BurgerFi International (BFICQ) DEFM14AProxy related to merger

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

OPES ACQUISITION CORP.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
OF
OPES ACQUISITION CORP.

Proxy Statement dated December 15, 2020
and first mailed to stockholders on or about December 2, 2020

Dear Stockholders:

You are cordially invited to attend a meeting of the stockholders (the “Meeting”) of OPES Acquisition Corp. (“OPES,” “we”, “our”, or “us”), which will be held at 10:00 a.m., Eastern time, on December 15, 2020. Due to the rapidly evolving public health concerns relating to the coronavirus pandemic, related governmental actions closing non-essential businesses and encouraging individuals to stay home, and our concerns about protecting the health and well-being of our stockholders and employees, the Board of Directors has determined to convene and conduct the Meeting via teleconference using the following dial-in information:

Stockholders will NOT be able to attend the Meeting in-person. This proxy statement includes instruction on how to access the Meeting via teleconference.

OPES is a Delaware corporation incorporated as a blank check company for the purpose of entering into a business combination, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” The Business Combination will be completed through the acquisition of the membership interests of BurgerFi International, LLC, a Delaware limited liability company (“BurgerFi” or the “Company”). BurgerFi is in the business of operating gourmet fast food and quick service casual restaurants focused on all-natural hamburgers, vegetarian burgers, hormone-free chicken, and other complementary food offerings (the “Business”).

The Business Combination

On June 29, 2020, OPES entered into a membership interest purchase agreement, as amended (the “Acquisition Agreement”) with BurgerFi, the members of BurgerFi (the “Members”), and BurgerFi Holdings, LLC, a Delaware limited liability company (the “Members’ Representative”). OPES’s acquisition of the membership interests of BurgerFi owned by the Members (the “Interests”) is referred to herein as the Business Combination. Upon the closing of the transactions contemplated in the Acquisition Agreement (the “Closing”), OPES will purchase 100% of the membership interests of BurgerFi from the Members resulting in BurgerFi becoming a wholly owned subsidiary of OPES. In connection with the Business Combination, OPES will change its name to “BurgerFi International, Inc.” References to the “Post-Combination Company” shall refer to BurgerFi International, Inc. after the consummation of the Business Combination. Holders of OPES common stock, par value $0.0001 per share (the “Common Stock”) will be asked to approve the Acquisition Agreement and the other related proposals. On September 22, 2020, OPES, the Members and Members’ Representative entered into an amendment to the Acquisition Agreement (the “Amendment,”) to, among other things, update covenants with respect to the transfer and or license of additional BurgerFi obligations to transfer BurgerFi Intellectual Property, to identify Key Employees of BurgerFi and to remove all references to a Consulting Agreement with Mr. Rosatti.

The aggregate value of the consideration to be paid by OPES in the Business Combination (subject to reduction for indemnification claims and potential changes due to a working capital adjustment) is approximately $100 million calculated as follows: (i) $30,000,000 in cash payable to Members, (ii) $20,000,000 payable either in cash or in 1,886,792 shares of Common Stock based upon a pre-determined price of $10.60 per share (the “Stock Portion”), in the sole and absolute discretion of the OPES board of directors (the “OPES Board of Directors” or “OPES’s Board of Directors”); and (iii) 4,716,981 shares of OPES Common Stock to be issued to the Members. After the Business Combination, the Members may be entitled to an additional 9,356,459 shares of Common Stock if certain stock price targets are met by the Post-Combination Company following the Business Combination.

As of November 24, 2020, there was approximately $46.5 million in OPES’s trust account. The closing price of the Common Stock on November 24, 2020 was $12.25.

Each stockholder’s vote is very important. Whether or not you plan to participate in the OPES Meeting, please submit your proxy card without delay. Stockholders may revoke proxies at any time before they are voted at the meeting. Voting by proxy will not prevent a stockholder from voting at the Meeting if such stockholder subsequently chooses to participate in the Meeting.

We encourage you to read this proxy statement carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 17.

OPES’s Board of Directors unanimously recommends that OPES stockholders vote “FOR” approval of each of the proposals.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the Business Combination or otherwise passed upon the adequacy or accuracy of this proxy statement. Any representation to the contrary is a criminal offense.

November 30, 2020

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be held on December 15, 2020: The notice of meeting, the accompanying proxy statement and proxy card are available at https://www.cstproxy.com/opesacquisitioncorp/smp2020. For banks and brokers, the notice of meeting and the accompanying proxy statement are available at https://www.cstproxy.com/opesacquisitioncorp/smp2020/proxy.

HOW TO OBTAIN ADDITIONAL INFORMATION

If you would like to receive additional information or if you want additional copies of this document, agreements contained in the annexes, or any other documents filed by OPES with the SEC, such information is available without charge upon written or oral request. Please contact our proxy solicitor, at:

Advantage Proxy

P.O. Box 13581

Des Moines, WA 98198

Toll Free: 877-870-8565

Collect: 206-870-8565

Email: KSmith@advantageproxy.com

If you would like to request documents, please do so no later than December 8, 2020 to receive them before the Meeting. Please be sure to include your complete name and address in your request. Please see the section titled “Where You Can Find More Information” to find out where you can find more information about OPES and BurgerFi. You should rely only on the information contained in this proxy statement in deciding how to vote on the Business Combination. Neither OPES nor BurgerFi has authorized anyone to give any information or to make any representations other than those contained in this proxy statement. Do not rely upon any information or representations made outside of this proxy statement. The information contained in this proxy statement may change after the date of this proxy statement. The Company is not obligated to update you of any changes. Do not assume after the date of this proxy statement that the information contained in this proxy statement is still correct.

USE OF CERTAIN TERMS

Unless otherwise stated in this this proxy statement:

“Acquisition Consideration” means (i) $30,000,000 in cash payable to Members, (ii) $20,000,000 payable either in cash or in 1,886,792 shares of OPES common stock based upon a pre-determined price of $10.60 per share (the “Stock Portion”), in the sole and absolute discretion of the OPES Board of Directors; and (iii) 4,716,981 shares of common stock of OPES to be issued to the Members.

“Additional Agreements” refers to the Lock-Up Agreement, the Director Voting Agreement, the New Registration Rights Agreement, the Standstill Letter, and the Indemnification Stock Escrow Agreement.

“Amended and Restated Certificate of Incorporation” refers to the Certificate of Incorporation of the Post-Combination Company that will be effective as of the Closing.

“Business Combination” refers to the transactions contemplated by the Acquisition Agreement, pursuant to which BurgerFi will become a wholly-owned subsidiary of OPES.

“Certificate of Incorporation” refers to OPES’s current Certificate of Incorporation, as amended and restated.

“Closing Date” means the date on which the closing of the Business Combination occurs.

“Closing Payment Shares” means 4,716,981 shares of common stock of OPES to be issued to the Members, together with the Stock Portion.

“Common Stock” means the common stock, par value $0.0001 per share, of OPES.

“Continental” means Continental Stock Transfer & Trust Company, OPES’s transfer agent.

“Earnout Share Consideration” means up to 9,356,459 shares of Common Stock issued as an earnout in accordance with the Acquisition Agreement.

“Founders’ Shares” refers to the 2,875,000 shares of Common Stock issued prior to the IPO.

“Indemnification Escrow Shares” means the 943,396 of the Closing Payment Shares that will be deposited into an escrow account with Continental to satisfy indemnification claims under the Acquisition Agreement.

“Initial Sponsor” means Axis Capital Management.

“Initial Stockholders” means holders of 1,265,000 Founders’ Shares, and based upon the context, may refer to the pre-IPO Initial Stockholder, or may refer to those the designees and transferees of the Founders’ Shares after the IPO. Mr. José Luis Córdova Vera, our Chief Financial Officer, is the only officer and director who is also an Initial Stockholder.

“IPO” means OPES’s initial public offering pursuant to a prospectus dated March 13, 2018.

“Key Employees” means the President, Chief Executive Officer, Chief Operations Officer, Chief Financial Officer, Chief Legal Officer, and Executive Vice President of Culinary & Procurement.

“Notes” means all of the promissory notes for working capital and other expenditures that have been issued by OPES and are payable upon the closing of the Business Combination.

“OPES,” “we,” “us,” “our,” or “our company” refers to OPES Acquisition Corp., a Delaware corporation, except with respect to the section entitled “Business of BurgerFi” in which case references to “we,” “us,” and “our” refer to BurgerFi International, LLC.

“PIPE Investors” means Lion Point Capital, LP and Lionheart Equities, LLC who will purchase 3,000,000 units, in the aggregate, pursuant to the Amended and Restated Forward Purchase Contract.

“Post-Closing Board of Directors” means the five-member board of directors to be appointed to serve on the board of the Post-Combination Company after the closing of the Business Combination.

“Post-Combination Company” means OPES after the completion of the Business Combination with its name changed to BurgerFi International, Inc.

“Public Warrants” means one redeemable warrant that was included as part of each OPES Unit issued in the IPO, entitling the holder thereof to purchase one share of OPES Common Stock at an exercise price of $11.50 per share.

“Private Placement Warrants” means one warrant that was included as part of each Private Placement Unit issued as part of a private placement, entitling the holder thereof to purchase one share of OPES Common Stock at an exercise price of $11.50 per share.

“Sponsor” means LH Equities, LLC, of which Ophir Sternberg, the OPES Chairman and Chief Executive Officer, is the controlling person.

“Units” means the units of OPES, with each Unit consisting of one share of OPES Common Stock, and one Public Warrant.

“UPO” means the unit purchase option issued to EarlyBirdCapital, LLC, OPES’s underwriter in its IPO, for the purchase of 750,000 units which, if exercised, will result in the issuance of 750,000 shares of Common Stock and warrants to purchase an additional 750,000 shares of Common Stock.

“Warrants” means the Public Warrants and Private Placement Warrants.

OPES ACQUISITION CORP.
4218 NE 2nd Avenue

Miami, FL 33137

NOTICE OF SPECIAL MEETING OF
OPES ACQUISITION CORP. STOCKHOLDERS
To Be Held on December 15, 2020

To OPES Acquisition Corp. Stockholders:

NOTICE IS HEREBY GIVEN, that you are cordially invited to attend a meeting of the stockholders of OPES Acquisition Corp. (“OPES,” “we”, “our”, or “us”), which will be held at 10:00 a.m., Eastern time, on December 15, 2020 (the “Meeting”). In light of developments surrounding the novel coronavirus (also known as COVID-19) we will hold the Meeting via teleconference using the following dial-in information:

During the Meeting, OPES stockholders will be asked to consider and vote upon the following proposals, which we refer to herein as the “Proposals”:

All of the proposals set forth above are sometimes collectively referred to herein as the “Proposals.” Proposals 2, 3 and 4 are dependent upon approval of the Business Combination Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, OPES will not consummate the Business Combination. Under the OPES Certificate of Incorporation, if OPES does not consummate the Business Combination and fails to complete an initial business combination by January 31, 2021, OPES would be required to dissolve and liquidate. unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated.

As of November 24, 2020, the record date, there were 7,688,090 shares of Common Stock issued and outstanding and entitled to vote. Only OPES stockholders who hold shares of Common Stock of record as of the close of business on November 24, 2020 are entitled to vote at the Meeting or any adjournment of the Meeting. This proxy statement is first being mailed to OPES stockholders on or about December 2, 2020.

Pursuant to our Certificate of Incorporation, OPES is providing its public stockholders with the opportunity to elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the trust account as of two business days prior to the consummation of the Business Combination, including interest (which shall be net of taxes payable), by (ii) the total number of then-outstanding shares of OPES Common Stock that were sold as part of the OPES Units in the OPES IPO, which are referred to collectively as “public shares,” subject to the limitations described herein. OPES estimates that the per-share price at which public shares may be redeemed from cash held in the trust account will be approximately $10.64 at the time of the Meeting. OPES’s public stockholders may elect to redeem their shares even if they vote for the Business Combination or do not vote at all. The Business Combination will not be consummated if the holders of 2,415,109 or more shares of OPES’s Common Stock exercise their redemption rights, which number of shares is based upon the balance of the trust account as of September 30, 2020.

It is anticipated that, upon consummation of the Business Combination, our Sponsor, the Initial Stockholders and our officers and directors will own approximately 18.9% of the issued and outstanding shares of OPES Common Stock (excluding treasury shares), and the Members will own approximately 37.6% of the issued and outstanding shares of OPES Common Stock (excluding treasury shares). These relative percentages assume that none of OPES’s existing public stockholders exercise their redemption rights, as discussed herein. If any of OPES’s existing stockholders exercise their redemption rights, the anticipated percentage ownership of OPES’s existing stockholders will be reduced and the above percentages would increase. You should read “The Membership Interest Purchase Agreement — Consideration” and “Unaudited Pro Forma Combined Financial Statements” for further information.

The OPES Units, OPES Common Stock, and OPES Warrants are currently listed on Nasdaq under the symbols “OPESU,” “OPES,” and “OPESW,” respectively.

Investing in OPES’s securities involves a high degree of risk. See “Risk Factors” beginning on page 17 for a discussion of information that should be considered in connection with an investment in OPES’s securities.

YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY.

OPES is providing this proxy statement and accompanying proxy card to its stockholders in connection with the solicitation of proxies to be voted at the Meeting and at any adjournments or postponements of the Meeting. Our Sponsor, the Initial Stockholders and our officers and directors who own approximately 43.1% of OPES outstanding shares of Common Stock as of November 24, 2020 (the “Record Date”), have agreed to vote their shares of Common Stock in favor of each of the Proposals.

Whether or not you plan to participate in the Meeting, please complete, date, sign and return the enclosed proxy card without delay in order to ensure your representation at the Meeting no later than the time appointed for the Meeting or adjourned meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the Meeting, you must obtain a proxy issued in your name from that broker, bank or other agent. Only stockholders of record at the close of business on the Record Date may vote at the Meeting or any adjournment or postponement thereof. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not participate in the Meeting, your shares will not be counted for purposes of determining whether a quorum is present at, and the number of votes voted at, the Meeting.

Assuming that a quorum is present, participating in the Meeting or by proxy and abstaining from voting will have no effect on any of the Proposals. Similarly, broker non-votes will have no effect on any of the Proposals. If you sign, date, and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the Proposals presented at the Meeting. If you are a stockholder of record and you participate in the virtual Meeting and wish to vote at that time, you may withdraw your proxy and vote then.

If you have submitted a proxy to vote your shares and wish to change your vote, you may do so by delivering a later-dated, signed proxy card to Advantage Proxy, P.O. Box 13581, Des Moines, WA 98198 Attention: Karen Smith, Telephone: 877-870-8565, the Company’s proxy solicitor, prior to the date of the Meeting. You also may revoke your proxy by sending a notice of revocation to Advantage Proxy. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

We encourage you to read this proxy statement carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 17.

OPES’s Board of Directors has unanimously approved the Acquisition Agreement, and unanimously recommends that the OPES stockholders vote “FOR” approval of each of the Proposals. When you consider OPES’s Board of Director’s recommendation of these Proposals, you should keep in mind that OPES’s directors and officers have interests in the Business Combination that may conflict or differ from your interests as a stockholder. See the section titled “The Business Combination Proposal: Approval of The Business Combination — Interests of Certain Persons in the Business Combination.”

On behalf of the OPES Board of Directors, I thank you for your support and we look forward to the successful consummation of the Business Combination.

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be held on December 15, 2020: This notice of meeting, the accompanying proxy statement and proxy card are available at https://www.cstproxy.com/opesacquisitioncorp/smp2020. For banks and brokers, the notice of meeting and the accompanying proxy statement are available at https://www.cstproxy.com/opesacquisitioncorp/smp2020/proxy.

TABLE OF CONTENTS

ANNEXES

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements, including statements about the parties’ ability to close the Business Combination, the anticipated benefits of the Business Combination, and the financial condition, results of operations, earnings outlook and prospects of OPES and/or BurgerFi, and may include statements for the period following the consummation of the Business Combination. Forward-looking statements appear in a number of places in this proxy statement including, without limitation, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of BurgerFi” and “Business of BurgerFi.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of the management of OPES and BurgerFi as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Risk Factors,” those discussed and identified in public filings made with the SEC by OPES and the following:

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of OPES and BurgerFi prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this proxy statement and attributable to OPES, BurgerFi or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement. Except to the extent required by applicable law or regulation, OPES and BurgerFi undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The following are answers to some questions that you, as a stockholder of OPES, may have regarding the Proposals being considered at the Meeting. We urge you to read carefully the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the Proposals and the other matters being considered at the Meeting. Additional important information is also contained in the annexes to and the documents incorporated by reference into this proxy statement.

A:          The board of directors of OPES is soliciting your proxy to vote for the Business Combination at the Meeting because you owned shares of OPES Common Stock at the close of business on November 24, 2020, the “Record Date” for the Meeting, and are therefore entitled to vote at the Meeting. This proxy statement summarizes the information that you need to know in order to cast your vote.

A:          If you were a holder of record of OPES Common Stock on November 24, 2020, the Record Date for the Meeting, you may vote with respect to the Proposals at the Meeting, or by submitting a proxy by mail so that it is received prior to 9:00 a.m., Eastern time, on December 15, 2020, in accordance with the instructions provided to you under the section titled “The Meeting.” If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, your broker or bank or other nominee may provide voting instructions (including any telephone or Internet voting instructions). You should contact your broker, bank, or nominee in advance to ensure that votes related to the shares you beneficially own will be properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares.

A.           If your shares are held in “street name” through a broker, bank or other nominee, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than directly from us. Simply complete and mail the proxy card to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone. Many banks and brokerage firms offer Internet and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided. If you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any Proposal for which your broker does not have discretionary authority to vote. If a proposal is determined to be discretionary, your broker, bank or other holder of record is permitted to vote on the proposal without receiving voting instructions from you. If a proposal is determined to be non-discretionary, your broker, bank or other holder of record is not permitted to vote on the proposal without receiving voting instructions from you. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a non-discretionary proposal because the holder of record has not received voting instructions from the beneficial owner.

Each of the Proposals to be presented at the Meeting is a non-discretionary proposal. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any of the Proposals. A broker non-vote would have the same effect as a vote against the Business Combination Proposal, and the Adjournment proposal.

A.          Yes. If you have not yet submitted a proxy, you may do so by submitting your proxy card by mail by using the previously provided self-addressed, stamped envelope.

A:          Yes. You may change your vote at any time before your proxy is voted at the Meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, or by submitting a written revocation stating that you would like to revoke your proxy that our proxy solicitor receives prior to the Meeting. If you hold your shares of OPES Common Stock through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of proxies. If you are a record holder, you should send any notice of revocation or your completed new proxy card, as the case may be, to:

Advantage Proxy

P.O. Box 13581

Des Moines, WA 98198

Toll Free: 877-870-8565

Collect: 206-870-8565

Email: KSmith@advantageproxy.com

Unless revoked, a proxy will be voted at the Meeting in accordance with the stockholder’s indicated instructions. In the absence of instructions, proxies will be voted FOR each of the Proposals.

A.          Stockholders of record; Shares registered directly in your name.

If you are a stockholder of record, you may vote by using the proxy card. Please complete, sign and date the proxy card and return it in the prepaid envelope. If you return your signed proxy card to us before the Meeting, we will vote your shares as you direct.

If your shares are registered in the name of your broker, bank, or other agent, you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than directly from us. Simply complete and mail the proxy card to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone. Many banks and brokerage firms offer Internet and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided.

A:          No. You may vote by proxy using the enclosed proxy card. Your vote is important. We encourage you to vote as soon as possible after carefully reading this proxy statement.

