~~		/s/ ~~Ron Johnson~~ Tiffany N. Meriweather
	Name:			~~Ron Johnson~~ Tiffany N. Meriweather
	Title:			Chief Legal Officer and Corporate Secretary (Principal Executive ~~Officer~~Officer)

Date: ~~November 12, 2021~~October 14, 2022	By:	~~By:~~		/s/ ~~Fareed Khan~~ Todd Zoha
	Name:			~~Fareed Khan~~ Todd Zoha
	Title			Chief Financial Officer (Principal Financial and Accounting Officer)


~~Delaware~~				~~98-1566891~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~				~~(I.R.S. Employer~~ ~~Identification No.)~~


Delaware		98-1566891
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3240 Hillview ~~Ave~~ Avenue Palo Alto, CA		94304
(Address of principal executive offices)		(Zip Code)


Title of each ~~class:~~ class	Trading Symbol(s)	Name of each exchange on which ~~registered:~~ registered
Common ~~Stock,~~stock, $0.0001 par value per share	~~ENJY~~ ENJYQ	~~The Nasdaq Stock Market LLC~~ *
Warrants to purchase common stock	~~ENJYW~~ ENJYWQ	~~The Nasdaq Stock Market LLC~~ *


Large accelerated filer ☐	☐		Accelerated filer		☐

Non-accelerated filer ☒	☒		Smaller reporting company		☒

		Emerging growth company		☒


	September 30, 2021			December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash	$	833,608		$	2,266,049
Prepaid expenses		514,151			831,645

Total current assets		1,347,759			3,097,694
Cash held in Trust Account		373,750,000			373,750,000

Total Assets	$	375,097,759		$	376,847,694

Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit
Current liabilities:
Accounts payable	$	7,498,600		$	578,902
Accrued expenses		87,181			488,824

Total current liabilities		7,585,781			1,067,726
Deferred legal fees		462,409			0
Deferred underwriting commissions		13,081,250			13,081,250
Derivative warrant liabilities		20,984,960			27,249,130

Total liabilities		42,114,400			41,398,106
Commitments and Contingencies		0			0
Class A ordinary shares subject to possible redemption, $0.0001 par value; 37,375,000 and 37,375,000 shares at $10.00 per share at September 30, 2021 and December 31, 2020		373,750,000			373,750,000
Shareholders’ Deficit
Preference shares, $0.0001 par value; 5,000,000 shares authorized; NaN issued and outstanding at September 30, 2021 and December 31, 2020		0			0
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized and NaN outstanding except shares subject to redemption at September 30, 2021 and December 31, 2020		0			0
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 9,343,750 shares issued and outstanding at September 30, 2021 and December 31, 2020		934			934
Accumulated deficit		(40,767,575	)		(38,301,346	)

Total shareholders’ deficit		(40,766,641	)		(38,300,412	)

Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit	$	375,097,759		$	376,847,694


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022

☐
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____


*	The registrant’s common stock and warrants began trading exclusively on the OTC Pink Marketplace on July 11, 2022 under the symbols “ENJYQ” and “ENJWQ”, respectively.


PART I — FINANCIAL INFORMATION				~~Page~~
~~PART I. FINANCIAL INFORMATION~~
Item 1.		~~Condensed Consolidated~~ Financial Statements		1	5

	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021 (Unaudited)~~2022 and December 31, ~~2020~~2021		1	5

	~~Unaudited~~ Condensed Consolidated Statements of Operations ~~for the~~and Comprehensive Loss For The Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2022 and 2021		2	6

	~~Unaudited~~ Condensed Consolidated Statements of ~~Changes in Shareholders’~~Redeemable Convertible Preferred Stock and Stockholders’ Equity ~~for the~~(Deficit) For The Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2022 and 2021		3	7

	~~Unaudited~~ Condensed Consolidated ~~Statement~~Statements of Cash Flows ~~for the Nine~~For The Six Months Ended ~~September~~ June 30, 2022 and 2021		4	9

	Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements		5	11

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		18	35

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		21	50

Item 4.		Controls and Procedures		21	50

PART ~~II.~~II — OTHER INFORMATION
~~Item 1.~~		~~Legal Proceedings~~		22
Item ~~1A.~~ 1.	Legal Proceedings	~~Risk Factors~~		22	53

Item 1A.	Risk Factors	53

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds ~~from Registered Securities~~		22	56

Item 3.		Defaults Upon Senior Securities		22	56

Item 4.		Mine Safety Disclosures		22	56
~~Item 5.~~		~~Other Information~~		22
Item 6. 5.	Other Information	~~Exhibits~~		22	56
~~SIGNATURES~~
Item 6.	23 Exhibits	57


	For The Three Months Ended September 30, 2021			For The Nine Months Ended September 30, 2021
General and administrative expenses	$	2,448,391		$	8,267,990

Loss from operations		(2,448,391	)		(8,267,990	)
Other expenses
Change in fair value of derivative warrant liabilities		(939,630	)		6,264,170

Net loss	$	(3,388,021	)	$	(2,003,820	)

Weighted average shares outstanding of Class A ordinary shares, basic and diluted		37,375,000			37,375,000

Basic and diluted net loss per share, Class A ordinary shares	$	(0.07	)	$	(0.04	)

Weighted average shares outstanding of Class B ordinary shares, basic and diluted		9,343,750			9,343,750

Basic and diluted net loss per share, Class B ordinary shares	$	(0.07	)	$	(0.04	)


