bfi-10q_20210930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38417

BurgerFi International, Inc.

(Exact name of registrant as specified in its charter)



Delaware	82-2418815
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

105 U.S. Highway 1 North Palm Beach, FL	33408
(Address of principal executive offices)	(Zip Code)

(561) 844-5528

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	BFI	The Nasdaq Stock Market LLC
Redeemable warrants, each exercisable for one share of common stock at an exercise price of $11.50 per share	BFIIW	The Nasdaq Stock Market LLC

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

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

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


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

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

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

The number of shares of the registrant’s Common Stock outstanding as of November 8th, 2021 was 21,263,400.

Table of Contents

		Page
PART I Financial Information		2
Item 1.	Financial Statements (Unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II Other Information		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	32

Signatures		33

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may appear throughout this Quarterly Report on Form 10-Q, including without limitation, Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2020 and this Quarterly Report on Form 10-Q, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A of such reports and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC”). We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

PART I

FINANCIAL INFORMATION

BurgerFi International Inc., and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

	September 30, 2021 (unaudited)			December 31, 2020
ASSETS
CURRENT ASSETS
Cash	$	28,295		$	37,150
Cash - restricted		—			3,233
Accounts receivable, net		551			718
Inventory		398			268
Deferred income taxes		—			713
Assets held for sale		732			732
Other current assets		1,507			1,607
TOTAL CURRENT ASSETS		31,483			44,421
PROPERTY & EQUIPMENT, net		15,122			8,004
DUE FROM RELATED COMPANIES		83			74
GOODWILL		123,560			119,542
INTANGIBLE ASSETS, net		111,437			116,824
OTHER ASSETS		246			251
TOTAL ASSETS	$	281,931		$	289,116
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable - trade and other	$	2,391		$	1,678
Accrued expenses		2,272			1,203
Other liabilities		4,128			430
Other deposit		907			907
Deferred revenue, current		587			490
Notes payable, current		76			1,438
Revolving line of credit		—			3,012
Deferred income taxes		18			—
TOTAL CURRENT LIABILITIES		10,379			9,158
NON-CURRENT LIABILITIES
Warrant liability		6,111			16,516
Deferred revenue, net of current portion		2,745			2,816
Notes payable, net of current portion		601			1,522
Deferred rent		472			29
TOTAL LIABILITIES		20,308			30,041
COMMITMENTS AND CONTINGENCIES - Note 9
Stockholders’ equity
Common stock, $0.0001 par value, 100,000,000 shares authorized, 17,893,476 and 17,541,838 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		2			2
Additional paid-in capital		268,083			261,298
Accumulated deficit		(6,462	)		(2,225	)
TOTAL STOCKHOLDERS’ EQUITY		261,623			259,075
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	281,931		$	289,116

See Notes to Condensed Consolidated Financial Statements.

BurgerFi International Inc., and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited – in thousands, except share data)

	Successor			Predecessor			Successor			Predecessor
	Three Months Ended September 30, 2021			Three Months Ended September 30, 2020			Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020
REVENUE
Restaurant sales	$	8,688		$	6,592		$	26,067		$	18,232
Royalty and other fees		1,861			1,770			5,940			4,687
Royalty - brand development and co-op		471			403			1,527			1,054
Franchise fees		95			108			293			307
TOTAL REVENUE		11,115			8,873			33,827			24,280
Restaurant level operating expenses:
Food, beverage and paper costs		2,671			1,966			7,786			5,554
Labor and related expenses		2,504			1,848			6,988			4,834
Other operating expenses		1,892			1,580			5,861			3,939
Occupancy and related expenses		719			862			2,280			2,108
General and administrative expenses		4,060			2,196			10,599			4,981
Pre-opening costs		615			18			1,243			124
Store closure costs		132			—			132			—
Share-based compensation expense		3,668			—			6,785			—
Depreciation and amortization expense		2,194			315			6,473			811
Brand development and co-op advertising expense		412			915			1,785			1,822
TOTAL OPERATING EXPENSES		18,867			9,700			49,932			24,173
OPERATING (LOSS) INCOME		(7,752	)		(827	)		(16,105	)		107
Other (loss) income		(2	)		—			2,240			—
Gain on change in value of warrant liability		2,732			—			10,405			—
Interest expense		(5	)		(10	)		(46	)		(97	)
(Loss) income before income taxes		(5,027	)		(837	)		(3,506	)		10
Income tax (expense) benefit		9			—			(731	)		—
Net (Loss) Income		(5,018	)		(837	)		(4,237	)		10
Net Income Attributable to Non-Controlling Interests (predecessor)		—			5			—			21
Net Loss Attributable to common shareholders (successor) and Controlling Interests (predecessor)	$	(5,018	)	$	(842	)	$	(4,237	)	$	(11	)
Weighted average common shares outstanding
Basic		17,892,769						17,866,168
Diluted		17,895,932						18,154,434
Net Loss per common share
Basic	$	(0.28	)				$	(0.24	)
Diluted	$	(0.28	)				$	(0.93	)

See Notes to Condensed Consolidated Financial Statements.