A.          If you have any questions concerning the Meeting or need help voting your shares of the Company’s common stock, please contact our transfer agent, 

Continental Stock Transfer at 917-262-2373 or email proxy@continentalstock.com.

The notice of meeting, the accompanying proxy statement and proxy card are available at https://www.cstproxy.com/opesacquisitioncorp/smp2020. For banks and brokers, the notice of meeting and the accompanying proxy statement are available at https://www.cstproxy.com/opesacquisitioncorp/smp2020/proxy.

A:          Only holders of record of shares of OPES Common Stock as of the close of business on November 24, 2020 (the Record Date) may vote at the Meeting. As of the Record Date, there were 7,688,090 shares of Common Stock issued and outstanding and entitled to vote. Please see the section titled “The Meeting—Record Date; Who is Entitled to Vote” for further information.

A:          Yes, the Amendment Proposal, the Incentive Plan Proposal and the Nasdaq Proposal are dependent upon the Business Combination Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, OPES will not consummate the Business Combination. In accordance with our Certificate of Incorporation, if OPES does not consummate the Business Combination and fails to complete an initial business combination by January 31, 2021, OPES would be required to dissolve and liquidate unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated. Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the other Proposals.

A:          After the Business Combination, the Post-Combination Company will be operating in the restaurant industry and more specifically as a fast casual “better burger” concept with approximately 119 franchised and corporate-owned restaurants, delivering an exceptional, all-natural premium burger experience in a refined, contemporary environment.

A:          The presence in person or by proxy at the Meeting of the holders of a majority of the number of issued and outstanding shares of OPES Common Stock is required in order to hold the Meeting and conduct business. This is called a quorum. OPES Common Stock will be counted for purposes of determining if there is a quorum if the stockholder (i) is present and entitled to vote at the meeting, or (ii) has properly submitted a proxy card or voting instructions through a broker, bank or custodian. In the absence of a quorum, the Meeting will be adjourned to such other time and place as the directors may determine.

A:          Proposal #1 - The Business Combination Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #1. Broker non-votes will have no effect on the vote for Proposal #1.

Proposal #2 - The Amendment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of OPES Common stock. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal #2.

Proposal #3 - The Incentive Plan Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #3. Broker non-votes will have no effect on the vote for Proposal #3.

Proposal #4 – The Nasdaq Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #4. Broker non-votes will have no effect on the vote for Proposal #4.

Proposal #5 - The Adjournment Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #5. Broker-non votes will have no effect on the vote for Proposal #5.

A:          Our Sponsor and the Initial Stockholders, who as of the Record Date own 2,875,000 shares of Common Stock in the aggregate, or approximately 37.39% of the outstanding shares of Common Stock, have agreed, pursuant to letter agreements with us and EarlyBirdCapital, to vote the shares of Common Stock owned by them in favor of the Business Combination Proposal, and intend to vote in favor of the Amendment Proposal, the Incentive Plan Proposal, the Nasdaq Proposal and the Adjournment Proposal. None of our officers and directors own shares of Common Stock as of the Record Date, other than Mr. José Luis Córdova Vera, our Chief Financial Officer, who owns Founders’ Shares as an Initial Stockholder, and Mr. Ophir Sternberg, our Chairman and Chief Executive Officer, who is the controlling person of our Sponsor.

A:          We urge you to read carefully and consider the information contained in this proxy statement, including the annexes, and consider how the Business Combination will affect you as an OPES stockholder. You should vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.

A:          No. You are not required to vote against the Business Combination Proposal in order to have the right to demand that OPES redeem your Common Stock for cash equal to your pro rata share of the aggregate amount then on deposit in the trust account (including interest earned on your pro rata portion of the trust account, net of taxes payable) before payment of deferred underwriting commissions. These redemption rights in respect of the shares of Common Stock are sometimes referred to herein as “redemption rights.” If the Business Combination is not completed holders of OPES shares of Common Stock electing to exercise their redemption rights will not be entitled to receive such payments and their OPES shares of Common Stock will be returned to them.

A:          If you are a public stockholder and you seek to have your shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern time, on December 11, 2020 (two business days before the Meeting), that OPES redeem your shares for cash, and (ii) submit your request in writing to OPES’s transfer agent, Continental, at One State Street, 30th Floor, New York, New York 10004 and deliver your shares to Continental (physically, or electronically using the DWAC system) at least two business days prior to the vote at the Meeting.

Any corrected or changed written demand of redemption rights must be received by OPES’s transfer agent two business days prior to the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to the transfer agent at least two business days prior to the vote at the Meeting.

Public stockholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of shares of OPES Common Stock as of the Record Date. Any public stockholder who holds shares of OPES Common Stock on or before December 11, 2020 (two business days before the Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

A:          OPES will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for the purposes of determining whether a quorum is present at the Meeting. An abstention will be deemed a vote “AGAINST” Proposals marked “ABSTAIN.” However, the failure to elect to exercise your redemption rights will preclude you from having your OPES shares of Common Stock redeemed for cash. If you wish to exercise your redemption rights, you must make an election to redeem such shares of OPES Common Stock by submitting a request in writing to OPES’s transfer agent at the address listed on page 5, and deliver your shares of Common Stock to OPES’s transfer agent physically or electronically through DTC prior to the Meeting.

If you do not provide instructions with your proxy, your bank, broker or other nominee may submit a proxy card expressly indicating that it is NOT voting your shares of OPES Common Stock; this indication that a bank, broker or nominee is not voting your shares of OPES Common Stock is referred to as a “broker non-vote.” Your bank, broker or other nominee can vote your shares of OPES Common Stock only if you provide instructions on how to vote. You should instruct your broker to vote your shares of OPES Common Stock in accordance with directions you provide. A broker non-vote will have no effect on Proposals #1, 3, 4 and 5, and will have the effect of a vote “AGAINST” Proposal #2.

A:          If you sign and return your proxy card without indicating how to vote on any particular Proposal, the shares of OPES Common Stock represented by your proxy will be voted in favor of each Proposal. Proxy cards that are returned without a signature will not be counted as present at the Meeting and cannot be voted.

A:          OPES will pay the cost of soliciting proxies for the Meeting. OPES has engaged Advantage Proxy to assist in the solicitation of proxies for the Meeting. OPES has agreed to pay Advantage Proxy a fee of $7,500, plus disbursements, and will reimburse Advantage Proxy for its reasonable out-of-pocket expenses in the amount of $750 and indemnify Advantage Proxy and its affiliates against certain claims, liabilities, losses, damages, and expenses. OPES will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of OPES Common Stock for their expenses in forwarding soliciting materials to beneficial owners of the shares of OPES Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

A:          The Record Date for the Meeting is earlier than the date of the Meeting, as well as the date that the Business Combination is expected to be consummated. If you transfer your shares of Common Stock after the Record Date, but before the Meeting, unless the transferee obtains from you a proxy to vote those shares, you would retain your right to vote at the Meeting, but will not hold an interest in OPES after the Business Combination is consummated.

A.          The Members will receive at the Closing, (i) $30,000,000 in cash, (ii) $20,000,000 payable, in OPES’s discretion, either in cash or in 1,886,792 shares of Common Stock based upon a pre-determined price of $10.60 per share, and (iii) 4,716,981 shares of Common Stock, on a pro rata basis of their ownership percentage in BurgerFi. After the consummation of the Business Combination, the Members will also be entitled to receive, if the conditions are met, an additional 9,356,459 shares of Common Stock.

A:          Prior to the Business Combination, the OPES stockholders who hold shares issued in the IPO owned approximately 57.8% of OPES’s issued and outstanding shares of Common Stock. After the Business Combination and giving effect to the issuance of the Closing Payment Shares, assuming (i) no redemptions of our public shares of Common Stock, (ii) the conversion of $1.123 million of Notes into 100,000 shares of Common Stock, (iii) the issuance of the Stock Portion in shares, (iv) the issuance of 3,000,000 shares of Common Stock in connection with the Forward Purchase Contract, (v) the Earnout Shares are not earned and issued, and (vi) the Warrants and UPO are not exercised for shares of Common Stock, the current OPES stockholders will own approximately 43.5% of the Post-Combination Company.

A:          Yes. There are several risks related to the Business Combination and other transactions contemplated by the Acquisition Agreement, that are discussed in this proxy statement. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page 17 of this proxy statement.

A:          Yes. The obligations of OPES and BurgerFi to consummate the Business Combination are subject to conditions, as more fully described in the section titled “The Acquisition Agreement” in this proxy statement.

A:          Yes. OPES stockholders who intend to have their shares of Common Stock redeemed should send their certificates or tender their shares electronically no later than two business days before the Meeting. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your shares of Common Stock for cash.

A:          Assuming the requisite stockholder approvals are received, OPES expects that the Business Combination will occur as soon as practicable following the Meeting. In accordance with the Certificate of Incorporation, if OPES does not consummate the Business Combination and fails to complete an initial business combination by January 31, 2021, OPES would be required to dissolve and liquidate unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated.

A:          If the Business Combination is not consummated and no other business combination is consummated prior to January 31, 2021, pursuant to Paragraph C of Article SIXTH of its Certificate of Incorporation, OPES’s officers must take all actions necessary in accordance with the Delaware General Corporation Law (the “DGCL”) to dissolve and liquidate OPES as soon as reasonably practicable. Following dissolution, OPES will no longer exist as a company. In any liquidation, the funds held in the trust account, plus any interest earned thereon (net of taxes payable), together with any remaining out-of-trust net assets will be distributed pro-rata to holders of shares of OPES Common Stock who acquired such shares in the IPO or in the aftermarket. The estimated consideration that each share of OPES Common Stock would be paid at liquidation would be approximately $10.64 per share for stockholders based on amounts on deposit in the trust account as of the Record Date. The closing price of OPES’s Common Stock on Nasdaq as of the November 24, 2020 was $12.25. Our Sponsor, the Initial Stockholders, and our officers and directors of OPES waived the right to any liquidation distribution with respect to any shares of OPES Common Stock held by them.

A:          Following the closing of the Business Combination, holders of shares of OPES Common Stock exercising redemption rights will receive their per share redemption price out of the funds in the trust account. The balance of the funds will be released to OPES after the Business Combinations and utilized to pay the cash portion of the purchase price to the Members of BurgerFi and to fund working capital needs of the Post-Combination Company. As of November 24, 2020, there was approximately $46.5 million in OPES’s trust account. OPES’s estimates that approximately $10.64 per outstanding share issued in OPES’s IPO will be paid to the public investors exercising their redemption rights.

A:          As a condition to the closing of the Business Combination, all of the officers and directors of OPES will resign, other than Mr. Sternberg, who will serve as the Executive Chairman of the Post-Combination Board of Directors, and Ms. Greenfield, who will remain a director. For information on the anticipated management of the Post-Combination Company, see the section titled “Post-Combination Company’s Directors and Executive Officers after the Business Combination” in this proxy statement.

You should read “Business Combination Proposal: Approval of the Business Combination — OPES’s Board’s Reasons for Approval of the Business Combination” beginning on page  54 for a discussion of the factors that our Board of Directors considered in deciding to recommend the approval of the Business Combination Proposal,

A:          In considering the recommendation of the OPES Board of Directors to approve the Acquisition Agreement, OPES stockholders should be aware that certain OPES executive officers and directors may be deemed to have interests in the Business Combination that are different from, or in addition to, those of OPES stockholders generally. These interests, which may create actual or potential conflicts of interest, are, to the extent material, described in the section entitled “Interests of Certain Persons in the Business Combination” beginning on page 57.

A:          You are entitled to one vote for each share of OPES Common Stock that you held as of the Record Date. As of the close of business on the Record Date, there were 7,688,090 outstanding shares of Common Stock.

A:          The presence in person or by proxy of a majority of the outstanding shares of Common Stock entitled to vote at the Meeting is necessary to constitute a quorum at the Meeting. The inspector of election will determine whether a quorum is present. If you are a beneficial owner (as defined above) of shares of the Company’s common stock and you do not instruct your bank, broker or other nominee how to vote your shares on any of the Proposals, your shares will not be counted as present at the Meeting for purposes of determining whether a quorum exists. Votes of stockholders of record who participate in the Meeting or by proxy will be counted as present at the Meeting for purposes of determining whether a quorum exists, whether or not such holder abstains from voting on all of the Proposals.

A:          If you have questions about the Proposals or if you need additional copies of this proxy statement or the enclosed proxy card you should contact OPES’s proxy solicitor at:

Advantage Proxy

P.O. Box 13581

Des Moines, WA 98198

Toll Free: 877-870-8565

Collect: 206-870-8565

Email: KSmith@advantageproxy.com

You may also obtain additional information about OPES from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

SUMMARY

This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the Proposals to be submitted for a vote at the Meeting, including the Business Combination, you should read this entire document carefully, including the Acquisition Agreement and the Amendment attached as Annex A and Annex A-1, respectively, to this proxy statement. The Acquisition Agreement, as amended, is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. It is also described in detail in this proxy statement in the section entitled “The Acquisition Agreement.”

The Parties

OPES Acquisition Corp.

OPES Acquisition Corp. is a blank check company formed on July 24, 2017 as a Delaware corporation for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities, which we refer to as a “target business.”

On March 16, 2018, we consummated our IPO of 10,000,000 Units, with each Unit consisting of one share of OPES Common Stock, and one Public Warrant. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $100,000,000. Simultaneously with the consummation of the IPO, we consummated a private placement of 400,000 Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, generating total proceeds of $4,000,000.

We also sold a unit purchase option to purchase up to 750,000 units to EarlyBirdCapital for a purchase price of $100 (the “UPO”). The UPO is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummation of our initial business combination. The UPO may be exercised for cash or on a cashless basis, at the holder’s option, and expires on March 17, 2023. At the time of the IPO, we also entered into the Forward Purchase Contract with Lion Point Capital, LP (“Lion Point”), wherein Lion Point agreed to purchase in a private placement to occur concurrently with the consummation of our initial business combination 3,000,000 units at $10.00 per unit, with each unit consisting of one share of OPES Common Stock and one warrant exercisable to purchase one share of OPES Common Stock at an exercise price of $11.50 per share, for aggregate gross proceeds of $30,000,000 (the “Forward Purchase Units”). The Forward Purchase Contract is subject to conditions, including that Lion Point consents to our initial business combination. Lion Point granting its consent to the purchase is entirely within its sole discretion. Accordingly, if it does not consent to the business combination, it will not be obligated to purchase the units. In connection with the consummation of the Business Combination, the Company will enter into Amended and Restated Forward Purchase Contracts (each an “Amended and Restated Forward Purchase Contract”) with each of Lion Point and Lionheart Equities, LLC (“Lionheart Equities”) for the purchase of Forward Purchase Units. In the written notice from Lion Point to OPES on June 29, 2020, Lion Point confirmed that it will consent to the Business Combination and has agreed to purchase 2,000,000 Forward Purchase Units under the terms of its Amended and Restated Forward Purchase Contract with the Company upon the consummation of the Business Combination, and Lionheart Equities has agreed to purchase 1,000,000 Forward Purchase Units upon the consummation of the Business Combination under the terms of its Amended and Restated Forward Purchase Contract with the Company. In addition, OPES agreed to register a total of 5,029,376 shares of OPES Common Stock owned, or to be owned by Lion Point as of the consummation of the Business Combination, which is comprised of (i) 862,500 of the Founders’ Shares, (ii) 83,438 shares of OPES Common Stock underlying the Private Placement Units and 83,438 shares of OPES Common Stock underlying the Private Placement Warrants, and (iii) 2,000,000 shares of OPES Common Stock underlying the Forward Purchase Units and 2,000,000 shares of OPES Common Stock underlying the warrants that are part of the Forward Purchase Units, which shares would have priority registration rights over all other shares of OPES Common Stock to be registered under the New Registration Rights Agreement. Lion Point is entitled to make up to two demands that we register such shares. OPES and Lion Point have agreed to enter into definitive documentation with respect to the terms of the written notice from Lion Point to OPES on June 29, 2020.

On March 20, 2018, we sold an additional 1,500,000 Units at $10.00 per Unit pursuant to the underwriters fully exercising their over-allotment option and we also sold an additional 45,000 Private Placement Units at $10.00 per Private Placement Unit to the original purchasers of the Private Placement Units in respect of their obligation to purchase such additional Private Placement Units upon the exercise of the underwriters’ over-allotment option, generating additional gross proceeds of $15,450,000.

After deducting the underwriting fee (excluding the deferred underwriting commission of $4,025,000, which amount will be payable upon consummation of the Business Combination, if consummated) and the IPO expenses, the total net proceeds from our IPO and the sale of the Private Placement Units, approximately $116,150,000, was placed in the trust account.

In accordance with the Investment Management Trust Agreement, dated March 13, 2018, by and among OPES and Continental, as trustee, the amounts held in the trust account may only be used by OPES upon the consummation of a business combination and upon the redemption of the public shares by the OPES public stockholders, except that there can be released to OPES, from time to time, any interest earned on the funds in the trust account that it may need to pay its tax obligations. The remaining interest earned on the funds in the trust account will not be released until the earlier of the completion of a business combination or OPES’s liquidation.

In accordance with the Certificate of Incorporation, if OPES does not consummate the Business Combination and fails to complete an initial business combination by January 31, 2021, OPES would be required to dissolve and liquidate. unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated. There is no assurance that OPES’s Stockholders will vote to approve the extension of time with which the Company has to complete a business combination. In addition, in connection with an approval to amend its Certificate of Incorporation to extend the time period to consummate the Business Combination, OPES’s stockholders may elect to redeem shares of the Common Stock and receive payment from the trust account. If the Business Combination is not consummated by January 31, 2021 and OPES does not obtain stockholder approval to extend the time period to consummate the Business Combination, OPES would wind up its affairs and liquidate.

OPES’s Units, shares of Common Stock and Public Warrants are each traded on Nasdaq under the symbols “OPESU,” “OPES” and “OPESW,” respectively. Each OPES Unit consists of one share of Common Stock and one Public Warrant entitling its holder to purchase one share of Common Stock at a price of $11.50 per share. OPES’s units, shares of Common Stock and Public Warrants commenced trading on Nasdaq on March 16, 2018.

BurgerFi International, LLC

BurgerFi is a fast-casual “better burger” concept with approximately 119 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, shakes, beer, wine and more. Originally founded in February 2011 in sunny Lauderdale-by-the-Sea, Florida, the purpose was simple – redeFining the way the world eats burgers by providing an upscale burger offering, at a fast-casual price point. BurgerFi has become the go-to burger restaurant for good times, and high-quality food across the United States and beyond. BurgerFi is committed to an uncompromising and rewarding dining experience that promises fresh food of transparent quality.

Today, BurgerFi is among the nation’s fastest-growing better burger concepts and was ranked as one of the Top 10 Fastest and Smartest-Growing Brands in Franchising and named a leader in its category by Franchise Times in their Fast and Serious list for both 2017 and 2018. BurgerFi was also featured in the fourth annual Chain Reaction antibiotic scorecard by National Resources Defense Council and Consumer Reports with an “A” rating – one of only two brands serving passing grade beef.

The Business Combination

The Acquisition Agreement was entered into on June 29, 2020, by and among OPES, BurgerFi and the Members’ Representative for the Members of BurgerFi. Upon the approval of the Acquisition Agreement by the OPES stockholders, OPES will acquire 100% of the Interests from the Members resulting in BurgerFi becoming a wholly owned subsidiary of OPES. In connection with the Business Combination, OPES will change its name to “BurgerFi International, Inc.” On September 22, 2020, OPES, the Members and Members’ Representative entered into the Amendment to, among other things, update covenants with respect to the transfer and or license of additional BurgerFi obligations to transfer BurgerFi Intellectual Property, to identify Key Employees of BurgerFi and to remove all references to a Consulting Agreement with Mr. Rosatti.

