References in this report (the "Annual Report") to "we," "us" or the "Company"
refer to Breeze Holdings Acquisition Corp. References to our "management" or our
"management team" refer to our officers and directors, and references to the
"Sponsor" refer to Breeze Sponsor, LLC.
Special Note Regarding Forward-Looking Statements
This Annual Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-K
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Annual Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties. For information
identifying important factors that could cause actual results to differ
materially from those anticipated in the forward-looking statements, please
refer to the Risk Factors section of the Annual Report.
Overview
We are a blank check company formed under the laws of the State of Delaware on
June 11, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses. We intend to effectuate our business
combination using cash from the proceeds of the Initial Public Offering and the
sale of the private placement warrants, our capital stock, debt or a combination
of cash, stock and debt.
As indicated in the accompanying financial statements, at December 31, 2022 and
December 31, 2021, we had $14,129 and $5,403 in cash, respectively, and working
capital deficits of $5,345,736 and $1,667,202, respectively (excluding franchise
tax payable and common stock payable). We expect to continue to incur
significant costs in the pursuit of our acquisition plans. We cannot assure you
that our plans to complete our initial business combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from June 11, 2020 (inception) through December 31, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and, after our Initial Public Offering,
identifying a target company for a business combination. We do not expect to
generate any operating revenues until after the completion of our business
combination. We generate non-operating income in the form of interest income on
marketable securities held in the trust account, and changes in the fair value
of warrant liabilities. We incur expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as
for due diligence expenses.
For the year ended December 31, 2022, we had net income of $3,788,224, which
consisted of a change of $5,923,750 in the fair value of warrant liabilities,
interest income from our money market account of $813, and an unrealized gain on
marketable securities held in our trust account of $188,903, offset by operating
costs of $2,323,153.
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For the year ended December 31, 2021, we had net income of $8,703,976, which
consisted of a change of $10,378,500 in the fair value of warrant liabilities,
interest income from our money market account of $764, and an unrealized gain on
marketable securities held in our trust account of $47,076, offset by operating
and formation costs of $1,722,364.
Liquidity and Capital Resources
On November 25, 2020, we consummated the Initial Public Offering of 11,500,000
units at a price of $10.00 per unit (including 1,500,000 units from the full
exercise of the underwriters' over-allotment option), generating gross proceeds
of $115,000,000. Simultaneously with the closing of the Initial Public Offering,
we consummated the sale of 5,425,000 private placement warrants to the Sponsor
at a price of $1.00 per warrant, generating gross proceeds of $5,425,000.
Following the Initial Public Offering, the exercise of the over-allotment option
and the sale of the private placement warrants, a total of $116,725,000 was
placed in the trust account. We incurred $4,099,907 in transaction costs,
including $2,300,000 of underwriting fees, $1,322,350 of representative share
offering costs, and $477,557 of other offering costs.
As of December 31, 2022, we had cash held in the non-interest bearing trust
account of $17,730,969. On May 5, 2022, the Company held a stockholders' meeting
at which a proposal to approve the extension of time to consummate the closing
of a Business Combination Agreement to September 26, 2022 was approved. The
Company provided its stockholders with the opportunity to redeem all or a
portion of their Public Shares at the time of this stockholders' meeting. The
stockholders who elected to redeem their shares did so for a pro rata portion of
the amount then in the Trust Account ($10.35 per share), plus any pro rata
interest earned on the funds held in the Trust Account and not previously
released to the Company to pay its tax obligations. In connection with the
extension proposal, 6,732,987 shares of the Company's common stock were redeemed
for $69,700,628, (the "Redemption"). On May 10, 2022, $109,000 was withdrawn
from the Trust Account for payment of franchise and income taxes.
On September 13, 2022, the Company held its annual stockholders' meeting at
which a proposal to approve the extension of time to consummate the closing of a
Business Combination Agreement to March 26, 2023 was approved. The Company
provided its stockholders with the opportunity to redeem all or a portion of
their Public Shares at the time of this stockholders' meeting. The stockholders
who elected to redeem their shares did so for a pro rata portion of the amount
then in the Trust Account ($10.35 per share), plus any pro rata interest earned
on the funds held in the Trust Account and not previously released to the
Company to pay its tax obligations. In connection with the extension proposal,
3,076,817 shares of the Company's common stock were redeemed for $31,845,056
with 1,690,196 shares remaining. On September 8, 2022, $122,247 was withdrawn
from the Trust Account for payment of franchise and income taxes.
At the annual meeting of the Company held on September 13, 2022, the Company's
stockholders approved (i) a proposal to amend the Company's Amended and Restated
Certificate of Incorporation (the "A&R COI") to authorize the Company to extend
the date of September 26, 2022, up to six (6) times for an additional one
(1) month each time (ultimately until as late as March 26, 2023) by which the
Company must (a) consummate a merger, capital stock exchange, asset, stock
purchase, reorganization or other similar business combination, which we refer
to as our initial business combination, or (b) cease its operations except for
the purpose of winding up if it fails to complete such initial business
combination, and redeem all of the shares of common stock of the Company
included as part of the units sold in the Company's initial public offering that
was consummated on November 25, 2020, and (ii) a proposal to amend the Trust
Agreement to authorize the Extension and its implementation by the Company. The
amended Trust Agreement authorizes the Company's Board of Directors to extend
the time to complete the Business Combination up to six (6) times for an
additional one (1) month each time (for a maximum of six one-month extensions),
upon the deposit into the Trust Account of $0.035 for each outstanding public
share by the Sponsor or its designees on or prior to September 26, 2022 or such
other date as may be extended. Breeze executed its first one month extension of
September 26, 2022 depositing $59,157 in the Trust Account. On October 21,
November 23, and December 20, 2022 Breeze executed the second, third and fourth
one month extensions through January 26, 2023.