BurgerFi International Inc., and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’/Members’ Equity

(Unaudited– in thousands, except share data)

					Predecessor, Three Months Ended
For the three months ended September 30, 2020					Controlling Interest			Noncontrolling Interest			Total Members’ Equity
Balance, June 30, 2020					$	3,258		$	31		$	3,289
Net (Loss) Income						(842	)		5			(837	)
Distributions						(613	)		(36	)		(649	)
Balance, September 30, 2020					$	1,803		$	—		$	1,803

	Successor, Three Months Ended
	Common Stock				Additional Paid-in			Accumulated
For the three months ended September 30, 2021	Shares		Amount		Capital			Deficit			Total
Balance, June 30, 2021		17,838,476	$	2	$	264,415		$	(1,444	)	$	262,973
Share-based compensation		—		—		3,615			—			3,615
Shares issued for share-based compensation		55,000		—		53			—			53
Net loss		—		—		—			(5,018	)		(5,018	)
Balance, September 30, 2021		17,893,476	$	2	$	268,083		$	(6,462	)	$	261,623

					Predecessor, Nine Months Ended
For the nine months ended September 30, 2020					Controlling Interest			Noncontrolling Interest			Total Members’ Equity
Balance, December 31, 2019					$	2,492		$	15		$	2,507
Net (Loss) Income						(11	)		21			10
Distributions						(678	)		(36	)		(714	)
Balance, September 30, 2020					$	1,803		$	—		$	1,803

	Successor, Nine Months Ended
	Common Stock				Additional Paid-in			Accumulated
For the nine months ended September 30, 2021	Shares		Amount		Capital			Deficit			Total
Balance, December 31, 2020		17,541,838	$	2	$	261,298		$	(2,225	)	$	259,075
Share-based compensation		—		—		6,657			—			6,657
Shares issued for share-based compensation		60,000		—		128			—			128
Shares issued for warrant exercises		7,969		—		—			—			—
Exchange of UPO units		283,669		—		—			—			—
Net loss		—		—		—			(4,237	)		(4,237	)
Balance, September 30, 2021		17,893,476	$	2	$	268,083		$	(6,462	)	$	261,623

See Notes to Condensed Consolidated Financial Statements.

BurgerFi International Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited – in thousands)

	Successor			Predecessor
	Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net (loss) income	$	(4,237	)	$	10
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities
Provision for bad debts		44			—
Depreciation and amortization		6,473			811
Gain on PPP loan forgiveness		(2,237	)		—
Deferred income taxes		731			—
Share-based compensation		6,785			—
Forfeited franchise deposits		(128	)		—
Change in fair value of warrant liability		(10,405	)		—
Loss on disposal of property and equipment		22			—
Changes in operating assets and liabilities
Accounts receivable		99			21
Inventory		(130	)		(3	)
Other assets		74			237
Accounts payable - trade and other		669			695
Other liabilities		(201	)		—
Accrued expenses		1,069			44
Deferred revenue		116			96
Deferred rent		443			371
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$	(813	)	$	2,282
NET CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(8,182	)		(1,929	)
Trademark cost		(26	)		—
Advances to related companies		(9	)		(6,874	)
Repayments from related companies		—			5,073
Purchase of store		—			(650	)
Deposit on sale		—			907
NET CASH USED IN INVESTING ACTIVITIES	$	(8,217	)	$	(3,473	)
NET CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on revolving line of credit		—			1,648
Payments on revolving line of credit		(3,012	)		(1,301	)
Notes payable proceeds		—			2,406
Payments on notes payable		(46	)		(22	)
Members’ distributions		—			(714	)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	$	(3,058	)	$	2,017
NET (DECREASE) INCREASE IN CASH		(12,088	)		826
CASH, INCLUDING RESTRICTED CASH, beginning of period		40,383			2,417
CASH, INCLUDING RESTRICTED CASH, end of period	$	28,295		$	3,243

See Notes to Condensed Consolidated Financial Statements.

BurgerFi International Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business and Organization

BurgerFi International, Inc. (“BurgerFi,” the “Company,” or “Successor,” also “we,” “us,” and “our”), is a fast-casual “better burger” concept with 116 franchised and corporate owned restaurants, renowned for delivering an exceptional, all-natural premium burger experience in a refined, contemporary environment. BurgerFi offers a classic American menu of premium burgers, hot dogs, crispy chicken, frozen custard, hand-cut fries and onion rings, shakes, beer, wine and more. BurgerFi has become the go-to better burger restaurant for good times and high-quality food across the United States and beyond. Known for delivering the all-natural burger experience in a fast-casual environment, BurgerFi is committed to an uncompromising and rewarding dining experience that promises fresh food of transparent quality.

On December 16, 2020 (the “Closing Date”), the Company, formerly known as Opes Acquisition Corp. (“Opes,” a special purpose acquisition company, or “SPAC”), consummated a business combination transaction (the “Business Combination”) pursuant to which it acquired the private operating company formerly called BurgerFi International, LLC (“Predecessor”). In connection with the closing of the Business Combination, the Company changed its name to BurgerFi International, Inc. The financial results described herein for the dates and periods prior to the Business Combination relate to the operations of the Predecessor prior to the consummation of the Business Combination. The Consolidated Financial Statements after the Closing Date include the accounts of the Company and its wholly owned subsidiaries including the Predecessor.

2. Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying consolidated balance sheet as of December 31, 2020 is derived from the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”). In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. When necessary, certain prior year amounts have been reclassified to conform to the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these unaudited condensed consolidated financial statements are adequate to make the information not misleading.

The historical financial information of Opes has not been reflected in the Predecessor financial statements as these historical amounts have been determined to be not useful information to a user of the financial statements. SPACs deposit the proceeds from their initial public offerings into a segregated trust account until a business combination occurs, where such funds are then used to pay consideration for the acquiree and/or to pay stockholders who elect to redeem their shares of common stock in connection with the business combination. The operations of a SPAC, until the closing of a business combination, other than income from the trust account investments and transaction expenses, are nominal. Accordingly, no