Consideration to the Members

The aggregate value of the consideration to be paid by OPES in the Business Combination (subject to reduction for indemnification claims and potential changes due to a working capital adjustment) is estimated to be $180.4 million calculated as follows: (i) $30,000,000 in cash payable to Members, (ii) $20,000,000 payable, in the sole and absolute discretion of the OPES Board of Directors, either in cash or in 1,886,792 shares of Common Stock based upon a pre-determined price of $10.60 per share (the “Stock Portion”), the value of which is preliminarily estimated to be approximately $23.1 million based on OPES’s intent to settle the payable by issuing the 1,886,792 shares valued at $12.25 per share based on the closing price of the Common Stock on November 24, 2020, (iii) 4,716,981 shares of Common Stock to be issued to the Members preliminarily estimated to be approximately $57.8 million, (iv) an estimated $65.3 million of contingent earnout consideration, and (v) assumed debt of approximately $4.2 million

Additionally, the Members will be entitled to receive additional consideration in the form of shares of OPES Common Stock (“Earnout Share Consideration”) on a pro-rata basis based on their ownership percentages in the Company, subject to the Post-Combination Company achieving certain share price targets in each of the following post-Closing periods (each an “Earnout Tranche”), as follows:

The Earnout Share Consideration payable with respect to each Earnout Tranche, when issued, shall be subject to a lockup for a period of six months from the date such Earnout Tranche is earned (provided that the Members shall be permitted to undertake block trades during each such lockup period). The Members shall only be entitled to receive the Earnout Share Consideration from one Earnout Tranche in any twelve month period and if the Members qualify to receive two or more Earnout Tranches in any such twelve-month period, the Members’ Representative can elect which such Earnout Tranche the Members will receive. No more than one Earnout Tranche shall be payable in any twelve-month period.

The parties have agreed that the target working capital as of the Closing Date shall be $1,000,000 (‘‘Target Working Capital”). Within 60 days after Closing, the Post-Combination Company shall prepare and deliver to the Members’ Representative a statement setting forth its good faith calculation of BurgerFi’s cash minus its current revolving credit line as of the Closing Date (the “Closing Working Capital”). Subject to the review and agreement by the parties of the Closing Working Capital calculation, there shall be a post-closing adjustment in an amount equal to the Closing Working Capital minus the Target Working Capital (the “Post-Closing Adjustment”). If the Post-Closing Adjustment is a positive number, the Post-Combination Company shall pay to Members an amount equal to the Post-Closing Adjustment at its option in cash or shares of the Post-Combination Company’s common stock, valued at $10.60 per share. If the Post-Closing Adjustment is a negative number, Members shall pay to the Post-Combination Company an amount equal to the Post-Closing Adjustment by surrendering to the Post-Combination Company shares of the Post-Combination Company’s common stock with a value of the Post-Closing Adjustment amount, valued at $10.60 per share, rounded down to the nearest whole-number. If the parties have objections to the Closing Working Capital calculation, they shall engage Berkowitz Pollack Brant, acting as experts and not arbitrators, to resolve the disputed amounts only and make any adjustments to the Post-Closing Adjustment.

Impact of the Business Combination on the Company’s Public Float

Assuming (i) no redemption of our public shares of Common Stock, (ii) the conversion of $1.123 million of Notes into 100,000 shares of Common Stock, (iii) the issuance of the Closing Payment Shares, including the Stock Portion, in shares, (iv) the issuance of 3,000,000 shares of Common Stock in connection with the Forward Purchase Contract, (v) the Earnout Shares are not earned and issued, and (vi) the Warrants and UPO are not exercised for shares of Common Stock, it is anticipated that upon completion of the Business Combination, the ownership of the Post-Combination Company, immediately after the Closing, will be as follows:

If the actual facts are different from these assumptions, the percentage ownership retained by our public stockholders following the Business Combination will be different. The Public Warrants and Private Placement Warrants will become exercisable on the later of the completion of the Business Combination and 12 months from the closing of the IPO and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.

Management and Post-Closing Board of Directors Following the Business Combination

Effective as of the closing of the Business Combination, the Post-Closing Board of Directors will have five members, consisting of Ophir Sternberg, as Executive Chairman, AJ Acker and three directors who shall qualify as an independent director under the Securities Act and the Nasdaq rules, to be selected by Mr. Sternberg, in his reasonable discretion and approved by Members’ Representative, such approval not to be unreasonably withheld. See section titled “Directors and Executive Officers after the Business Combination” for additional information.

Redemption Rights

Pursuant to OPES’s Certificate of Incorporation, holders of public shares of Common Stock may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the trust account as of two business days prior to the consummation of the Business Combination, including interest (net of taxes payable), by (ii) the total number of then-outstanding public shares of Common Stock. As of November 24, 2020, this would have amounted to approximately $10.64 per share.

You will be entitled to receive cash for any public shares of Common Stock to be redeemed only if you:

(i) (a) hold public shares of Common Stock, or

(b) hold public shares of Common Stock through Units and you elect to separate your Units into the underlying public shares of Common Stock and Public Warrants prior to exercising your redemption rights with respect to the public shares of Common Stock; and

(ii) prior to 5:00 p.m., Eastern Time, on December 11, 2020, (a) submit a written request to the Transfer Agent that OPES redeem your public shares of Common Stock for cash and (b) deliver your public shares of Common Stock to the Transfer Agent, physically or electronically through DTC.

Holders of outstanding Units must separate the underlying shares of Common Stock and Public Warrants prior to exercising redemption rights with respect to the Common Stock. If the Units are registered in a holder’s own name, the holder must deliver the certificate for its Units to Continental, with written instructions to separate the Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may then exercise his, her or its redemption rights upon the separation of the shares of Common Stock from the Units.

If a holder exercises its redemption rights, then such holder will be exchanging its public shares of Common Stock for cash and will no longer own shares of the Post-Combination Company. Such a holder will be entitled to receive cash for its public shares of Common Stock only if it properly demands redemption and delivers its shares (either physically or electronically) to our Transfer Agent in accordance with the procedures described herein. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your public shares of Common Stock for cash.

Anticipated Accounting Treatment

The Business Combination will be accounted for as a business combination in accordance with U.S. GAAP. accounting under ASC 805, Business Combinations. OPES is both the legal and the accounting acquiror. BurgerFi will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the expectation that the former Stockholders of OPES will have a majority of the voting power of the Post-Combination Company, that the Board will consist of the Chairman of OPES, the minority Members of BurgerFi and three board members appointed by the OPES chairman with approval of the majority Member of BurgerFi, which approval will not be unreasonably withheld. In addition, the Board members, the founders of OPES and the members of BurgerFi, agree to vote their stock as a block. Although that the business of BurgerFi will comprise the ongoing operations of the Post-Combination Company, and BurgerFi’s senior management will comprise the majority of the senior management of the Post-Combination Company, they report to the Board which is controlled by the OPES Chairman’s appointments. The acquired assets and assumed liabilities of BurgerFi will be recorded at fair value, with goodwill and other intangible assets recorded. BurgerFi has been determined to be the predecessor and operations prior to the Business Combination will be deemed to be those of BurgerFi.

Other Agreements Relating to the Business Combination

Voting Agreements

Voting Agreement – Approval of Business Combination

On March 13, 2018, in connection with the IPO, our Initial Sponsor and the Initial Stockholders who held Founders’ Shares prior to the IPO entered into a letter agreement with OPES and EarlyBirdCapital, pursuant to which they agreed that if OPES solicits approval of its stockholders of a business combination, they will vote all shares of Common Stock beneficially owned by him, her or it, whether acquired before, in, or after the IPO, in favor of such business combination.

On June 30, 2020, the Initial Stockholders transferred 1,610,000 of the Founders’ Shares to Sponsor. Pursuant to the terms of the letter agreement, as a transferee of the Founders’ Shares, Sponsor is bound by the restrictions and other obligations set forth in the letter agreement and will also vote all of its Founders’ Shares and other shares of Common Stock beneficially owned by it in favor of the Business Combination.

Voting Agreement – Election of Directors

In connection with the Business Combination, OPES will enter into voting agreements with our Sponsor, the Initial Stockholders and our officers and directors pursuant to which such stockholders shall agree to vote all securities of the Post-Combination Company that such stockholder owns from time to time and may vote in the election of the Post-Combination Company’s directors in favor of the Post-Closing Board of Directors for a period of three years after the Closing Date (the “Director Voting Agreement”). The Director Voting Agreement also provides that, if during the term of the agreement, any stockholder who is a party thereto is unable to attend a meeting of the Post-Combination Company’s stockholders in person, at which directors shall be elected to the Board, and such stockholder fails to timely submit a proxy card indicating how such stockholder intends to vote for the directors who are standing for election, the stockholder appoints the Chairman of the Board of Directors as its true and lawful attorney and proxy with full power of substitution for and its name to act on behalf of the stockholder, for the limited purpose of voting in favor of the election of all of the Post-Closing Board of Directors. The Director Voting Agreement shall terminate three years after the Closing Date. The form of the Director Voting Agreement is attached hereto as Annex D.

Registration Rights Agreements

Pursuant to a registration rights agreement, dated as of March 15, 2018 (the “Original Registration Rights Agreement”), those Initial Stockholders who held the Founders’ Shares issued and outstanding prior to the IPO, as well as the holders of the Private Placement Units and any units our Initial Sponsor, the Initial Stockholders, their affiliates, officers, directors or third parties may be issued in payment of working capital loans made to us, are entitled to registration rights. The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of the majority of the Founders’ Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which their shares of Common Stock are to be released from escrow. The holders of a majority of the Private Placement Units and units issued to our Initial Sponsor, officers, directors or their affiliates in payment of working capital loans made to us (or underlying securities) can elect to exercise these registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We bear the expenses incurred in connection with the filing of any such registration statements.

In connection with the Business Combination, all of the parties to the Original Registration Rights Agreement (and those parties who as a result of the transfer of Founders’ Shares became a party to the Original Registration Rights Agreement), the holders of Private Placement Units, the holders of Warrants pursuant to the warrant agreement entered into at the time of the IPO, as well as the Members, the PIPE Investors, and our Sponsor will enter into a new registration rights agreement covering the registration of 28,618,773 shares of Common Stock in the aggregate (the “New Registration Rights Agreement”). The Post-Combination Company will be obligated to file a registration statement with the SEC within thirty (30) days after the Closing of the Business Combination to register the shares for resale, which must be effective within 90 calendar days following the filing date, or in the event the registration statement receives a “full review” by the SEC, the 120th calendar date following the filing date. In the event the SEC requires a cutback in the number of shares being registered, the shares will be cut back on a pro rata basis, except that the 5,029,376 shares of Lion Point that are being registered will not be reduced. In addition, Lion Point is entitled to make up to two demands that we register the shares and all holders have “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of the Business Combination. The form of the New Registration Rights Agreement is attached as Exhibit C to the Acquisition Agreement.

Lock-Ups

In connection with the Business Combination, the Members shall enter into a lock-up agreement with OPES pursuant to which the (i) Closing Payment Shares shall be subject to a lock-up until the earlier of (x) six months after the Closing Date of the Business Combination, and (y) if, subsequent to the Closing Date, the Post-Combination Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Post-Combination Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property, the date such transaction is consummated; and (ii) the Earnout Share Consideration shall be subject to a lock-up for a period of six months from the date the applicable Earnout Tranche is earned (provided that the Members shall be permitted to undertake block trades during each such lockup period).

Escrow Agreements

IPO Escrow Agreement

In connection with the IPO, our Initial Sponsor and those Initial Stockholders of OPES who held shares prior to the IPO, originally entered into a stock escrow agreement, dated as of March 13, 2018 with Continental serving as escrow agent (the “IPO Escrow Agreement”). Pursuant to the terms of the IPO Escrow Agreement, the Initial Stockholders who held shares prior to the IPO deposited 2,875,000 shares of Common Stock (the “IPO Escrow Shares”) with Continental. The IPO Escrow Shares shall remain in escrow until the earlier of (x) six months after the date of the consummation of the Business Combination and (y) the date on which the closing price of the Company’s Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Company’s initial Business Combination (collectively, the “Escrow Period”). Subsequent to the IPO, the Initial Stockholders transferred 2,847,596 of the IPO Escrow Shares, in the aggregate, to certain of their affiliates and designees. On June 30, 2020, 1,610,000 of the IPO Escrow Shares were transferred to our Sponsor and still remain in the escrow account. Pursuant to the terms of the IPO Escrow Agreement, as the transferee of the IPO Escrow Shares, our Sponsor is bound by the restrictions and other obligations set forth in the IPO Escrow Agreement and the letter agreement with respect to voting for the Business Combination

In connection with the Business Combination, the IPO Escrow Agreement shall be amended to remove the stock price condition for release of the IPO Escrow Shares during the Escrow Period. As a result, the IPO Escrow Agreement will terminate and the IPO Escrow Shares will be released upon the earlier of (i) six months after the Closing Date of the Business Combination, and (ii) if, subsequent to the Closing Date, the Post-Combination Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Post-Combination Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property, the date such transaction is consummated.

Indemnification Escrow Agreement

In connection with the Business Combination, OPES, the Members, and Continental, will enter into a stock escrow agreement for the escrow of the Indemnification Escrow Shares for a period of eighteen months after the Closing Date to satisfy any potential indemnification claims against BurgerFi and the Members brought pursuant to the Acquisition Agreement.

Regulatory Approvals

The Business Combination, and the other transactions contemplated by the Acquisition Agreement, are not subject to any additional U.S. federal or state regulatory requirements or approvals, after filing of a pre-merger notification under the Hart-Scott-Rodino Act with the Federal Trade Commission and Department of Justice and receiving notification that the request for early termination of the waiting period is granted effective as of August 26, 2020.

Interests of Certain Persons in the Business Combination

When you consider the recommendation of OPES’s Board of Directors in favor of adoption of the Proposals, you should keep in mind that OPES’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder, including the following:

Amendment to Acquisition Agreement

On September 22, 2020, OPES, the Members and Members’ Representative entered into the Amendment. The Amendment provides the following changes to the Acquisition Agreement:

1. to amend the schedule identifying entities controlled by Mr. Rosatti to reflect that certain entities will no longer be transferred to OPES at Closing, and to include a new entity to be transferred that holds BurgerFi Intellectual Property, as well as the transfer of any other entity that holds BurgerFi Intellectual Property;

2. to amend the schedule that identifies the Key Employees of BurgerFi to include solely senior management as Key Employees, which consists of the Chief Executive Officer, President, Chief Financial Officer, Chief Legal Officer, Chief Operating Officer and Executive Vice President of Culinary & Procurement;

3. to remove all references to a Consulting Agreement to be entered into with Mr. Rosatti;

4. to update the covenants with respect to the BurgerFi Intellectual Property to ensure the transfer and assignment or the license to OPES of all Intellectual Property used by BurgerFi or its franchisees at or prior to Closing, and to include a post-closing obligation by BurgerFi to pursue the transfer of any remaining Intellectual Property to OPES that BurgerFi could not, after diligent efforts, assign prior to or at Closing; and

5. to correct certain incorrect cross –references in Article XI.

Summary of Material United States Federal Income Tax Considerations

If a U.S. Holder redeems Common Stock into the right to receive cash pursuant to the exercise of a stockholder’s redemption right, for U.S. federal income tax purposes, such conversion or sale generally will be treated as a redemption and will be subject to the following rules. If the redemption qualifies as a sale of the common stock under Section 302 of the Code:

Whether redemption of our shares qualifies for sale treatment will depend largely on the total number of shares of OPES Common Stock treated as held by such U.S. Holder. The redemption of common stock generally will be treated as a sale or exchange of common stock (rather than as a distribution) if the receipt of cash upon the redemption (i) is “substantially disproportionate” with respect to a U.S. Holder, (ii) results in a “complete termination” of such holder’s interest in us or (iii) is “not essentially equivalent to a dividend” with respect to such holder. Please see the section titled “United States Federal Income Taxation Relating to Redeeming Stockholders” on page 142 for further details about the federal income tax considerations for redeeming stockholders.

Recommendations of the OPES Board of Directors to the OPES Stockholders

After careful consideration of the terms and conditions of the Acquisition Agreement, the OPES Board of Directors has determined that the Business Combination and the transactions contemplated thereby are fair to and in the best interests of OPES and its stockholders. The OPES Board of Directors did not obtain a fairness opinion on which to base its assessment. OPES’s Board of Directors recommends that its stockholders vote:

Risk Factors

In evaluating the Business Combination and the Proposals to be considered and voted on at the Meeting, you should carefully review and consider the risk factors set forth under the section titled “Risk Factors” beginning on page 17 of this proxy statement. The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) OPES’s ability to complete the Business Combination, and (ii) the business, cash flows, financial condition and results of operations of BurgerFi following consummation of the Business Combination.

RISK FACTORS

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before they decide whether to vote or instruct their vote to be cast to approve the Proposals described in this proxy statement. The risks described below highlight potential events, trends or other circumstances that could adversely affect the Post- Combination Company’s business, financial condition, results of operations, cash flows, liquidity or access to sources of financing and could adversely affect the trading price of the Post Combination Company’s securities following the Business Combination. These risks could cause the Post Combination Company’s future results to differ materially from historical results and from guidance the Post Combination Company may provide regarding its expectations of future financial performance.

RISKS RELATED TO BURGERFI’S GROWTH STRATEGIES AND OPERATIONS

BurgerFi’s long-term success is dependent on the selection, design, and execution of appropriate business strategies.

BurgerFi operates in a highly competitive and ever-changing environment. Its long-term success is dependent on its ability to identify, develop and execute appropriate business strategies within this environment. BurgerFi’s current strategies include:

BurgerFi may experience challenges in achieving the goals it has set and it may be unsuccessful in executing on its strategies once identified. BurgerFi may incur significant costs and damage its brand if it is unable to identify, develop and execute on appropriate business strategies, which could have a material adverse impact on its business and results of operations.

BurgerFi’s primary growth strategy is highly dependent on the availability of suitable locations and its ability to develop and open new restaurants on a timely basis and on terms attractive to it.

One of the keys to achieving BurgerFi’s growth strategies will be opening and operating new restaurants on a profitable basis for the foreseeable future. BurgerFi must identify target markets where it can enter or expand, taking into account numerous factors such as the location of its current restaurants, the target consumer base, population density, demographics, traffic patterns, competition, geography and information gathered from its various contacts. BurgerFi may not be able to open its planned new restaurants within budget or on a timely basis, if at all, given the uncertainty of these factors, which could adversely affect its business, financial condition and results of operations. As BurgerFi operates more restaurants, its rate of expansion relative to the size of its restaurant base will eventually decline.

The number and timing of new restaurants opened during any given period may be negatively impacted by a number of factors including:

Accordingly, BurgerFi cannot assure you that it will be able to successfully expand as it may not correctly analyze the suitability of a location or anticipate all of the challenges imposed by expanding its operations. BurgerFi’s growth strategy, and the substantial investment associated with the development of each new domestic company-operated restaurant, may cause its operating results to fluctuate and be unpredictable or adversely affect its profits. In addition, as has happened when other restaurant concepts have tried to expand, BurgerFi may find that its concept has limited appeal in new markets or it may experience a decline in the popularity of its concept in the markets in which it operates. If BurgerFi is unable to expand in existing markets or penetrate new markets, its ability to increase its revenues and profitability may be materially harmed or it may face losses.