As of December 31, 2021, we had cash and marketable securities held in the trust
account of $117,931,556 (including $56,556 of unrealized gains) consisting of
U.S. Treasury Bills with a maturity of 180 days or less. Interest income on the
balance in the trust account may be used by us to pay taxes. Through
December 31, 2021, we did not withdraw any interest earned on the trust account.
For the year ended December 31, 2022, cash used in operating activities was
$3,022,729 which was due to a change in fair value of warrant liabilities of
$5,923,750, and an unrealized gain on marketable securities held in Trust
Account of $189,716, offset in part by our net income of $3,788,224, and a
reduction in working capital of $697,487.
For the year ended December 31, 2021, cash used in operating activities was
$688,415 which was due to an increase in fair value of warrant liabilities of
$10,378,500, and an unrealized gain on marketable securities held in Trust
Account of $47,076, offset in part by our net income of $8,703,976, compensation
expense for common stock purchased by Directors from Sponsor of $401,000, and
changes in working capital of $632,185.
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We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
deferred underwriting commissions and income taxes payable), to complete our
business combination. To the extent that our capital stock or debt is used, in
whole or in part, as consideration to complete our business combination, the
remaining proceeds held in the trust account will be used as working capital to
finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategies.
As of December 31, 2022 and 2021, the Company had $14,129 and $5,403,
respectively, in cash held outside of the Trust Account and working capital
deficits of $5,345,736 and $1,667,202, respectively, (excluding franchise tax
payable).
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, the initial stockholders or their
affiliates may, but are not obligated to, loan us funds as may be required. If
we complete a business combination, we would repay such loaned amounts. In the
event that a business combination does not close, we may use a portion of the
working capital held outside the trust account to repay such loaned amounts but
no proceeds from our trust account would be used for such repayment. Up to
$1,000,000 of such loans may be convertible into warrants identical to the
private placement warrants, at a price of $1.00 per warrant at the option of the
lender. The warrants would be identical to the private placement warrants issued
to our sponsor, including as to exercise price, exercisability and exercise
period. The terms of such loans by our officers and directors, if any, have not
been determined and no written agreements exist with respect to such loans. We
do not expect to seek loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such
funds and provide a waiver against any and all rights to seek access to funds in
our trust account.
On November 19, 2021, the Sponsor loaned the Company an aggregate of $1,150,000
pursuant to an unsecured promissory note to extend the date by which the Company
has to consummate a business combination from November 25, 2021 to February 25,
2022. This unsecured promissory note is non-interest bearing and payable on the
earlier of (i) the consummation of an initial Business Combination, or
(ii) March 26, 2023.
On February 1, 2022, the Company signed a Promissory Note with Sponsor, with a
Maturity Date of March 26, 2023, for a total of up to $1,500,000. On October 1,
2022, the Company signed an Amended Promissory Note with Sponsor, with a
Maturity Date of September 26, 2023 for a total of up to $4,000,000. As of
December 31, 2022, the amount outstanding under this Promissory Note was
$2,800,209 for direct working capital, and $236,628 for monthly SPAC extension
funds for the months of September, 2022 through December, 2022 for a total of
$3,036,837 from Sponsor. The Promissory Note is non-interest bearing and payable
on the earlier of (i) the consummation of an initial Business Combination, or
(ii) September 26, 2023.
On February 18, 2022, the Sponsor loaned the Company an aggregate of $1,150,000
pursuant to an unsecured promissory note to extend the date by which the Company
has to consummate a business combination from February 25, 2022 to May 25, 2022.
This unsecured promissory note is non-interest bearing and payable on the
earlier of (i) the consummation of an initial Business Combination, or
(ii) March 26, 2023.
We believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. If our estimate of the costs
of identifying a target business, undertaking in-depth due diligence and
negotiating a business combination are less than the actual amount necessary to
do so, we may have insufficient funds available to operate our business prior to
our business combination. Moreover, we may need to obtain additional financing
either to complete our business combination or because we become obligated to
redeem a significant number of our public shares upon consummation of our
business combination, in which case we may issue additional securities or incur
debt in connection with such business combination. Subject to compliance with
applicable securities laws, we would only complete such financing simultaneously
with the completion of our business combination. If we are unable to complete
our business combination because we do not have sufficient funds available to
us, we will be forced to cease operations and liquidate the trust account. In
addition, following our business combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations.