	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2022			2021			2022			2021
Revenue	$	18,960		$	17,161		$	39,723		$	32,677
Operating expenses:
Cost of revenue		26,449			19,687			56,255			38,325
Operations and technology		22,555			17,499			45,359			33,071
General and administrative		18,497			9,071			36,522			20,193
Impairment charges		7,827			—			7,827			—
Related party expense		5,941			—			5,941			—
Restructuring expenses		10,842			—			10,842			—
Total operating expenses		92,111			46,257			162,746			91,589
Loss from operations		(73,151	)		(29,096	)		(123,023	)		(58,912	)
Loss on convertible loans		—			(17,361	)		—			(19,226	)
Interest expense		(193	)		(1,398	)		(217	)		(2,792	)
Interest income		25			2			27			4
Other income, net		4,173			175			6,796			97
Loss before provision for income taxes		(69,146	)		(47,678	)		(116,417	)		(80,829	)
Provision for income taxes		(1	)		39			16			157
Net loss from continuing operations	$	(69,145	)	$	(47,717	)	$	(116,433	)	$	(80,986	)
Net loss from discontinued operations	$	(14,108	)	$	(8,242	)	$	(22,065	)	$	(14,439	)
Net loss	$	(83,253	)	$	(55,959	)	$	(138,498	)	$	(95,425	)
Other comprehensive loss, net of tax
Cumulative translation adjustment		(708	)		(100	)		(910	)		(104	)
Total comprehensive loss	$	(83,961	)	$	(56,059	)	$	(139,408	)	$	(95,529	)
Net loss per share continuing operations, basic and diluted	$	(0.57	)	$	(2.16	)	$	(0.97	)	$	(3.69	)
Net loss per share discontinued operations, basic and diluted	$	(0.12	)	$	(0.37	)	$	(0.18	)	$	(0.66	)
Weighted average shares used in computing net loss per share, basic and diluted		120,719,489			22,079,802			120,260,245			21,919,563


	Ordinary Shares								Additional Paid-in Capital					Total Shareholders’ Deficit
	Class A				Class B						Accumulated Deficit
	Shares		Amount		Shares		Amount				Accumulated Deficit
Balance - December 31, 2020		—	$	—		9,343,750	$	934	$	0	$	(38,301,346	)	$	(38,300,412	)
Accretion of Class A ordinary shares subject to possible redemption		—		—		—		—		—		(266,102	)		(266,102	)
Net income		—		—		—		—		—		4,368,352			4,368,352

Balance - March 31, 2021 (Unaudited)		—		—		9,343,750		934		0		(34,199,096	)		(34,198,162	)
Accretion of Class A ordinary shares subject to possible redemption		—		—		—		—		—		(196,307	)		(196,307	)
Net loss		—		—		—		—		—		(2,984,151	)		(2,984,151	)

Balance - June 30, 2021 (Unaudited)		—		—		9,343,750		934		0		(37,379,554	)		(37,378,620	)
Net loss		—		—		—		—		—		(3,388,021	)		(3,388,021	)

Balance - September 30, 2021 (Unaudited)		—	$	—		9,343,750	$	934	$	0	$	(40,767,575	)	$	(40,766,641	)


Cash Flows from Operating Activities:
Net loss	$	(2,003,820	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative warrant liabilities		(6,264,170	)
Changes in operating assets and liabilities:
Prepaid expenses		317,494
Accounts payable		6,919,698
Accrued expenses		(36,409	)

Net cash used in operating activities		(1,067,207	)

Cash Flows from Financing Activities:
Offering costs paid		(365,234	)

Net cash used in financing activities		(365,234	)

Net change in cash		(1,432,441	)
Cash - beginning of the period		2,266,049

Cash - end of the period	$	833,608

Supplemental disclosure of noncash financing activities:
Deferred legal fees	$	462,409


	For the Three Months Ended September 30, 2021						For the Nine Months Ended September 30, 2021
	Class A			Class B			Class A			Class B
Basic and diluted net loss per ordinary share:
Numerator:
Allocation of net loss		(2,710,417	)		(677,604	)		(1,603,056	)		(400,764	)
Denominator:
Basic and diluted weighted average ordinary shares outstanding		37,375,000			9,343,750			37,375,000			9,343,750

Basic and diluted net loss per ordinary share	$	(0.07)		$	(0.07)		$	(0.04)		$	(0.04)


Gross proceeds	$	373,750,000
Less:
Fair value of Public Warrants at issuance		(14,015,630	)
Offering costs allocated to Class A ordinary shares subject to possible redemption		(19,939,990	)
Plus:
Accretion on Class A ordinary shares subject to possible redemption amount		33,955,620

Class A ordinary shares subject to possible redemption	$	373,750,000

☒
(Mark One)


Description	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Liabilities:
Derivative warrant liabilities - Public	$	12,520,630	$	0	$	0
Derivative warrant liabilities - Private	$	0	$	8,464,330	$	0


Level 3 - Derivative warrant liabilities at December 31, 2020	$	27,249,130
Change in fair value of derivative warrant liabilities		(3,158,330	)
Transfer of Public Warrants out of level 3		(16,258,130	)

Level 3 - Derivative warrant liabilities at March 31, 2021		7,832,670
Transfer of Private Warrants out of level 3		(7,832,670	)

Level 3 - Derivative warrant liabilities at June 30, 2021		0
Change in fair value of derivative warrant liabilities		0

Level 3 - Derivative warrant liabilities at September 30, 2021	$	0