BurgerFi’s expansion into new markets may present increased risks, which could affect its profitability.

BurgerFi hopes to open company-operated restaurants in markets where it has little or no operating experience. Restaurants BurgerFi opens in new markets may take longer to reach expected restaurant sales and profit levels on a consistent basis and may have higher construction, occupancy, or operating costs than restaurants it opens in existing markets. New markets may have competitive conditions, consumer tastes and discretionary spending patterns that are more difficult to predict or satisfy than its existing markets. BurgerFi may need to make greater investments than originally planned in advertising and promotional activity in new markets to build brand awareness. BurgerFi may also incur higher costs from entering new markets if, for example, it assigns area directors to manage comparatively fewer restaurants than it assigns in more developed markets. Also, until BurgerFi attains a critical mass in a market, the restaurants it opens will incur higher food distribution costs and reduced operating leverage. As a result, these new restaurants may be less successful or may achieve target restaurant-level operating profit margins at a slower rate, if ever. If BurgerFi does not successfully execute its plans to enter new markets, its business, financial condition, or results of operations could be adversely affected. In addition, BurgerFi plans to continue to expand into new international markets, which can pose similar and additional challenges in opening new restaurants.

BurgerFi’s failure to manage its growth effectively could harm its business and operating results.

BurgerFi’s growth plan includes opening a significant number of new restaurants. BurgerFi’s existing personnel, management systems, financial and management controls and information systems may not be adequate to support its planned expansion. BurgerFi’s ability to manage its growth effectively will require it to continue to enhance these systems, procedures, and controls and to locate, hire, train and retain management and operating personnel, particularly in new markets. BurgerFi may not be able to respond on a timely basis to all of the changing demands that its planned expansion will impose on management and on its existing infrastructure, or be able to hire or retain the necessary management and operating personnel, which could harm its business, financial condition or results of operations. These demands could cause BurgerFi to operate its existing business less effectively, which in turn could cause a deterioration in the financial performance of its existing restaurants. If BurgerFi experiences a decline in financial performance, it may decrease the number of or discontinue restaurant openings, or it may decide to close restaurants that it is unable to operate in a profitable manner.

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

BurgerFi’s results have been, and in the future may continue to be, significantly impacted by the timing of new restaurant openings (often dictated by factors outside of its control), including landlord delays, associated restaurant pre-opening costs and operating inefficiencies, as well as changes in its geographic concentration due to the opening of new restaurants. BurgerFi typically incurs the most significant portion of pre-opening costs associated with a given restaurant within the several months preceding the opening of the restaurant. BurgerFi’s experience has been that labor and operating costs associated with a newly opened restaurant for the first several months of operation are materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of restaurant sales. BurgerFi’s new restaurants take a period of time to reach target operating levels due to inefficiencies typically associated with new restaurants, including the training of new personnel, new market learning curves, inability to hire sufficient qualified staff and other factors. BurgerFi may incur additional costs in new markets, particularly for transportation and distribution, which may impact the profitability of those restaurants. Although BurgerFi has specific target operating and financial metrics, new restaurants may not meet these targets or may take longer than anticipated to do so. Any new restaurants BurgerFi open may not be profitable or achieve operating results similar to those of its existing restaurants, which could adversely affect its business, financial condition or results of operations.

If BurgerFi is unable to maintain and grow restaurant sales at its existing restaurants, its financial performance could be adversely affected.

The level of same-store sales growth, which represents the change in year-over-year revenues for domestic company-operated restaurants open for 24 full months or longer, could affect BurgerFi’s restaurant sales growth. BurgerFi’s ability to increase same-store sales depends, in part, on its ability to successfully implement its initiatives to build restaurant sales. It is possible such initiatives will not be successful, that BurgerFi will not achieve its target same-store sales growth or that same-store sales growth could be negative, which may cause a decrease in restaurant sales and profit growth that would adversely affect its business, financial condition or results of operations.

BurgerFi’s mission of being “natural and proud of it” may subject it to risks.

BurgerFi believes in clean, transparent, and sustainable restaurant ecosystems, which includes a full commitment to the humane treatment of animals. For example, BurgerFi’s beef is never exposed to steroids, antibiotics, growth hormones or additives, and is never frozen. BurgerFi is dedicated to using sustainable materials and equipment whenever possible. BurgerFi’s mission is a significant part of its business strategy and what it is as a company. BurgerFi does, however, face many challenges in carrying out its mission. BurgerFi incurs higher costs and other risks associated with purchasing high quality ingredients grown or raised with an emphasis on quality and responsible practices. As a result, BurgerFi’s food and labor costs may be significantly higher than other companies who do not source high quality ingredients or pay above minimum wage. Additionally, the supply for high quality ingredients may be limited and it may take BurgerFi longer to identify and secure relationships with suppliers that are able to meet its quality standards and have sufficient quantities to support its growing business. If BurgerFi is unable to obtain a sufficient and consistent supply for its ingredients on a cost-effective basis, its food costs could increase or BurgerFi may experience supply interruptions which could have an adverse effect on its operating margins. Additionally, some of BurgerFi’s competitors have recently announced initiatives to offer better quality ingredients, such as antibiotic-free meat. If this trend continues, it could further limit BurgerFi’s supply for certain ingredients and BurgerFi may lose its competitive advantage as it will be more difficult to differentiate itself.

BurgerFi has a limited number of suppliers for its major products and relies on SYSCO Corporation for the majority of its domestic distribution needs. If BurgerFi’s suppliers or distributor are unable to fulfill their obligations under its arrangements with them, it could encounter supply shortages and incur higher costs.

BurgerFi has a limited number of suppliers for its major ingredients. Due to this concentration of suppliers, the cancellation of BurgerFi’s supply arrangements with any one of these suppliers or the disruption, delay or inability of these suppliers to deliver these major products to its restaurants may materially and adversely affect its results of operations while it establishes alternate distribution channels. In addition, if BurgerFi’s suppliers fail to comply with food safety or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted. BurgerFi cannot assure you that it would be able to find replacement suppliers on commercially reasonable terms or a timely basis, if at all. Although BurgerFi believes that alternative supply and distribution sources are available, there can be no assurance that BurgerFi will continue to be able to identify or negotiate with such sources on terms that are commercially reasonable to it. If BurgerFi’s suppliers or distributors are unable to fulfill their obligations under their contracts or BurgerFi is unable to identify alternative sources, it could encounter supply shortages and incur higher costs, each of which could have a material adverse effect on its results of operations.

BurgerFi’s plans to open new restaurants, and the ongoing need for capital expenditures at its existing restaurants, require it to spend capital.

BurgerFi’s growth strategy depends on opening new restaurants, which will require it to use cash flows from operations. BurgerFi cannot assure that cash flows from operations will be sufficient to allow it to implement its growth strategy. If these funds are not allocated efficiently among its various projects, or if any of these initiatives prove to be unsuccessful, BurgerFi may experience reduced profitability and BurgerFi could be required to delay, significantly curtail or eliminate planned restaurant openings, which could have a material adverse effect on its business, financial condition and results of operations.

In addition, as BurgerFi’s restaurants mature, its business will require capital expenditures for the maintenance, renovation, and improvement of existing restaurants to remain competitive and maintain the value of its brand standard. This creates an ongoing need for cash, and, to the extent BurgerFi cannot fund capital expenditures from cash flows from operations, funds will need to be borrowed or otherwise obtained.

If the costs of funding new restaurants or renovations or enhancements to existing restaurants exceed budgeted amounts, and/or the time for building or renovation is longer than anticipated, BurgerFi’s profits could be reduced. If BurgerFi cannot access the capital it needs, it may not be able to execute its growth strategy, take advantage of future opportunities or respond to competitive pressures.

BurgerFi’s marketing strategies and channels will evolve, and its programs may or may not be successful.

BurgerFi is a small, but growing brand. BurgerFi incurs costs and expends other resources in its marketing efforts to attract and retain guests. BurgerFi’s strategy includes public relations, digital and social media, promotions and in-store messaging, which require less marketing spend as compared to traditional marketing programs. Currently, the amount of discounted promotions and advertising BurgerFi does is not significant. As the number of restaurants increases, and as it expands into new markets, BurgerFi expects to increase its investment in advertising and considers additional promotional activities. Accordingly, in the future, BurgerFi will incur greater marketing expenditures, resulting in greater financial risk and a greater impact on its financial results.

BurgerFi relies heavily on social media for many of its marketing efforts. If consumer sentiment towards social media changes or a new medium of communication becomes more mainstream, BurgerFi may be required to fundamentally change its current marketing strategies which could require it to incur significantly more costs.

Some of BurgerFi’s marketing initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues. Additionally, some of BurgerFi’s competitors have greater financial resources, which enable them to spend significantly more on marketing and advertising than BurgerFi is able to at this time. Should BurgerFi’s competitors increase spending on marketing and advertising or its marketing funds decrease for any reason, or should its advertising and promotions be less effective than those of its competitors, there could be a material adverse effect on its business, financial condition and results of operations.

BurgerFi relies on a limited number of franchisees for the operation of its franchised restaurants, and it has limited control with respect to the operations of its franchised restaurants, which could have a negative impact on its reputation and business.

BurgerFi relies, in part, on its franchisees and the manner in which they operate their restaurants to develop and promote its business. As of July 31, 2020, 49 franchisees operated all of BurgerFi’s domestic franchised restaurants and two franchisees operated all of its international franchised restaurants. BurgerFi’s franchisees are required to operate their restaurants according to the specific guidelines BurgerFi sets forth, which are essential to maintaining brand integrity and reputation, all laws and regulations applicable to BurgerFi and its subsidiaries, and all laws and regulations applicable in the jurisdictions in which BurgerFi operates. BurgerFi provides training to these franchisees to integrate them into its operating strategy and culture. However, since BurgerFi does not have day-to-day control over all of these restaurants, it cannot give assurance that there will not be differences in product and service quality, operations, labor law enforcement or marketing or that there will be adherence to all of its guidelines and applicable laws at these restaurants. In addition, if BurgerFi’s franchisees fail to make investments necessary to maintain or improve their restaurants, guest preference for the BurgerFi brand could suffer. Failure of these restaurants to operate effectively could adversely affect BurgerFi’s cash flows from those operations or have a negative impact on its reputation or its business.

The success of BurgerFi’s franchised operations depends on BurgerFi’s ability to establish and maintain good relationships with its franchisees. The value of BurgerFi’s brand and the rapport that it maintains with its franchisees are important factors for potential franchisees considering doing business with it. If BurgerFi is unable to maintain good relationships with franchisees, it may be unable to renew franchise agreements and opportunities for developing new relationships with additional franchisees may be adversely affected. This, in turn, could have an adverse effect on BurgerFi’s business, financial condition and results of operations.

Although BurgerFi has developed criteria to evaluate and screen prospective developers and franchisees, it cannot be certain that the developers and franchisees it selects will have the business acumen necessary to open and operate successful franchised restaurants in their franchising areas. BurgerFi’s franchisees compete for guests with other restaurants in their geographic markets, and the ability of BurgerFi’s franchisees to compete for guests directly impacts its business, financial condition and results of operations, as well as the desirability of its brand to prospective franchisees. Franchisees may not have access to the financial or management resources that they need to open the restaurants contemplated by their agreements with BurgerFi or to be able to find suitable sites on which to develop them, or they may elect to cease development for other reasons. Franchisees may not be able to negotiate acceptable lease or purchase terms for the sites, obtain the necessary permits and governmental approvals or meet construction schedules. Additionally, financing from banks and other financial institutions may not always be available to franchisees to construct and open new restaurants. Any of these problems could slow BurgerFi’s growth from franchised operations and reduce its franchising revenues.

BurgerFi’s franchise business model presents a number of risks.

BurgerFi’s success as a franchised business relies, in part, on the financial success and cooperation of its franchisees. BurgerFi’s restaurant margins arise from two sources: fees from franchised restaurants (e.g., royalties based on a percentage of sales) and sales from Company-operated restaurants. BurgerFi’s franchisees manage their businesses independently, and therefore are responsible for the day-to-day operation of their restaurants. The revenues BurgerFi realizes from franchised restaurants are largely dependent on the ability of its franchisees to grow their sales. Business risks affecting BurgerFi’s operations also affect its franchisees. In particular, BurgerFi’s franchisees have also been significantly impacted by the COVID-19 pandemic. If franchisee sales trends continue to worsen, BurgerFi’s financial results will continue to be negatively affected, which may be material.

BurgerFi’s success also relies on the willingness and ability of its independent franchisees to implement its initiatives, which may include financial investment, and to remain aligned with it on operating, value/promotional and capital-intensive reinvestment plans. The ability of franchisees to contribute to the achievement of BurgerFi’s plans is dependent in large part on the availability to them of funding at reasonable interest rates and may be negatively impacted by the financial markets in general, by the creditworthiness of its franchisees or the Company or by banks’ lending practices. If BurgerFi’s franchisees are unwilling or unable to invest in major initiatives or are unable to obtain financing at commercially reasonable rates, or at all, its future growth and results of operations could be adversely affected.

From time to time, BurgerFi has guaranteed certain franchisee’s lease obligations, which could require it to make lease payments on behalf of franchisees should they fail to honor such commitments.

BurgerFi’s operating performance could also be negatively affected if its franchisees experience food safety or other operational problems or project an image inconsistent with its brand and values, particularly if BurgerFi’s contractual and other rights and remedies are limited, costly to exercise or subjected to litigation and potential delays. If franchisees do not successfully operate restaurants in a manner consistent with BurgerFi’s required standards, BurgerFi’s brand’s image and reputation could be harmed, which in turn could hurt its business and operating results.

BurgerFi’s ownership mix also affects its results and financial condition. The decision to own restaurants or to operate under franchise agreements is driven by many factors whose interrelationship is complex. The benefits of BurgerFi’s more heavily franchised structure depend on various factors including whether it has effectively selected franchisees that meet its rigorous standards, whether it is able to successfully integrate them into its structure and whether their performance and the resulting ownership mix supports its brand and financial objectives.

BurgerFi, from time to time, may also become subject to legal proceedings that may adversely affect its business, including claims by current or former franchisees. Regardless of whether claims are valid or whether BurgerFi is found to be liable, claims may be expensive to defend and may divert management’s attention away from operations. In the course of the franchise relationship, occasional disputes may arise between BurgerFi and its current or former franchisees relating to a broad range of subjects including, but not limited to, quality, service and cleanliness issues, menu pricing, contentions regarding grants or terminations of franchises, delinquent payments of rents and fees, and franchisee claims for additional franchises or renewals of franchises. Additionally, occasional disputes arise between BurgerFi and individuals who claim they should have been granted a franchise or who challenge the legal distinction between BurgerFi and its franchisees for employment law purposes. Litigation and regulatory action concerning BurgerFi’s relationship with its franchisees and the legal distinction between its franchisees and BurgerFi for employment law purposes, if determined adversely, could increase costs, negatively impact BurgerFi’s business operations and the business prospects of its franchisees and subject BurgerFi to incremental liability for their actions. Similarly, although BurgerFi’s commercial relationships with its suppliers remain independent, there may be attempts to challenge that independence, which, if determined adversely, could also increase costs, negatively impact the business prospects of BurgerFi’s suppliers, and subject BurgerFi to incremental liability for their actions.

Additionally, a rise in minimum wages could adversely impact BurgerFi’s and its franchisees’ financial performance. The impact of events such as boycotts or protests, labor strikes, and supply chain interruptions (including due to lack of supply or price increases) could also adversely affect both BurgerFi and its franchisees.

RISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

Incidents involving food safety and food-borne illnesses could adversely affect guests’ perception of BurgerFi’s brand, result in lower sales and increase operating costs.

Food safety is a top priority, and BurgerFi dedicates substantial resources to ensure the safety and quality of the food it serves. Nevertheless, BurgerFi faces food safety risks, including the risk of food-borne illness and food contamination, which are common both in the restaurant industry and the food supply chain and cannot be completely eliminated. BurgerFi relies on third-party food suppliers and distributors to properly handle, store and transport its ingredients to its restaurants. Any failure by BurgerFi’s suppliers, or their suppliers, could cause its ingredients to be contaminated, which may be difficult to detect before the food is served. Additionally, the risk of food-borne illness may also increase whenever BurgerFi’s food is served outside of its control, such as by third-party delivery services. BurgerFi is further exposed to this risk from its sales through unaffiliated third-party delivery services, as well as through any third-party delivery partners it has used.

Regardless of the source or cause, any report of food-borne illnesses or food safety issues, whether or not accurate, at one or more of BurgerFi’s restaurants, including restaurants operated by its franchisees, could adversely affect its brand and reputation, which in turn could result in reduced guest traffic and lower sales.

If any of BurgerFi’s guests become ill from food-borne illnesses, it could be forced to temporarily close one or more restaurants or choose to close as a preventative measure if BurgerFi suspects there was a pathogen in its restaurants. Furthermore, any instances of food contamination, whether or not at its restaurants, could subject BurgerFi or its suppliers to voluntary or involuntary food recalls and the costs to conduct such recalls could be significant and could interrupt its supply to unaffected restaurants or increase the cost of its ingredients.

Additionally, consumer preferences could be affected by health concerns about the consumption of beef, BurgerFi’s key ingredient. For example, if a pathogen, such as “mad cow disease,” or other virus, bacteria, parasite or toxin infects the food supply (or is believed to have infected the food supply), regardless of whether its supply chain is affected, guests may actively avoid consuming certain ingredients. A negative report or negative publicity surrounding such an incident, whether related to one of BurgerFi’s restaurants or to a competitor in the industry, may have an adverse impact on demand for its food and could result in a material decrease in guest traffic and lower sales.

Rising labor costs and difficulties recruiting and retaining the right team members could adversely affect BurgerFi’s business.

As BurgerFi’s culture remains an important factor to its success, it in part depends on its ability to attract, motivate and retain a sufficient number of qualified managers and team members to meet the needs of its existing restaurants and to staff new restaurants. BurgerFi aims to hire people who have integrity, who are warm, friendly, motivated, caring, self-aware and intellectually curious. In many markets, competition for qualified individuals is intense and BurgerFi may be unable to identify and attract a sufficient number of individuals to meet its growing needs, especially in markets where its brand is less established. As a result, because BurgerFi aims to hire the best people, it may be required to pay higher wages and provide greater benefits. BurgerFi’s commitment to taking care of its team may cause it to incur higher labor costs compared to other restaurant companies. Additionally, several states in which BurgerFi operates have enacted minimum wage increases and it is possible that other states or the federal government could also enact minimum wage increases. Such increases will cause an increase to BurgerFi’s labor and related expenses and cause its restaurant-level operating profit margins to decline.

BurgerFi places a heavy emphasis on the qualification and training of its team members and spends a significant amount of time and money training its employees. Any inability to recruit and retain qualified individuals may result in higher turnover and increased labor costs, and could compromise the quality of BurgerFi’s service, all of which could adversely affect its business. Any such inability could also delay the planned openings of new restaurants and could adversely impact its existing restaurants. Such increased costs of attracting qualified employees or delays in restaurant openings could adversely affect its business and results of operations.

Increased food commodity and energy costs could decrease BurgerFi’s restaurant-level operating profit margins or cause it to limit or otherwise modify its menu, which could adversely affect its business.