Going Concern
Based upon the above narrative, Management determined that the above conditions
and/or events indicate that it may be probable that the Company would be unable
to meet its obligations as they become due within one year after the date that
the financial statements as of December 31, 2022 are available to be
issued. Although Management plans to address this uncertainty through a Business
Combination or through obtaining Working Capital Loans, there is no assurance
that the Company's plans to consummate the Business Combination or obtain the
Working Capital Loans will be successful.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 1 to
the financial statements, the Company's business plan is dependent on the
completion of a business combination and the Company's cash and working capital
as of December 31, 2022 are not sufficient to complete its planned activities.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
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Off-balance sheet financing arrangements
We did not have any off-balance sheet arrangements as of December 31, 2022 and
2021.
Contractual obligations
On November 19, 2021, the Sponsor loaned the Company an aggregate of $1,150,000
pursuant to an unsecured promissory note to extend the date by which the Company
has to consummate a business combination from November 25, 2021 to February 25,
2022. This unsecured promissory note is non-interest bearing and payable on the
earlier of (i) the consummation of an initial Business Combination, or
(ii) March 26, 2023.
On February 1, 2022, the Company signed a Promissory Note with Sponsor, with a
Maturity Date of March 26, 2023, for a total of up to $1,500,000. On October 1,
2022, the Company signed an Amended Promissory Note with Sponsor, with a
Maturity Date of September 26, 2023 for a total of up to $4,000,000. As of
December 31, 2022, the amount outstanding under this Promissory Note was
$2,800,209 for direct working capital, and $236,628 for monthly SPAC extension
funds for the month of September, 2022 through December, 2022 for a total of
$3,036,837 from Sponsor. The Promissory Note is non-interest bearing and payable
on the earlier of (i) the consummation of an initial Business Combination, or
(ii) September 26, 2023.
On February 18, 2022, the Sponsor loaned the Company an aggregate of $1,150,000
pursuant to an unsecured promissory note to extend the date by which the Company
has to consummate a business combination from February 25, 2022 to May 25, 2022.
This unsecured promissory note is non-interest bearing and payable on the
earlier of (i) the consummation of an initial Business Combination, or
(ii) March 26, 2023.
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay Breeze
Financial, Inc. a monthly fee of $5,000 for office space, administrative and
support services to the Company.
The underwriters are entitled to a deferred fee of $0.275 per share, or
$3,162,500 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the trust account solely in the event that
we complete a business combination, subject to the terms of the underwriting
agreement.
On December 2, 2022, the Company signed a Merger Proxy/Business Combination Rate
Agreement with Edgar Agents LLC, for SEC document preparation, printing and
filing for the merger with TV Ammo. The agreement includes an obligation to pay
a Transaction Success Fee of $50,000 upon successful completion and filing of
the documents with the SEC.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our initial public
offering in accordance with ASC 815-40, Derivatives and Hedging-Contracts in
Entity's Own Equity ("ASC 815"), under which the warrants do not meet the
criteria for equity classification and must be recorded as liabilities. As the
warrants meet the definition of a derivative as contemplated in ASC 815, the
Warrants are measured at fair value at inception and at each reporting date in
accordance with ASC 820, Fair Value Measurement, with changes in fair value
recognized in the Statement of Operations in the period of change.
Representative and Consultant Shares
Pursuant to the underwriting agreement (the "Underwriting Agreement") between
the Company and I-Bankers Securities (the "Representative"), on November 23,
2020, the Company issued to the Representative and its designee 250,000 shares
of common stock and separately agreed to issue the Company's Consultant 15,000
shares of common stock for nominal consideration in a private placement intended
to be exempt from registration under Section 4(a)(2) of the Act. The Company
accounts for the Representative Shares and Consultant Shares as a deferred
offering cost of the Initial Public Offering. Accordingly, the offering cost
will be 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 allocated to the Warrants will be expensed immediately
in the Statement of Operations, while offering costs allocated to the redeemable
Public Shares will be deferred and subsequently charged to temporary
stockholders' equity upon the completion of the Initial Public Offering.
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Common stock subject to possible redemption
We account for common stock subject to possible redemption in accordance with
the guidance in ASC Topic 480, "Distinguishing Liabilities from Equity". Common
stock subject to mandatory redemption is classified as a liability instrument
and is measured at fair value. Conditionally redeemable common stock (including
common stock that features redemption rights that are either within the control
of the holder or subject to redemption upon the occurrence of uncertain events
not solely within the Company's control) is classified as temporary equity. At
all other times, common stock is classified as stockholders' equity. Our common
stock features certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
common stock subject to possible redemption is presented at redemption value as
temporary equity, outside of the stockholders' deficit section of our balance
sheet.
Net Income (Loss) Per Share
Net income (loss) per share of common stock is computed by dividing net income
(loss) by the weighted-average number of common shares outstanding during the
period. As the Public Shares are considered to be redeemable at fair value, and
a redemption at fair value does not amount to a distribution different than
other stockholders, redeemable and non-redeemable shares of common stock are
presented as one class of shares in calculating net income (loss) per share of
common stock. As a result, the calculated net income (loss) per share is the
same for redeemable and non-redeemable shares of common stock.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("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) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06
would have on its financial position, results of operations or cash flows.
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