BurgerFi’s profitability depends, in part, on its ability to anticipate and react to changes in the price and availability of food commodities, including among other things beef, poultry, grains, dairy and produce. Prices may be affected due to market changes, increased competition, the general risk of inflation, shortages or interruptions in supply due to weather, disease or other conditions beyond BurgerFi’s control, or other reasons. For example, in 2020, COVID-19 caused significant supply chain disruptions. This and other events could increase commodity prices or cause shortages that could affect the cost and quality of the items BurgerFi buys or require it to further raise prices or limit its menu options. These events, combined with other more general economic and demographic conditions, could impact BurgerFi’s pricing and negatively affect its restaurant sales and restaurant-level operating profit margins. While BurgerFi has been able to partially offset inflation and other changes in the costs of core operating resources by gradually increasing menu prices, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that it will be able to continue to do so in the future. From time to time, competitive conditions could limit BurgerFi’s menu pricing flexibility. There can be no assurance that future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by its guests without any resulting change to their visit frequencies or purchasing patterns. In addition, there can be no assurance that BurgerFi will generate same-store sales growth in an amount sufficient to offset inflationary or other cost pressures.

BurgerFi may decide to enter into certain forward pricing arrangements with its suppliers, which could result in fixed or formula-based pricing with respect to certain food products. However, these arrangements generally are relatively short in duration and may provide only limited protection from price changes. In addition, the use of these arrangements may limit BurgerFi’s ability to benefit from favorable price movements.

BurgerFi’s profitability is also adversely affected by increases in the price of utilities, such as natural gas, electric and water, whether as a result of inflation, shortages or interruptions in supply, or otherwise. BurgerFi’s ability to respond to increased costs by increasing prices or by implementing alternative processes or products will depend on its ability to anticipate and react to such increases and other more general economic and demographic conditions, as well as the responses of its competitors and guests. All of these things may be difficult to predict and beyond BurgerFi’s control. In this manner, increased costs could adversely affect BurgerFi’s results of operations.

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

Digital innovation and growth remain a focus for BurgerFi. BurgerFi’s continuous investment in a sophisticated technology infrastructure, it believes, has enabled it to strategically anticipate and execute against significant industry-wide changes. BurgerFi utilizes advanced technology to analyze, communicate and tactically execute in virtually all aspects of the business. BurgerFi has executed upon its digital strategy over the past few years, including the development and launch of its app, its licensing agreement with REEF Kitchens, and using various third-party delivery partners, including its partnerships with Uber Eats, DoorDash, Post Mates and Grubhub. As the digital space around BurgerFi continues to evolve, its technology needs to evolve concurrently to stay competitive with the industry. If BurgerFi does not maintain digital systems that are competitive with the industry, its digital business may be adversely affected and could damage its sales. BurgerFi relies on third\parties for its ordering and payment platforms relating to its mobile app and REEF Kitchens. Such services performed by these third parties could be damaged or interrupted by technological issues, which could then result in a loss of sales for a period of time. Information processed by these third parties could also be impacted by cyber-attacks, which could not only negatively impact BurgerFi’s sales, but also harm its brand image.

Recognizing the rise in delivery services offered throughout the restaurant industry, BurgerFi understands the importance of providing such services to its guests wherever and whenever they want. BurgerFi has invested in marketing to promote its delivery partnership, which could negatively impact its profitability if the business does not continue to expand. BurgerFi relies on third parties, including Uber Eats, DoorDash, Post Mates and Grubhub, to fulfill delivery orders timely and in a fashion that will satisfy its guests. Errors in providing adequate delivery services may result in guest dissatisfaction, which could also result in loss of guest retention, loss in sales and damage to BurgerFi’s brand image. Additionally, as with any third-party handling food, such delivery services increase the risk of food tampering while in transit. BurgerFi is also subject to risk if there is a shortage of delivery drivers, which could result in a failure to meet its guests’ expectations.

Third-party delivery services within the restaurant industry is a competitive environment and includes a number of players competing for market share. If BurgerFi’s third-party delivery partners fail to effectively compete with other third-party delivery providers in the sector, its delivery business may suffer resulting in a loss of sales. If any third-party delivery provider BurgerFi partners with experiences damage to their brand image, it may also see ramifications due to its partnership with them. Additionally, some of BurgerFi’s competitors have greater financial resources to spend on marketing and advertising around their digital and delivery campaigns than BurgerFi is able to at this time. Should BurgerFi’s competitors increase their spend in these areas, or if its advertising and promotions are less effective than its competitors, there could be an adverse impact on its business in this space. As delivery, as well as the partnerships BurgerFi has made in connection with delivery, is still a new concept for it, it is difficult for BurgerFi to anticipate its impact to its sales as well as the challenges it may face in the future.

Shortages or interruptions in the supply or delivery of food products could adversely affect BurgerFi’s operating results.

BurgerFi is dependent on frequent deliveries of food products that meet its exact specifications. Shortages or interruptions in the supply of food products caused by problems in production or distribution, inclement weather, unanticipated demand or other conditions could adversely affect the availability, quality and cost of ingredients, which would adversely affect BurgerFi’s operating results.

BurgerFi’s burgers depend on the availability of its proprietary ground beef blend. Availability of its blend depends on two different components: raw material supplied by the slaughterhouses and ground and formed beef patties supplied by the national grinder who further process and convert proteins purchased from the slaughterhouses. If there is an interruption of operation at its national grinder’s facility, BurgerFi faces an immediate risk because each restaurant typically has less than three days of beef patty inventory on hand. However, BurgerFi’s national grinder is contractually obligated to provide an alternate back-up supply and facility in the event of a disruption in their operations. In addition, BurgerFi’s distribution model allows it to back haul product from 1 of its 25 distribution centers. BurgerFi also has a final emergency protocol which allows the distribution models to freeze product to ensure there is no stoppage in daily operations.

BurgerFi currently has four of the world’s largest approved raw beef suppliers and two approved beef processing facilities in the United States. If there is a supply issue with all U.S. raw beef, BurgerFi has tested and approved an International beef supply. This is a benefit of partnering with one of the United States’ largest and most respected beef processors. The benefit to using international suppliers that are already in the current partnered supply chain is there is little to no shipping lead time, no additional shipping costs or potential import customs risks. It is unknown at this time how long it would take and at what cost the raw material would be in such an industry crisis, but the additional cost would likely adversely affect its business.

BurgerFi faces significant competition for guests, and if BurgerFi is unable to compete effectively, its business could be adversely affected.

The restaurant industry is intensely competitive with many well-established companies that compete directly and indirectly with BurgerFi with respect to taste, price, food quality, service, value, design and location. BurgerFi competes in the restaurant industry with multi-unit national, regional and locally-owned and/or operated limited-service restaurants and full-service restaurants. BurgerFi competes with (i) restaurants, (ii) other fast casual restaurants, (iii) quick service restaurants and (iv) casual dining restaurants. BurgerFi may also compete with companies outside of the traditional restaurant industry, such as grocery store chains, meal subscription services and delicatessens, especially those that target customers who seek high-quality food, as well as convenience food stores, cafeterias and other dining outlets. Many of BurgerFi’s competitors have existed longer than it has and may have a more established market presence, better locations and greater name recognition nationally or in some of the local markets in which BurgerFi operates or plans to open restaurants. Some of BurgerFi’s competitors may also have significantly greater financial, marketing, personnel and other resources than it does. They may also operate more restaurants than BurgerFi does and be able to take advantage of greater economies of scale than BurgerFi can given its current size.

BurgerFi’s competition continues to intensify as new competitors enter the burger, fast casual, quick service and casual dining segments. Many of BurgerFi’s competitors emphasize low cost “value meal” menu options or other programs that provide price discounts on their menu offerings, a strategy BurgerFi does not pursue. BurgerFi also faces increasing competitive pressures from some of its competitors who have recently announced initiatives to offer better quality ingredients, such as antibiotic-free meat.

Additionally, as BurgerFi continues to innovate upon its digital strategy and offer more ways to order through digital channels, such as the app, web ordering, and delivery, it competes with other competitors who currently, or are beginning to, offer the same options as well as new and improved technologies. With the introduction of these digital channels, there is also an increased opportunity for customer credit card fraud to occur, which could result in increased credit card fees for BurgerFi.

BurgerFi’s continued success depends, in part, on the continued popularity of its menu and the experience it offers guests at its restaurants. If BurgerFi is unable to continue to compete effectively on any of the factors mentioned above, its traffic, restaurant sales and restaurant-level operating profit margins could decline and its business, financial condition and results of operations would be adversely affected.

The increasing focus on environmental sustainability and social initiatives could increase BurgerFi’s costs, harm its reputation and adversely impact its financial results.

There has been increasing public focus by investors, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. With respect to the restaurant industry, concerns have been expressed regarding energy management, water management, food and packaging waste management, food safety, nutritional content, labor practices and supply chain and management food sourcing. BurgerFi is experiencing increased pressure to make commitments relating to sustainability matters that affect companies in its industry, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability. If BurgerFi is not effective in addressing environmental, social and other sustainability matters affecting its industry, or setting and meeting relevant sustainability goals, its brand image may suffer. In addition, BurgerFi may experience increased costs to execute upon its sustainability goals and measure achievement of those goals, which could have an adverse impact on its business and financial condition.

BurgerFi is subject to risks associated with leasing property subject to long-term non-cancelable leases.

BurgerFi does not own any real property and all of its domestic company-operated restaurants are located on leased premises. The leases for BurgerFi’s restaurants generally have initial terms ranging from ten to 20 years and typically provide for two five-year renewal options as well as for rent escalations. Generally, BurgerFi’s leases are net leases that require it to pay its share of the costs of real estate taxes, utilities, building operating expenses, insurance and other charges in addition to rent. BurgerFi generally cannot cancel these leases. Additional sites that BurgerFi leases are likely to be subject to similar long-term non-cancelable leases. If BurgerFi closes a restaurant, it may still be obligated to perform its monetary obligations under the applicable lease, including, among other things, payment of the base rent for the remaining lease term. In addition, as each of its leases expire, BurgerFi may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause it to close restaurants in desirable locations. BurgerFi depends on cash flows from operations to pay its lease expenses and to fulfill its other cash needs. If BurgerFi’s business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to it from borrowings or other sources, it may not be able to service its lease obligations or fund its other liquidity and capital needs, which would materially affect its business.

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

BurgerFi’s business is subject to the risk of litigation by employees, guests, suppliers, franchisees, stockholders or others through private actions, class actions, administrative proceedings, regulatory actions, or other litigation. The outcome of litigation, particularly class action and regulatory actions, is difficult to assess or quantify. In recent years, restaurant companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state laws regarding workplace and employment matters, discrimination, and similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, overtime eligibility of assistant managers and failure to pay for all hours worked.

Additionally, BurgerFi’s guests could file complaints or lawsuits against it alleging that BurgerFi is responsible for some illness or injury they suffered at or after a visit to one of its restaurants, including actions seeking damages resulting from food-borne illnesses or accidents in its restaurants. BurgerFi is also subject to a variety of other claims from third parties arising in the ordinary course of its business, including contract claims. The restaurant industry has also been subject to a growing number of claims that the menus and actions of restaurant chains have led to the obesity of certain of their customers.

Regardless of whether any claims against BurgerFi are valid or whether BurgerFi is liable, claims may be expensive to defend and may divert time and money away from its operations. In addition, they may generate negative publicity, which could reduce guest traffic and restaurant sales. Although BurgerFi maintains what it believes to be adequate levels of insurance to cover any of these liabilities, insurance may not be available at all or in sufficient amounts with respect to these or other matters. A judgment or other liability in excess of BurgerFi’s insurance coverage for any claims or any adverse publicity resulting from claims could adversely affect its business and results of operations.

We may be unable to obtain forgiveness of the PPP Loan, in whole or in part, in accordance with the provisions of the CARES Act, which could adversely affect BurgerFi’s financial condition. 

In May 2020, BurgerFi entered into a note with Pilot Bank, under the Paycheck Protection Program (“PPP”) of the CARES Act pursuant to which bank agreed to make a loan to BurgerFi in the amount of approximately $2.2 million. The PPP Loan matures in May 2022, bears interest at a rate of 1.0% per annum and requires no payments during the first six months from the date of the loan.

The PPP Loan is unsecured and guaranteed by the Small Business Administration, or the SBA. Under the terms of the PPP Loan, the principal amount of the loan may be forgiven to the extent it is used for qualifying expenses as described in the CARES Act and otherwise request forgiveness in accordance with the terms of the PPP Loan and the requirements of the SBA. BurgerFi expects to request that a significant portion of the principal amount of the PPP Loan be forgiven and to comply with all corresponding requirements. On April 28, 2020, the Secretary of the Treasury and Small Business Administration (SBA) announced that the government will review all PPP loans of more than $2.0 million before there is forgiveness. BurgerFi cannot guarantee that it will be successful in obtaining forgiveness of all or any part of such principal amount. BurgerFi will be required to repay any principal amount of the PPP Loan that is not forgiven, together with accrued and unpaid interest, in equal monthly installments prior to the maturity date of the loan, which would further restrict BurgerFi’s operating and financial flexibility.

BurgerFi’s business is subject to risks related to its sale of alcoholic beverages.

BurgerFi serves beer and wine at most of its restaurants. Alcoholic beverage control regulations generally require its restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license that must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of its restaurants, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and handling, and the storage and dispensing of alcoholic beverages. Any future failure to comply with these regulations and obtain or retain licenses could adversely affect BurgerFi’s business, financial condition and results of operations.

BurgerFi is also subject in certain states to “dram shop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. BurgerFi carries liquor liability coverage as part of its existing comprehensive general liability insurance. Recent litigation against restaurant chains has resulted in significant judgments and settlements under dram shop statutes. Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could have an adverse impact on BurgerFi’s business, results of operations or financial condition. Regardless of whether any claims against BurgerFi are valid or whether BurgerFi is liable, claims may be expensive to defend and may divert time and resources away from operations and hurt its financial performance. A judgment significantly in excess of BurgerFi’s insurance coverage or not covered by insurance could have a material adverse effect on its business, results of operations or financial condition.

GENERAL BUSINESS AND ECONOMIC RISKS

The COVID-19 pandemic has adversely affected and could continue to adversely affect BurgerFi’s financial results, condition, and outlook.

Health epidemics or pandemics can adversely affect consumer spending and confidence levels and supply availability and costs, as well as the local operations in impacted markets, all of which can affect BurgerFi’s financial results, condition, and outlook. Importantly, the global pandemic resulting from the outbreak of COVID-19 has disrupted global health, economic and market conditions, consumer behavior and BurgerFi’s restaurant operations beginning in early 2020. Local and national governmental mandates or recommendations and public perceptions of the risks associated with the COVID-19 pandemic have caused, and may continue to cause, consumer behavior to change and worsening economic conditions, which could continue to adversely affect BurgerFi’s business. In addition, BurgerFi’s global operations have been and may continue to be disrupted to varying degrees (from limited operations including drive-thru, delivery and/or take-away operations, sometimes with limited hours, menus and/or capacity, to full restaurant closures in some markets). While BurgerFi cannot predict the duration or scope of the COVID-19 pandemic, it has negatively impacted its business and such impact could be material to its financial results, condition and outlook. The COVID-19 pandemic may also have the effect of heightening other risks disclosed in these Risk Factors, such as, but not limited to, those related to consumer behavior, consumer perceptions of BurgerFi’s brand, supply chain interruptions and labor availability and cost.

Damage to BurgerFi’s reputation could negatively impact its business, financial condition, and results of operations.

BurgerFi’s reputation and the quality of its brand are critical to its business and success in existing markets and will be critical to its success as it enters new markets. BurgerFi believes that it has built its reputation on the high quality of its food and service, its commitment to its guests, its strong employee culture, and the atmosphere and design of its restaurants, and it must protect and grow the value of its brand in order for BurgerFi to continue to be successful. Any incident that erodes consumer loyalty for BurgerFi’s brand could significantly reduce its value and damage its business. BurgerFi may be adversely affected by any negative publicity, regardless of its accuracy, including with respect to:

Also, many social media platforms immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning BurgerFi may be posted on such platforms at any time. Information posted may be adverse to BurgerFi’s interests or may be inaccurate, each of which may harm its performance, prospects or business. The harm may be immediate without affording BurgerFi an opportunity for redress or correction. The risks associated with any such negative publicity or incorrect information cannot be completely eliminated or mitigated and may materially harm BurgerFi’s reputation, business, financial condition and results of operations.

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

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

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

If BurgerFi is unable to maintain and update its information technology systems to meet the needs of its business, its business could be adversely impacted.

BurgerFi relies heavily on information systems, including point-of-sale processing in its restaurants, for management of its supply chain, accounting, payment of obligations, collection of cash, credit and debit card transactions, mobile ordering, and other processes and procedures. As a rapidly growing business, BurgerFi’s current information technology infrastructure may not be adequately suited to handle the increasing volume of data and additional information needs of its organization. If BurgerFi is unable to successfully upgrade its information systems to meet the growing needs of its business, its growth could be adversely affected.

If BurgerFi experiences a material failure or interruption in its systems, its business could be adversely impacted.

BurgerFi’s ability to efficiently and effectively manage its business depends significantly on the reliability and capacity of its information technology systems. BurgerFi’s operations depend upon its ability to protect its computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure, or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive problems. The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, expanding BurgerFi’s systems as it grows or a breach in security of these systems could result in interruptions to or delays in BurgerFi’s business and guest service and reduce efficiency in its operations. If BurgerFi’s information technology systems fail and its redundant systems or disaster recovery plans are not adequate to address such failures, its revenues and profits could be reduced, and the reputation of its brand and its business could be materially adversely affected. In addition, remediation of such problems could result in significant, unplanned capital investments.

Additionally, as BurgerFi continues to evolve its digital platforms and enhance its internal systems, it places increasing reliance on third parties to provide infrastructure and other support services. BurgerFi may be adversely affected if any of its third-party service providers experience any interruptions in their systems, which then could potentially impact the services it receives from them and cause a material failure or interruption in its own systems.

BurgerFi depends on key members of its executive management team.

BurgerFi depends on the leadership and experience of key members of its executive management team. The loss of the services of any of its executive management team members could have a material adverse effect on BurgerFi’s business and prospects, as it may not be able to find suitable individuals to replace such personnel on a timely basis or without incurring increased costs, or at all. BurgerFi does not maintain key person life insurance policies on any of its executive officers. BurgerFi believes that its future success will depend on its continued ability to attract and retain highly skilled and qualified personnel. There is a high level of competition for experienced, successful personnel in its industry. BurgerFi’s inability to meet its executive staffing requirements in the future could impair its growth and harm its business.

BurgerFi may not be able to adequately protect its intellectual property, which, in turn, could harm the value of its brands and adversely affect its business.

BurgerFi’s ability to implement its business plan successfully depends in part on its ability to further build brand recognition using its trademarks, service marks, proprietary products and other intellectual property, including its name and logos and the unique character and atmosphere of its restaurants. BurgerFi relies on U.S. and foreign trademark, copyright, and trade secret laws, as well as franchise agreements, non-disclosure agreements, and confidentiality and other contractual provisions to protect its intellectual property. Nevertheless, BurgerFi’s competitors may develop similar menu items and concepts, and adequate remedies may not be available in the event of an unauthorized use or disclosure of its trade secrets and other intellectual property. BurgerFi may not be able to adequately protect its trademarks and service marks, and its competitors and others may successfully challenge the validity and/or enforceability of its trademarks and service marks and other intellectual property. Additionally, BurgerFi may be prohibited from entering into certain new markets due to restrictions surrounding competitors’ trademarks. The steps BurgerFi has taken to protect its intellectual property in the United States and in foreign countries may not be adequate. BurgerFi may also from time to time be required to institute litigation to enforce its trademarks, service marks and other intellectual property. Such litigation could result in substantial costs and diversion of resources and could negatively affect its sales, profitability and prospects regardless of whether it is able to successfully enforce its rights.

BurgerFi’s insurance coverage may not provide adequate levels of coverage against claims.

BurgerFi maintains various insurance policies for employee health, workers’ compensation, general liability, and property damage. BurgerFi believes that it maintains insurance customary for businesses of its size and type. However, there are types of losses BurgerFi may incur that cannot be insured against or that it believes are not economically reasonable to insure. Such losses could have a material adverse effect on its business and results of operations.

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

Many factors are expected to affect the volatility and price of BurgerFi’s common stock in addition to its operating results and prospects. Some of these factors, several of which are outside BurgerFi’s control, are the following:

REGULATORY AND LEGAL RISKS

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

BurgerFi is subject to extensive federal, state, local and foreign laws and regulations, as well as other statutory and regulatory requirements, including those related to:

The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, uncertainty around future changes in laws made by new regulatory administrations or BurgerFi’s inability to respond effectively to significant regulatory or public policy issues, could increase its compliance and other costs of doing business and, therefore, have an adverse effect on its results of operations. Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability. In addition, certain laws, including the ADA, could require BurgerFi to expend significant funds to make modifications to its restaurants if it failed to comply with applicable standards. Compliance with all of these laws and regulations can be costly and can increase BurgerFi’s exposure to litigation or governmental investigations or proceedings.

Laws and Regulations Relating to BurgerFi’s Franchised Operations

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

Nutritional Content Labeling and Disclosure Requirements

In recent years, there has been an increased legislative, regulatory and consumer focus on the food industry including nutritional and advertising practices. These changes have resulted in, and may continue to result in, the enactment of laws and regulations that impact the ingredients and nutritional content of BurgerFi’s menu offerings, or laws and regulations requiring it to disclose the nutritional content of its food offerings. For example, a number of states, counties and cities have enacted menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers or have enacted legislation restricting the use of certain types of ingredients in restaurants. Furthermore, the Patient Protection and Affordable Care Act of 2010 (the “PPACA”) establishes a uniform, federal requirement for certain restaurants to post certain nutritional information on their menus. Specifically, the PPACA amended the Federal Food, Drug and Cosmetic Act to require certain chain restaurants to publish the total number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake. These new labeling laws may also change consumer buying habits in a way that adversely impacts BurgerFi’s sales. Additionally, an unfavorable report on, or reaction to, BurgerFi’s menu ingredients, the size of its portions or the nutritional content of its menu items could negatively influence the demand for its offerings.

Local Licensure, Building and Zoning Regulations

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

Privacy and Cybersecurity

BurgerFi’s business requires the collection, transmission and retention of large volumes of guest and employee data, including credit and debit card numbers and other personally identifiable information, in various information technology systems that it maintains and in those maintained by third parties with whom it contracts to provide services. The collection and use of such information is regulated at the federal and state levels, as well as by the European Union (EU). Regulatory requirements, both domestic and abroad, have been changing and increasing regulation relating to the privacy, security, and protection of data. For example, the California Consumer Privacy Act was passed in June 2018, becoming effective January 2020, and requires businesses to provide California residents with certain rights regarding their personal information. Such regulatory requirements may become more prevalent in other states and jurisdictions as well. It is BurgerFi’s responsibility to ensure it is complying with these laws by taking the appropriate measures as well as monitoring its practices as these laws continue to evolve. As BurgerFi’s environment continues to evolve in this digital age and reliance upon new technologies, for example, cloud computing and its digital methods of ordering, become more prevalent, it is imperative it secures the private and sensitive information it collects. Failure to do so, whether through fault of BurgerFi’s own information systems or those of outsourced third party providers, could not only cause it to fail to comply with these laws and regulations, but also could cause it to face litigation and penalties that could adversely affect its business, financial condition and results of operations. BurgerFi’s brand’s reputation and its image as an employer could also be harmed by these types of security breaches or regulatory violations.

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

BurgerFi is subject to taxes by the U.S. federal, state, local and foreign tax authorities, and its tax liabilities will be affected by the allocation of expenses to differing jurisdictions. BurgerFi’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

BurgerFi may also be subject to audits of its income, sales and other transaction taxes by U.S. federal, state, local and foreign taxing authorities. Outcomes from these audits could have an adverse effect on BurgerFi’s operating results and financial condition.

If BurgerFi fails to maintain effective internal controls over financial reporting, its ability to produce timely and accurate financial information or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could be impaired, which could have a material adverse effect on its business and stock price.

As a public company, BurgerFi is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), and the listing standards of the New York Stock Exchange. The Sarbanes-Oxley Act requires, among other things, that BurgerFi maintains effective disclosure controls and procedures and internal control over financial reporting. It also requires annual management assessments of the effectiveness of BurgerFi’s internal control over financial reporting and disclosure of any material weaknesses in such controls. As an emerging growth company, if BurgerFi becomes a large accelerated filer or when BurgerFi is no longer an emerging growth company and becomes an accelerated filer, they will be required to have its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting. To maintain and improve the effectiveness of its disclosure controls and procedures and internal control over financial reporting, BurgerFi has expended, and anticipates that it will continue to expend, significant resources, including accounting-related costs and significant management oversight. BurgerFi expects that the requirements of these rules and regulations will continue to increase its legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on its personnel, systems and resources.

Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm BurgerFi’s operating results or cause it to fail to meet its reporting obligations and may result in a restatement of its financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of BurgerFi’s internal control over financial reporting that it is required to include in its periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in BurgerFi’s reported financial and other information, which may have a negative effect on the trading price of its common stock. In addition, if BurgerFi is unable to continue to meet these requirements, it may not be able to remain listed on the Nasdaq Stock Market.

BurgerFi has identified material weaknesses in its internal control over financial reporting. If it fails to remediate one or more of its material weaknesses, BurgerFi’s ability to accurately and timely report its financial results could be adversely affected.

BurgerFi’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP). 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 the consolidated financial statements will not be prevented or detected on a timely basis. Prior to this merger transaction, BurgerFi has been a private company with limited accounting personnel and other resources to address its internal control over financial reporting. In connection with the audit of BurgerFi’s 2019 and 2018 annual consolidated financial statements, BurgerFi and its independent registered public accounting firm identified a material weakness in its internal controls due to a lack of controls over the financial closing and reporting process, including segregation of duties issues, and a lack of resources to perform and review the application of accounting standards over the accounting for revenue, leases, and variable interest entities. In preparing the BurgerFi consolidated financial statements for the years ended December 31, 2019 and 2018, BurgerFi’s internal controls failed to detect certain errors related to consolidating variable interest entities for which BurgerFi is the primary beneficiary, accounting for deferred rent, and as it relates to the year ended December 31, 2019, accounting for initial franchise fees and brand development revenue and expenses in connection with the adoption of the new revenue recognition standard. During 2020, BurgerFi began to take steps to address the material weakness, which included the hiring of a Chief Financial Officer and the engagement of external advisors to provide financial accounting assistance. BurgerFi plans to hire additional personnel to address the segregation of duties issues and the application of accounting standards in its financial closing and reporting process. In addition, BurgerFi plans to engage external advisors to evaluate and document the design and operating effectiveness of its internal controls and assist with the remediation and implementation of its internal controls as required. The actions BurgerFi has and will continue to take are subject to continued review, supported by confirmation and testing by management as well as audit committee oversight. While BurgerFi has a plan to remediate these material weaknesses, it cannot assure you that it will be able to remediate these material weaknesses, which could impair its ability to accurately and timely report its financial position, results of operations or cash flows. Moreover, a failure to remediate these material weaknesses identified above or the identification of additional material weaknesses, could adversely affect the Post-Combination Company’s stock price and ability to maintain compliance with exchange listing requirements.

RISKS RELATED TO THE POST-COMBINATION COMPANY’S ORGANIZATIONAL STRUCTURE

BurgerFi will have controlling stockholders whose interests may differ from those of its public stockholders.

Upon the closing of the Business Combination, approximately 54% of the voting power of the Post-Combination Company’s common stock will be controlled, directly or indirectly, by the Members and the other parties to the Voting Agreement. These stockholders, for the foreseeable future, have influence over corporate management and affairs, as well as matters requiring stockholder approval, and they will be able to, subject to applicable law and the Voting Agreement, participate in the election of the members of the Post-Closing Board of Directors and actions to be taken by it and the Post-Closing Board of Directors, including amendments to the Amended and Restated Certificate of Incorporation (assuming it is approved by the stockholders) and its Amended and Restated Bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of its assets. The directors so elected will have the authority, subject to the terms of the Post-Combination Company’s indebtedness and applicable rules and regulations, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions. It is possible that the interests of these stockholders may in some circumstances conflict with the Post-Combination Company’s interests and the interests of its other stockholders. This could influence their decisions, including with regard to whether and when to dispose of assets and whether and when to incur new or refinance existing indebtedness. In addition, the determination of future tax reporting positions, the structuring of future transactions and the handling of any future challenges by any taxing authorities to the Post-Combination Company’s tax reporting positions may take into consideration these stockholders’ tax or other considerations, which may differ from the Post-Combination Company’s considerations or those of its other stockholders.

The Post-Combination Company’s anti-takeover provisions could prevent or delay a change in control of the company, even if such change in control would be beneficial to its stockholders.

Provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as well as provisions of Delaware law could discourage, delay or prevent a merger, acquisition or other change in control of the company, even if such change in control would be beneficial to its stockholders. These provisions include:

These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause the Post-Combination Company to take other corporate actions you desire. In addition, because the Post-Closing Board of Directors is responsible for appointing the members of its management team, these provisions could in turn affect any attempt by its stockholders to replace current members of its management team.

In addition, the Delaware General Corporation Law (the “DGCL”), to which the Post-Combination Company is subject, prohibits it, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder or group of stockholders who owns at least 15% of its common stock.

The provision of the Post-Combination Company’s Amended and Restated Certificate of Incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against its directors and officers.

Our Amended and Restated Certificate of Incorporation includes an exclusive venue provision. This provision requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on behalf of the Post-Combination Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of its directors, officers or other employees to it or its stockholders, (iii) any action asserting a claim against it arising pursuant to any provision of the DGCL or its Amended and Restated Certificate of Incorporation or the Amended and Restated Bylaws or (iv) any action asserting a claim against it governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware. Notwithstanding the foregoing, the inclusion of such provision in our Amended and Restated Certificate of Incorporation will not be deemed to be a waiver by our stockholders of our obligation to comply with federal securities laws, rules and regulations, and the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any other claim for which the federal district courts of the United States of America shall be the sole and exclusive forum.

This choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Post-Combination Company or its directors, officers or other employees, and may result in increased costs to a stockholder who has to bring a claim in a forum that is not convenient to the stockholder, which may discourage such lawsuits. Although under Section 115 of the DGCL, exclusive forum provisions may be included in our Amended and Restated Certificate of Incorporation, if a court were to find the exclusive forum provision of our Amended and Restated Certificate of Incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.

The Post-Combination Company will incur relatively outsized costs as a result of becoming a public company.

As a public company, the Post-Combination Company will incur significant legal, accounting, insurance and other expenses that it would not incur as a private company, including costs associated with public company reporting requirements. The Post-Combination Company will continue to incur costs associated with compliance with the Sarbanes-Oxley Act and related rules implemented by the SEC. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. These expenses will likely increase in the future, particularly after the combined company ceases to be an “emerging growth company” if it is also no longer a “smaller reporting company” as a result of additional corporate governance and disclosure requirements under the Sarbanes-Oxley Act, the Dodd-Frank Act, and SEC rules and regulations. These rules and regulations increase the Post-Combination Company’s legal and financial compliance costs and make some activities more time-consuming. These laws and regulations also make it more difficult or costly for the Post-Combination Company to obtain certain types of insurance, including director and officer liability insurance, and the Post-Combination Company may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. Furthermore, if the Post-Combination Company is unable to continue to satisfy its obligations as a public company, it would be subject to delisting of its common stock, fines, sanctions and other regulatory action and potentially civil litigation.

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

We are currently a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies. Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects which may result in less investor confidence. Investors may find our common stock less attractive as a result of our smaller reporting company status. If some investors find our common stock less attractive, there may be a less active trading market for our common stock and our stock price may be more volatile.

We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. As long as we qualify as an emerging growth company, we would be permitted, and we intend to, omit the auditor’s attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act, as described above. We also intend to take advantage of the exemption provided under the JOBS Act from the requirements to submit say-on-pay, say-on-frequency and say-on-golden parachute votes to our stockholders and we will avail ourselves of reduced executive compensation disclosure that is already available to smaller reporting companies.

In addition, Section 107 of the JOBS Act also provides that we can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of these benefits until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of this exemption. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will continue to be an emerging growth company until the earliest to occur of (i) the last day of the fiscal year during which we had total annual gross revenues of at least $1.07 billion (as indexed for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of OPES Units at our IPO on March 16, 2018, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the date on which we are deemed to be a “large accelerated filer,” as defined under the Exchange Act.

Until such time that we lose “emerging growth company” status, it is unclear if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and our stock prices may be more volatile and could cause our stock prices to decline.

The unaudited pro forma financial information included in this proxy statement may not be representative of the Post-Combination Company’s results following the Business Combination.

The unaudited pro forma financial information included in this proxy statement has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the Business Combination been completed as of the date indicated, nor is it indicative of the Post-Combination Company’s future operating results or financial position. The pro forma financial statements have been derived from the historical financial statements of OPES and BurgerFi and adjustments and assumptions have been made regarding the combined company after giving effect to the Business Combination. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the Post-Combination Company in connection with the Business Combination. As a result, the actual financial condition of the Post-Combination Company following the Business Combination may not be consistent with, or evident from, these pro forma financial statements. The assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the Post-Combination Company’s financial condition following the Business Combination.

The Post-Combination Company will have broad discretion in the use of its existing cash, cash equivalents and the net proceeds from the Business Combination and may not use them effectively.

Management of the Post-Combination Company will have broad discretion in the application of its existing cash, cash equivalents and the net proceeds from the Business Combination, and you will not have the opportunity as part of your investment decision to assess whether such proceeds are being used appropriately. Because of the number and variability of factors that will determine its use of our existing cash, cash equivalents and the net proceeds from the Business Combination, the ultimate use may vary substantially from their currently intended use. Management might not apply our cash resources in ways that ultimately increase the value of your investment. The failure by management to apply these funds effectively could harm our business. Pending their use, the Post-Combination Company may invest our cash resources in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If the Post-Combination Company does not invest in ways that enhance stockholder value, it may fail to achieve expected financial results, which could cause our stock price to decline.

In the event that a significant number of OPES’s common stock are redeemed, its stock may become less liquid following the Business Combination.

If a significant number of OPES’s common stock are redeemed, the Post-Combination Company may be left with a significantly smaller number of stockholders. As a result, trading in the shares of the Post-Combination Company following the Business Combination may be limited and your ability to sell your shares in the market could be adversely affected.

The Post-Combination Company will be required to meet the initial listing requirements to be listed on Nasdaq following the Business Combination. The Post-Combination Company may be unable to maintain the listing of its securities in the future.

If the Post-Combination Company fails to meet the continued listing requirements following the Business Combination, it could face significant material adverse consequences, including:

Risk Factors Relating to OPES’s Business

OPES will be forced to liquidate the trust account if it cannot consummate a business combination by January 31, 2021. In the event of a liquidation, OPES’s public stockholders will receive no less than $10.10 per share and the Warrants will expire worthless.

If OPES is unable to complete a business combination by January 31, 2021 and is forced to liquidate, the per-share liquidation distribution will be no less than $10.10, plus interest earned on amounts held in trust that have not been used to pay for taxes. Furthermore, there will be no distribution with respect to the Warrants, which will expire worthless as a result of OPES’s failure to complete a business combination.

If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption price received by stockholders may be less than approximately $10.10.

Our placing of funds in the trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of our public stockholders. If we are unable to complete an initial business combination within the required time period, our insiders have agreed that they will be jointly and severally liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver. However, our insiders may not be able to meet such obligation as we have not required our insiders to retain any assets to provide for their indemnification obligations, nor have we taken any further steps to ensure that our insiders will be able to satisfy any indemnification obligations that arise. Moreover, our insiders will not be liable to our public stockholders if they should fail to satisfy their obligations under this agreement and instead will only be liable to us. Therefore, the per share redemption or conversion amount received by public stockholders may be less than approximately $10.10 due to such claims.

Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per share redemption or conversion amount received by public stockholders may be less than $10.10.

Our Sponsor may be held liable for claims by third parties against us to the extent of distributions received by them.

If we have not completed our initial business combination by January 31, 2021, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the trust account which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining holders of common stock and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. We may not properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us.

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

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

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

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

Holders of our Warrants will not have redemption rights.

If we are unable to complete a Business Combination within the required time period and we redeem the funds held in the trust account, the Warrants will expire and holders will not receive any of the amounts held in the trust account in exchange for the Warrants. 

The shares beneficially owned by our Sponsor and our Chief Financial Officer will not participate in a redemption and, therefore, they may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.

Our Sponsor and our Chief Financial Officer have waived their right to redeem their Founders’ Shares in connection with a business combination if we are unable to consummate a business combination. In addition, certain of our directors are entitled to receive Founders’ Shares only upon the consummation of a business combination. Accordingly, these securities will be worthless if we do not consummate a business combination. The personal and financial interests of our directors and officers may influence their motivation in consummating the Business Combination. Consequently, our directors’ and officers’ discretion in identifying and selecting BurgerFi as a suitable business target may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in our stockholders’ best interest.

The shares beneficially owned by our Sponsor and our Chief Financial Officer will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether the Business Combination is appropriate.

As of the date of this proxy statement, our Sponsor and our Chief Financial Officer own 1,626,715 shares of OPES Common Stock, in the aggregate. They have waived their right to receive distributions with respect to these shares upon the liquidation of the trust account if OPES is unable to consummate a business combination. Based on a market price of $12.25 per share of Common Stock on the Record Date, the value of the shares of OPES Common Stock was approximately $19.9 million. Accordingly, the shares of OPES Common Stock will be worthless if OPES does not consummate a business combination. In addition, certain of our directors are entitled to receive Founders’ Shares only upon the consummation of a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting BurgerFi as a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in OPES’s stockholders’ best interest.

If we are unable to consummate a business combination, any loans made by our Sponsor or its affiliates, any of the Initial Stockholders, or their affiliates and EarlyBirdCapital, would not be repaid, resulting in a potential conflict of interest in determining whether a potential transaction is in our stockholders’ best interest.

To meet our working capital needs, our Sponsor, its affiliates, certain of the Initial Stockholders, and their affiliates, and EarlyBirdCapital have loaned us funds, from time to time. The loans are non-interest bearing and are payable at the consummation of a business combination. If we fail to consummate a business combination within the required time period, the loans would not be repaid. Consequently, our directors and officers may have a conflict of interest in determining whether the terms, conditions and timing of the Business Combination are appropriate and in our stockholders’ best interest.

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

As of September 30, 2020, OPES had $10,962 in cash, $48,401,503 in securities held in the trust account to be used for a business combination or to repurchase or redeem OPES Common Stock in connection therewith, and a working capital deficit of $625,631, which excludes prepaid income taxes and franchise and income taxes payable as the net amounts can be paid from the interest earned in the trust account. As of September 30, 2020, approximately $1,231,000 of the amount on deposit in the trust account represented interest income, which is available to pay the Company’s tax obligations. Marcum LLP’s report on our financial statements includes an explanatory paragraph stating that our ability to continue as a going concern is dependent on the consummation of a business combination before January 31, 2021. The financial statements do not include any adjustments that might result from our inability to consummate the Business Combination. There is no assurance that the Business Combination will be approved by the OPES stockholders at the Meeting. In accordance with the Certificate of Incorporation, if OPES does not consummate the Business Combination and fails to complete an initial business combination by January 31, 2021, OPES would be required to dissolve and liquidate unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated. If the Business Combination Proposal is not approved, the Business Combination will not be consummated. These factors raise substantial doubt about our ability to continue as a going concern.

You must tender your OPES shares of Common Stock to validly seek redemption at the Meeting. OPES is requiring stockholders who wish to redeem their common stock in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

In connection with tendering your shares for redemption, you must elect either to physically tender your stock certificates to OPES’s transfer agent at least two (2) business days before the Meeting or deliver your shares of Common Stock to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, which election would likely be determined based on the manner in which you hold your ordinary shares. The requirement for physical or electronic delivery at least two (2) business days before the Meeting ensures that a redeeming holder’s election to redeem is irrevocable once the Business Combination is consummated. It is OPES’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a shorter time to deliver shares through the DWAC System, we cannot assure you of this fact. Any failure to observe these procedures will result in your loss of redemption rights in connection with the vote on the Business Combination.

OPES will require its stockholders who wish to redeem their common stock in connection with the Business Combination to comply with specific requirements for redemption, and such redeeming stockholders may be unable to sell their securities when they wish to in the event that the Business Combination is not consummated.

OPES is requiring that public stockholders who wish to redeem their Common Stock in connection with the proposed Business Combination to comply with specific requirements for redemption as described above. If the Business Combination is not consummated, stockholders who attempted to redeem their Common Stock will be unable to sell their securities after the failed Business Combination until OPES has returned their securities to them. The market price for OPES’s Common Stock may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their securities.

If our due diligence investigation of BurgerFi was inadequate, then OPES stockholders following the Business Combination could lose some or all of their investment.

Even though OPES conducted a due diligence investigation of BurgerFi, we cannot be sure that this diligence uncovered all material issues that may be present inside BurgerFi or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of BurgerFi and its business and outside of its control will not later arise.

If those OPES security holders who have registration rights exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of OPES’s securities.

OPES’s Sponsor, the Initial Stockholders, the PIPE Investors, the holders of Private Placement Units and the holders of Public Warrants have the right to have their shares of OPES Common Stock and/or shares of OPES Common Stock underlying their Warrants registered for resale after the consummation of the Business Combination. In addition, the securities that may be issued to our Initial Stockholders, officers, directors, or their affiliates in payment of working capital loans made to us also will be registered for resale after we consummate the Business Combination. If such persons exercise their registration rights with respect to all of their securities, then there will be an additional 28,618,773 shares of Common Stock eligible for trading in the public market. The presence of these additional shares of Common Stock trading in the public market may have an adverse effect on the market price of the Post-Combination Company’s securities.

Provisions in our Certificate of Incorporation, Bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Common Stock and could entrench management.

Our Certificate of Incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. See also “RISKS RELATED TO THE POST-COMBINATION COMPANY’S ORGANIZATIONAL STRUCTURE.”

Risks Related to Our Common Stock

If the Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline. The market values of our securities at the time of the Business Combination may vary significantly from their prices on the date the Acquisition Agreement was executed, the date of this proxy statement, or the date on which our stockholders vote on the Business Combination.

In addition, following the Business Combination, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for BurgerFi’s securities. Accordingly, the valuation ascribed to BurgerFi in the Business Combination may not be indicative of the actual price that will prevail in the trading market following the Business Combination. If an active market for our securities develops and continues, the trading price of our securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline, which could have a material adverse effect on your investment in our securities.

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

The trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on the company. Because the Business Combination will result in BurgerFi merging with a special purpose acquisition company (“SPAC”), research coverage from industry analysts may be limited. If no securities or industry analysts commence coverage of the Post-Combination Company, our stock price and trading volume could be negatively impacted. If any of the analysts who may cover the Post-Combination Company change their recommendation regarding our stock adversely, provide more favorable relative recommendations about our competitors or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If any analyst who may cover us ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

A significant number of shares of our Common Stock are subject to issuance upon exercise of the outstanding Warrants, which upon such exercise may result in dilution to our security holders.

Outstanding Public Warrants and Private Warrants to purchase an aggregate of 11,945,000 shares of our Common Stock will become exercisable at a price of $11.50 per share on the later of 30 days after the completion of an initial business combination or 12 months from the closing of the IPO and will expire on the fifth anniversary of the completion an initial business combination, or earlier upon redemption or liquidation, In addition, there will be 3,000,000 warrants issued as part of the units issuable under the Forward Purchase Contract and there may be additional securities consisting of warrants issued in payment of working capital loans made to us. To the extent such warrants are exercised, additional shares of our Common Stock will be issued, which will result in dilution to the then existing holders of Common Stock of the Post-Combination Company and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of the Common Stock of the Post-Combination Company.

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

Sales of a substantial number of shares of our Common Stock after the Business Combination in the public market or the perception that these sales might occur could depress the market price of the shares of Common Stock of the Post-Combination Company and could impair its ability to raise capital through the sale of additional equity securities. The Post-Combination Company is unable to predict the effect that sales may have on the prevailing market price of its Common Stock.

TRADING MARKET AND DIVIDENDS

OPES’s Units, shares of Common Stock and Public Warrants, are each traded on Nasdaq, under the symbols “OPESU,” “OPES,” and “OPESW,” respectively. Each Unit consists of one share of Common Stock and one Public Warrant entitling its holder to purchase one share of Common Stock at a price of $11.50 per share. OPES’s Units, Common Stock and Public Warrants commenced trading on Nasdaq on March 16, 2018.

OPES has not paid any cash dividends on its shares of Common Stock to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of any dividends after the Business Combination will be within the discretion of the Post-Closing Board of Directors. It is the present intention of OPES’s Board of Directors to retain all earnings, if any, for use in its business operations and, accordingly, OPES’s Board of Directors does not anticipate declaring any dividends in the foreseeable future.

BurgerFi’s securities are not publicly traded. 

THE MEETING

General

We are furnishing this proxy statement to the OPES stockholders as part of the solicitation of proxies by the OPES Board of Directors for use at the Meeting to be held on December 15, 2020, via teleconference, and at any adjournment or postponement thereof. This document provides you with the information you need to know to be able to vote or instruct your vote to be cast at the Meeting.

Date, Time and Place

The Meeting will be held on December 15, 2020 at 10:00 a.m., Eastern time, or such other date and time to which such meeting may be adjourned or postponed. In light of developments surrounding the novel coronavirus (also known as COVID-19) we decided to hold the Meeting via teleconference using the following dial-in information:

Purpose of the Meeting

At the Meeting, we are asking holders of OPES Common Stock to approve the following Proposals:

No Additional Matters May Be Presented at the Meeting

This Meeting has been called only to consider the approval of the Proposals.

Record Date; Who is Entitled to Vote

The close of business on November 24, 2020, was fixed as the Record Date for determining those OPES stockholders entitled to notice of and to vote at the Meeting. As of the Record Date, there were 7,688,090 shares of OPES Common Stock outstanding and entitled to vote. Each holder of OPES Common Stock is entitled to one vote per share on each of the Proposals.

As of the Record Date, our Sponsor, the Initial Stockholders, and certain of our directors and officers owned and are entitled to vote 3,320,000 shares of Common Stock, or approximately 43.1% of OPES’s issued and outstanding shares of Common Stock. Our Initial Sponsor and the Initial Stockholders entered into letter agreements at the time of the IPO whereby they agreed to vote all shares of Common Stock owned by them in favor of the Business Combination. In addition, all transferees of Founders’ Shares since the IPO, which includes our Sponsor, have assumed the same obligations under the letter agreements.

Quorum and Required Vote for Proposals

A quorum of OPES stockholders is necessary to hold a valid meeting. A quorum will be present at the Meeting if at least a majority of the shares of OPES Common Stock issued and outstanding and entitled to vote at the Meeting is represented in person or by proxy. An OPES stockholder present in person or by proxy and abstaining from voting at the Meeting will count as present for the purposes of establishing a quorum, but broker non-votes will not.

The vote required to approve each of the Proposals is as follows:

Proposal #1 - The Business Combination Proposal requires the vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. An abstention will have the effect of a vote “AGAINST” Proposal #1. Broker non-votes will have no effect on the vote for Proposal #1.

Proposal #2 - The Amendment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of OPES Common stock. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal #2.

Proposal #3 - The Incentive Plan Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #3. Broker non-votes will have no effect on the vote for Proposal #3.

Proposal #4 – The Nasdaq Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #4. Broker non-votes will have no effect on the vote for Proposal #4.

Proposal #5 – The Adjournment Proposal requires the affirmative vote of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal #5. Broker-non votes have no effect on the vote for Proposal #5.

The Business Combination will not be consummated if the holders of 2,415,109 or more shares of OPES’s Common Stock exercise their redemption rights, which number of shares is based upon the balance of the trust account as of September 30, 2020.

Voting Your Shares

 Each share of OPES Common Stock that you own in your name entitles you to one vote for each Proposal on which such shares are entitled to vote at the Meeting. Your proxy card shows the number of shares of OPES Common Stock that you own.

There are two ways to ensure that your shares of OPES Common Stock are voted at the Meeting:

IN ORDER TO REDEEM YOUR SHARES, YOU MUST DEMAND, IN WRITING TO OUR TRANSFER AGENT, THAT OPES REDEEM YOUR SHARES AND TENDER YOUR PHYSICAL STOCK CERTIFICATE, OR ELECTRONICALLY TRANSFER YOUR SHARES TO THE DTC ACCOUNT OF CONTINENTAL, OUR TRANSFER AGENT, AT LEAST TWO BUSINESS DAYS PRIOR TO THE MEETING. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO ELECTRONICALLY TRANSFER YOUR SHARES TO THE DTC ACCOUNT OF CONTINENTAL AT LEAST TWO BUSINESS DAYS PRIOR TO THE MEETING.

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

Redemption Rights

Pursuant to OPES’s Certificate of Incorporation, a holder of shares of OPES Common Stock has the right to have its public shares redeemed for cash equal to its pro rata share of the trust account (net of taxes payable) in connection with the Business Combination. Public stockholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of shares of OPES Common Stock as of the Record Date. OPES stockholders will be offered the option to redeem their shares of OPES Common Stock for a full pro rata share of the trust account (net of taxes payable), calculated as of two business days prior to the anticipated consummation of the Business Combination. As of November 24, 2020, the Record Date, this would amount to approximately $10.64 per share. If you exercise your redemption rights, you will be exchanging your shares of OPES Common Stock for cash and will no longer own the shares of Common Stock.

If you are a public stockholder and you seek to have your shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern time, on December 11, 2020 (two (2) business days before the Meeting), that OPES redeem your shares into cash; and (ii) submit your request in writing to OPES’s transfer agent, Continental, at the address listed at the end of this section and deliver your shares to OPES’s transfer agent physically or electronically using the DWAC system at least two (2) business days prior to the vote at the Meeting.

You may tender the shares of OPES Common Stock for which you are electing redemption at least two (2) business days before the Meeting by either:

Through the DWAC system, this electronic delivery process can be accomplished by contacting your broker and requesting delivery of your shares through the DWAC system. Delivering shares physically may take significantly longer. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC, and OPES’s transfer agent will need to act together to facilitate this request. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and the broker would determine whether or not to pass this cost on to the redeeming holder. It is OPES’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. OPES does not have any control over this process or over the brokers or DTC, and it may take longer than two weeks to obtain a physical stock certificate. Stockholders who request physical stock certificates and wish to redeem may be unable to meet the deadline for tendering their ordinary shares before exercising their redemption rights and thus will be unable to redeem their shares of Common Stock.

In the event that a stockholder tenders its shares of OPES Common Stock and decides prior to the consummation of the Business Combination that it does not want to redeem its shares; the stockholder may withdraw the tender. In the event that a stockholder tenders shares of OPES Common Stock and the Business Combination is not completed, these shares will not be redeemed for cash and the physical certificates representing these shares will be returned to the stockholder promptly following the determination that the Business Combination will not be consummated. OPES anticipates that a stockholder who tenders shares of OPES Common Stock for redemption in connection with the vote to approve the Business Combination would receive payment of the redemption price for such shares soon after the completion of the Business Combination.

Any corrected or changed written demand of redemption rights must be received by OPES’s transfer agent two (2) business days prior to the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to the transfer agent at least two (2) business days prior to the vote at the Meeting. Furthermore, if a stockholder delivered his certificate for redemption and subsequently decided prior to the date immediately preceding the consummation of the proposed Business Combination not to elect redemption, he may simply request that the transfer agent return the certificate (physically or electronically).

The Business Combination will not be consummated if the holders of 2,415,109 or more shares of OPES’s Common Stock exercise their redemption rights, which number of shares is based upon the balance of the trust account as of September 30, 2020.

If OPES is unable to complete the Business Combination by January 31, 2021 it will liquidate and dissolve and public stockholders would be entitled to receive approximately $10.64 per share upon such liquidation based on the balance of the trust account of $46.5 million on November 24, 2020.

Holders of outstanding OPES Units must separate the underlying shares of OPES Common Stock and OPES Warrants prior to exercising redemption rights with respect to the shares of OPES Common Stock. If OPES Units are registered in a holder’s own name, the holder must deliver the certificate for its OPES Units to Continental, with written instructions to separate the OPES Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may then exercise his, her or its redemption rights upon the separation of the shares of OPES Common Stock from the OPES Units.

If a broker, dealer, commercial bank, trust company or other nominee holds OPES Units for an individual or entity (such individual or entity, the “beneficial owner”), the beneficial owner must instruct such nominee to separate the beneficial owner’s OPES Units into their individual component parts. The beneficial owner’s nominee must send written instructions by facsimile to Continental. Such written instructions must include the number of OPES Units to be separated and the nominee holding such OPES Units. The beneficial owner’s nominee must also initiate electronically, using DTC’s DWAC system, a withdrawal of the relevant OPES Units and a deposit of an equal number of shares of OPES Common Stock and OPES Warrants. This must be completed far enough in advance to permit the nominee to exercise the beneficial owner’s redemption rights upon the separation of the shares of OPES Common Stock from the OPES Units. While this is typically done electronically the same business day, beneficial owners should allow at least one full business day to accomplish the separation. If beneficial owners fail to cause their shares of OPES Common Stock to be separated in a timely manner, they will likely not be able to exercise their redemption rights.

Proxies and Proxy Solicitation Costs

We are soliciting proxies on behalf of the OPES Board of Directors. This solicitation is being made by mail but also may be made by telephone or in person. OPES and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Any solicitation made and information provided in such a solicitation will be consistent with the written proxy statement and proxy card. Advantage Proxy, a proxy solicitation firm that OPES has engaged to assist it in soliciting proxies, will be paid its customary fee of approximately $7,500 and $750 in out-of-pocket expenses.

OPES will ask banks, brokers and other institutions, nominees, and fiduciaries to forward its proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. OPES will reimburse them for their reasonable expenses.

If you send in your completed proxy card, you may still vote your shares in person if you revoke your proxy before it is exercised at the Meeting.

Shares Held by OPES Directors and Executive Officers

As of the Record Date, none of our directors and executive officers of OPES owned shares of our Common Stock, other than our Chairman and Chief Executive Officer, Mr. Ophir Sternberg, through his controlling interest in our Sponsor, and our Chief Financial Officer, José Luis Córdova Vera, who owns Founders’ Shares as an Initial Stockholder. As of the Record Date, Mr. Sternberg and Mr. Córdova owned and were entitled to vote 1,626,715 shares of Common Stock, representing approximately 21.2% of the outstanding shares of Common Stock of OPES on that date. Mr. Sternberg and Mr. Cordova have entered into an agreement obligating them to vote their shares in favor of the Business Combination Proposal, and OPES expects that they will vote their shares in favor of the other Proposals.

Recommendation of OPES’s Board of Directors

OPES’s Board of Directors:

OPES’s directors have interests that may be different from or in addition to your interests as a stockholder. See “Business Combination Proposal: Approval of The Business Combination — Interests of Certain Persons in the Business Combination” in this proxy statement for further information.

Consummation of the Business Combination

Assuming timely satisfaction of necessary closing conditions, including the approval by our stockholders of the Business Combination, we anticipate that the Business Combination will be consummated in the fourth calendar quarter of 2020.

Householding of Meeting Materials

Unless we have received contrary instructions, we may send a single copy of this proxy statement and notice to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as “householding,” reduces the volume of duplicate information received at your household and helps to reduce our expenses.

Who Can Answer Your Questions About Voting Your Shares

If you have any questions about how to vote or direct a vote in respect of your OPES Common Stock, you may call Advantage Proxy, our proxy solicitor, at 877-870-8565.

PROPOSAL NO. 1

BUSINESS COMBINATION PROPOSAL: APPROVAL OF THE BUSINESS COMBINATION

The discussion in this proxy statement of the Business Combination and the principal terms of the Acquisition Agreement, is subject to, and is qualified in its entirety by reference to, the Acquisition Agreement. The full text of the Acquisition Agreement and the Amendment is attached hereto as Annex A and Annex A-1, respectively, which is incorporated by reference herein.

General Description of the Business Combination

Business Combination with BurgerFi

On the closing date of the transactions contemplated by the Acquisition Agreement, OPES will issue the Closing Payment Shares to the Members and will acquire 100% the Interests from the Members resulting in BurgerFi becoming a wholly owned subsidiary of OPES. In connection with the Business Combination, OPES will change its name to “BurgerFi International, Inc.”

After the Business Combination, assuming (i) no redemption of our public shares of Common Stock, (ii) the conversion of $1.123 million of Notes into 100,000 shares of Common Stock, (iii) the issuance of the Closing Payment Shares, including the Stock Portion, in shares, (iv) the issuance of 3,000,000 shares of Common Stock in connection with the Forward Purchase Contract, (v) the Earnout Shares are not earned and issued, and (vi) the Warrants and UPO are not exercised for shares of Common Stock, OPES’s current public stockholders (including the PIPE investors) will own approximately 43.5% of the Post-Combination Company, OPES’s current directors and officers together with our Sponsor and the Initial Stockholders will own approximately 18.9% of the Post-Combination Company, and the Members will own approximately 37.6% of the Post-Combination Company. Assuming redemption by holders of 2,415,108 shares of OPES’s Common Stock and the assumptions set forth in (ii) through (vi) above, OPES’s current public stockholders (including the PIPE investors), will own approximately 31.2% of the Post-Combination Company, OPES’s current directors, officers together with our Sponsor and the Initial Stockholders will own approximately 23.0% of the Post-Combination Company, and the Members will own approximately 45.8% of the Post-Combination Company.

Background of the Business Combination

OPES was incorporated as a blank check company on July 24, 2017, under the laws of the State of Delaware, for the purpose of entering into a merger, stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Our efforts in identifying a prospective target business were not limited to a particular industry or geographic region of the world.

On March 16, 2018, we consummated our IPO of 10,000,000 Units, with each Unit consisting of one share of Common Stock, and one Public Warrant. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $100,000,000. Simultaneously with the consummation of the IPO, we consummated a private placement of 400,000 Private Placement Units at a price of $10.00 per Private Placement Unit, generating total proceeds of $4,000,000. 

We also sold the UPO to purchase up to 750,000 units to our underwriter, EarlyBirdCapital, for a purchase price of $100. The UPO is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummation of our initial business combination. The UPO may be exercised for cash or on a cashless basis, at the holder’s option, and expires on March 17, 2023. At the time of the IPO, we also entered into the Forward Purchase Contract with Lion Point, wherein Lion Point agreed to purchase in a private placement to occur concurrently with the consummation the Forward Purchase Units. The Forward Purchase Contract is subject to conditions, including that Lion Point consents to our initial business combination. Lion Point granting its consent to the purchase is entirely within its sole discretion. Accordingly, if it does not consent to the business combination, it will not be obligated to purchase the units. In connection with the consummation of the Business Combination, the Company will enter into Amended and Restated Forward Purchase Contracts with each of Lion Point and Lionheart Equities for the purchase of Forward Purchase Units. In the written notice from Lion Point to OPES on June 29, 2020, Lion Point confirmed that it will consent to the Business Combination and has agreed to purchase 2,000,000 Forward Purchase Units under the terms of the Amended and Restated Forward Purchase Contract it will enter into with the Company upon the consummation of the Business Combination. Lionheart Equities has also agreed to purchase 1,000,000 Forward Purchase Units under the terms of the Amended and Restated Forward Purchase Contract it will enter into with the Company upon the consummation of the Business Combination. In addition, OPES agreed to register a total of 5,029,376 shares of OPES Common Stock owned, or to be owned by Lion Point as of the consummation of the Business Combination, which is comprised of (i) 862,500 of the Founders’ Shares, (ii) 83,438 shares of OPES Common Stock underlying the Private Placement Units and 83,438 shares of OPES Common Stock underlying the Private Placement Warrants, and (iii) 2,000,000 shares of OPES Common Stock underlying the Forward Purchase Units and 2,000,000 shares of OPES Common Stock underlying the warrants that are part of the Forward Purchase Units, which shares would have priority registration rights over all other shares of OPES Common Stock to be registered under the New Registration Rights Agreement. Lion Point is entitled to make up to two demands that we register such shares. OPES and Lion Point have agreed to enter into definitive documentation with respect to the terms of the written notice from Lion Point to OPES on June 29, 2020.

On March 20, 2018, we sold an additional 1,500,000 Units at $10.00 per Unit pursuant to the underwriters fully exercising their over-allotment option and we also sold an additional 45,000 Private Placement Units at $10.00 per Private Placement Unit to the original purchasers of the Private Placement Units in respect of their obligation to purchase such additional Private Placement Units upon the exercise of the underwriters’ over-allotment option, generating additional gross proceeds of $15,450,000.

After deducting the underwriting fee (excluding the deferred underwriting commission of $4,025,000, which amount will be payable upon consummation of the Business Combination, if consummated) and the IPO expenses, the total net proceeds from our IPO and the sale of the Private Placement Units, approximately $116,150,000 (or $10.10 per Unit Sold), was placed in the trust account.

Prior to the consummation of its IPO, neither OPES nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to such a transaction with OPES. Immediately after closing the IPO, the officers and directors of OPES initiated contact with several potential targets and/or advisors. Although OPES initially planned to focus on prospective target businesses in Mexico, during the second quarter of 2020, OPES’s management changed to a new team led by Ophir Sternberg, and the new management team focused on identifying a high-growth US company that could take advantage of the new team’s extensive experience in real estate development, design and build, acquisitions, leasing and rapid growth strategies. From the IPO through and including the change in target focus, OPES contacted more than 35 potential targets and/or their advisors, including both privately held companies, as well as assets or divisions owned by publicly traded companies. Of those potential targets, OPES entered into non-disclosure agreements with approximately ten and conducted additional due diligence and/or detailed discussions with approximately eight. Due to discrepancies in commercial terms and valuation expectations, OPES did not continue talks with seven companies with which we engaged in additional due diligence. The seven companies were in varied industries, including: co-working, re-insurance, third party delivery platforms, data centers, transportation logistics and bio-technology.

Within the co-working industry, we were focused on two targets with asking valuations of $250 million for Company 1, and $500 million for Company 2. In order to determine the potential for domestic growth, and potential market share gains in the co-working industry, we began our research by consulting SPACEIQ.com. According to SPACEIQ.com, the size of the co-working market today is approximately $26 billion. The discussions with Company 1 were discontinued after failing to understand the substance behind their $250 million valuation. The discussions with Company 2 went further since Company 2, having 85 locations, seemed to have more market presence, which generated initial interest for us for brand value, which may help support their asking valuation of $500 million. However, after further scrutiny, we determined that the brand value did not support the asking price. Subsequent to this, we did not continue to pursue this potential acquisition after the OPES management team determined that, in OPES’s opinion, a growth strategy after the merger would not effectively be organic, but rather require acquisitions. Since we did not consider an acquisition at that price made sense when growth and increasing stockholder value would require additional acquisitions, we decided to explore other potential industries.

We had discussions with a company in the re-insurance industry, Company 3, valued between $75 million and $100 million. OPES was initially interested in a substantial business in this industry since there were significant barriers to entry which would result in less competition in this market. In order to have a competitive advantage, however, a company in this industry would need to have cutting edge back office technology, to operate more cost effectively and efficiently. OPES management determined that Company 3 was not using, and perhaps not interested in using, the latest and greatest technology to unlock superior value in the underwriting process.

Company 4 was a third-party delivery platform company with an asking valuation of $250 million. The OPES management team was focused on two of its largest contracts representing the bulk of its revenues and the valuation expectation of Company 4’s management team. After initial research on the industry and Company 4’s projected cash flow, OPES’s management determined the value of Company 4 to be no more than $100 million. After extensive discussions with Company 4’s management team, trying to bridge the gap between their asking price of $250 million and our $100 million valuation, OPES management and Company 4’s ownership decided the valuation difference was too substantial.

Company 5 was an owner and operator of an E–Data Center. The opportunity was centered around the long-term sustainability of its contracts and the willingness of the management team to continue operating the company post-merger. The global data center market according to Statista GmbH is projected to grow to $50 billion in total market revenue by 2023. Company 5 is a family-owned company, and talks were discontinued once the OPES management team realized that Company’s 5’s management team was not interested nor aligned with our growth strategy, which included rapid acceleration of additional centers post-merger.

Company 6 was a transportation logistics company. The size of the transportation logistics industry is estimated by Freigthwaves.com to be in the $8 trillion to $12 trillion range. OPES management and Company 6’s management could not successfully agree on a pre-money valuation. After much discussion, Company 6 decided that it would be best for them to seek other alternatives, and discussions were terminated by mutual agreement of OPES management and the principals of Company 6.

The final target, Company 7, that was evaluated, was an emerging revenue biotechnology company. The OPES management team determined that the proper valuation of this business was substantially lower than Company 7 and their bankers thought. Discussions continued during the later stages of due diligence, since OPES had sufficient data to present to Company 7 to attempt to convince them of a more reasonable valuation. After further discussions, the board of directors of Company 7 decided that they would pursue other funding alternatives.

On September 16, 2019, our stockholders approved an amendment to our Certificate of Incorporation to extend the period of time for which we were required to consummate a Business Combination from September 16, 2019 to November 15, 2019 (the “First Extension”). In connection with the approval of the First Extension, stockholders elected to redeem an aggregate of 2,282,753 shares of common stock, of which we paid cash in the aggregate amount of approximately $23.6 million, or approximately $10.34 per share, to redeeming stockholders.

On November 15, 2019, our stockholders approved another amendment to our Certificate of Incorporation to extend the period of time for which we are required to consummate a Business Combination from November 15, 2019 to January 15, 2020 (the “Second Extension”). In connection with the approval of the Second Extension, stockholders elected to redeem an aggregate of 228,001 shares of common stock, of which we paid cash in the aggregate amount of approximately $2.4 million, or approximately $10.43 per share, to redeeming stockholders.

On January 15, 2020, our stockholders approved a further amendment to our Certificate of Incorporation to extend the period of time for which we are required to consummate a Business Combination from January 15, 2020 to March 16, 2020 (the “Third Extension”). In connection with the approval of the Third Extension, stockholders elected to redeem an aggregate of 18,133 shares of common stock, of which we paid cash in the aggregate amount of $190,800, or approximately $10.52 per share, to redeeming stockholders.

On March 16, 2020, our stockholders approved an additional amendment to our Certificate of Incorporation to extend the period of time for which we are required to consummate a Business Combination from March 16, 2020 to June 18, 2020 (the “Fourth Extension”). In connection with the approval of the Fourth Extension, stockholders elected to redeem an aggregate of 4,428,044 shares of common stock, of which we paid cash in the aggregate amount of $46.97 million, or approximately $10.61 per share, to redeeming stockholders.

On March 18, 2020, Mr. Sternberg, contacted John Rosatti, the Chief Executive Officer and Founder of BurgerFi, for the purpose of exploring a business combination with OPES. Mr. Sternberg and Mr. Rosatti previously knew each other personally but had not had any previous business relationships.

On March 30, 2020, Messrs. Rosatti and Sternberg had a phone call during which Mr. Sternberg presented to Mr. Rosatti the possibility of combining BurgerFi and OPES in a transaction that would result in BurgerFi becoming a publicly listed company. In the subsequent days, Messrs. Sternberg and Rosatti communicated further by electronic mail, about what such transactions would entail and agreed to schedule a virtual meeting for April 8, 2020, which they held.

Following these communications, OPES began to conduct preliminary diligence of BurgerFi, the fast casual, “better burger” industry, and the valuations of comparable companies in the same sector as BurgerFi.

On April 10, 2020, OPES and BurgerFi executed a confidentiality agreement and subsequently BurgerFi began to share additional information regarding its operating business and financial performance.

On April 16, 2020, Mr. Sternberg shared a preliminary presentation with Mr. Rosatti discussing a potential business combination transaction with BurgerFi.

On April 20, 2020, OPES’s management team and BurgerFi’s management team met to confirm OPES’s interest in exploring the potential combination with BurgerFi and discussed a preliminary framework for a transaction.

Messrs. Rosatti and senior members of the BurgerFi management team met with Mr. Sternberg at a BurgerFi location where they held a menu tasting for Mr. Sternberg showcasing the full range of BurgerFi’s menu offerings. On April 25, 2020, OPES shared an initial draft of the Letter of Intent (“LOI”) with Mr. Rosatti that proposed a merger under which OPES would acquire BurgerFi for a total upfront consideration in stock and cash, and additional consideration in the form of earnouts subject to share price performance post business combination. The purchase price of $250 million was initially proposed by Mr. Rosatti. Mr. Sternberg countered that the initial valuation should be closer to $100 million with additional stock price performance targets that could result in additional consideration. The discussions about the earnout structure were centered around the size thresholds, and period under which the Members should be entitled to the additional incentive. Mr. Sternberg and Mr. Rosatti agreed on up to $200 million incentive through the earnout structure, bringing the potential total consideration to $300 million should the Post-Combination Company stock price increase, thereby aligning the interest of management, sponsor and public investors. Appreciative of the opportunity to earn the larger payoff convinced Mr. Rosatti to accept the initial valuation of $100 million, with the opportunity to earn an additional $200 million based on the performance of the company, determined by the increasing value of the company’s stock.

The final consideration for the transaction due at closing was structured to be $70 million in shares of OPES common stock, plus cash consideration of $30 million to allow the members of BurgerFi to pay taxes that may be incurred in the transaction. Additionally, the Members will be entitled to receive additional consideration in the form of shares of OPES Common Stock on a pro-rata basis based on their ownership percentages in the Company, subject to the Post-Combination Company achieving certain share price targets in each of the following post-Closing periods as follows:

Further discussions were centered on post-merger operational efficiencies, growth of the business, and the value added that the OPES management team would bring to the post-merged entity with their national real estate expertise.

OPES started to work with its financial and legal advisors to conduct a more detailed due diligence. On May 11, 2020, BurgerFi made a presentation to the expanded OPES team and its financial advisors.

In the subsequent days following the presentation, Mr. Sternberg shared presentation materials with Mr. Rosatti summarizing initial valuation perspectives that incorporated information received by OPES up to that date. The meeting was constructive and BurgerFi reiterated a desire to continue discussions. Following the meeting, BurgerFi engaged Julio Esquivel of Shumaker, Loop & Kendrick (“Shumaker”), as BurgerFi’s legal counsel, to assist with due diligence requests and coordination of a transaction timeline.

Throughout May 2020, Messrs. Sternberg and Rosatti continued to engage in discussions regarding the potential transaction. Also, during this time, other OPES team members conducted introductory phone calls with Mr. Rosatti.

On May 21, 2020, Messrs. Sternberg and Faquiry Diaz Cala, advisor to the OPES Board, met with Mr. Rosatti at a BurgerFi’s location.

On June 2, 2020, OPES’s management team conducted a call with Mr. Rosatti and BurgerFi’s senior management to discuss BurgerFi’s management team, brand portfolio and marketing, growth strategies, operations, and recent financial performance for due diligence purposes.

On June 5, 2020, Messrs. Sternberg and Diaz Cala met with Mr. Rosatti at BurgerFi’s corporate headquarters. OPES’s legal advisor, Loeb & Loeb (“L&L”), and Shumaker also joined the meeting.

On June 6, 2020, Messrs. Sternberg and Diaz Cala met with Mr. Rosatti along with Ms. Acker, the minority member of BurgerFi, as well as Charles Guzzetta, Chief of Brand Development of BurgerFi, to discuss transaction structure, timing, and valuation surrounding a potential combination between BurgerFi and OPES.

In the subsequent days, OPES continued to engage in dialogue regarding a potential business combination with BurgerFi, while advancing due diligence directly and through its advisors. Key topics included commercial and financial due diligence, governance, tax structure, and transaction structure. During that period, the parties continued to discuss the LOI proposal and, through their respective counsels, requested the incorporation into the LOI of adjustments to the terms and conditions of the merger.

On June 6, 2020, Mr. Sternberg and members of the OPES Board of Directors spent the day at BurgerFi, negotiating open items for the final non-binding LOI. Also, L&L and Shumaker exchanged drafts reflecting the progressing discussions of the parties, including with respect to the parameters of exclusivity, the go-forward distribution policy, governance rights, transaction structure and exchange rights, and related matters. The parties also continued due diligence activities and ongoing discussions regarding future value creation while beginning preparation of certain investor materials.

On June 7, 2020, the OPES team spent the day negotiating the final deal terms for a non-binding LOI, culminating with the non-binding LOI being signed later that day.

On June 8, 2020, a joint press release was issued by OPES and the BurgerFi management team announcing the non-binding LOI.

Also in connection with the entry into the LOI, BurgerFi agreed not to initiate, continue, or engage in any discussions or negotiations, or enter into any agreements, with respect to a competing business combination or similar transaction until the earlier of 60 days or until entering into a definitive agreement.

Following the execution of the LOI, OPES continued its business, legal, accounting, tax, insurance, benefits, and environmental due diligence, through the reviewing of documentation and several due diligence calls with BurgerFi management.

On June 9, 2020, BurgerFi’s management team had an initial virtual meeting with Lion Point to introduce the firm to the BurgerFi senior management team. Lion Point has an option to invest in the OPES business combination through the forward purchase agreement executed at the time of OPES’s IPO. Immediately after the call, Lion Point initiated its due diligence analysis for the investment opportunity.

Throughout June 2020, OPES and the Members exchanged drafts of the Acquisition Agreement and drafts of the ancillary documents, including the Director Voting Agreement, the Lockup Agreement, and the New Registration Rights Agreement. The various drafts exchanged reflected the parties’ negotiations on, among other things, the consideration structure, the scope of prohibited affiliate transactions for which the Members would be liable, interim operating covenants, allocation of tax risk and responsibility, post-closing governance matters, scope of registration rights and other matters.

On June 10, 2020, OPES shared the first draft of the Acquisition Agreement and ancillary documents with Mr. Rosatti.

On June 16, 2020, Mr. Sternberg had a call with Bryan McGuire, Chief Financial Officer of BurgerFi, to discuss BurgerFi’s financial performance during the first half of 2020 and updated expectations for the fiscal years 2020 and 2021. In the subsequent days, the forecast for the fiscal years 2020 and 2021 was finalized by BurgerFi.

On June 18, 2020, our stockholders approved the latest amendment to our Certificate of Incorporation to extend the period of time for which we are required to consummate a Business Combination from June 18, 2020 to September 16, 2020 (the “Fifth Extension”). None of our stockholders elected to redeem their shares of Common Stock in connection with the Fifth Extension.

On June 20, 2020, OPES’s management team spent the day with the senior management BurgerFi team at the corporate headquarters for an intensive due diligence review.

On June 24, 2020, OPES’s management team met with its underwriter and further discussed proposed deal terms with BurgerFi.

On June 24, 2020, OPES’s management team held a telephonic board meeting to where the BurgerFi opportunity was presented to the OPES Board. The board members received a presentation about the company including recent financial performance, potential growth opportunities, future franchise developments and new brand positioning strategies. In order to get a more comprehensive understanding of the restaurant industry, its valuation metrics, as well as the potential business climate, the board consulted with its financial advisor, and OPES initial public offering underwriter, EarlyBirdCapital. EarlyBirdCapital is a boutique investment bank and broker dealer based in New York, with the research expertise to gather and produce the industry data necessary to gain competent understanding of the restaurant industry, specifically trading values, valuation statistics, industry metrics and investor appetite. EarlyBirdCapital provided data including trading values and qualitative data (menu’s, supply chain and sourcing, check average and consumer demographics) for Shake Shack (SHAK), Chipotle Mexican Grill (CMG), Habit Burger (purchased by YUM brands), as well as other fast casual companies. The board considered several factors in reviewing BurgerFi as a target including potential risk factors. Some of these risks in undertaking BurgerFi as a target were (1) consumer trends tend to focus more on value (less expensive) brands in light of economic uncertainties; (2) the move towards plant based diets; and (3) the competitive landscape for the “better burger” category. Additionally, the board was focused on the potential for a higher than market valuation for BurgerFi. After much deliberation, the quality of the product offerings by BurgerFi and its extensive all-natural menu compared to the price for its offerings was a primary factor in outweighing the board’s concerns. The board determined that although consumers tend to seek more value for their purchase, the consumer is also focused on an all-natural, no hormone, antibiotic-free menu. The general market shift (in the board’s opinion) towards plant-based diet, was addressed by the near 15% growing product mix of the BurgerFi Veggie Burger, the Beyond Burger & The Beyond Burger Vegan that BurgerFi currently sells.

In the opinion of the OPES board, the valuation concerns were addressed by the initial valuation of $100 million and specific stock priced-based potential structured payments of $75 million, $75 million, and $50 million over a three-year period. If the stock price is not achieved these potential payments are forfeited. The board did not receive a fairness opinion from any third party nor a valuation opinion on this transaction. After a formal vote was conducted, the business combination was unanimously approved by the board of directors.

On June 25, 2020, L&L and Shumaker continued exchange of drafts of the Acquisition Agreement and ancillary documents.

On June 26, 2020, Mr. Guzzetta, who had just been promoted to the President of BurgerFi, Nicholas Raucci, Chief Operating Officer of BurgerFi and Mr. McGuire met with OPES’s senior management team to prepare for the joint announcement that terms of a definitive merger agreement had been reached. Mr. Sternberg also congratulated Mr. Guzzetta on his recent promotion to President of BurgerFi. The parties also drafted presentation materials to investors, addressing BurgerFi operations, financial performance, and the business combination, to be incorporated in the Current Report on Form 8-K filing with the SEC.

On June 29, 2020, the parties executed the Acquisition Agreement and on June 30, 2020, they issued a joint press release announcing the execution of definitive agreements for the contemplated Business Combination. Shortly thereafter, OPES filed a current report on Form 8-K attaching the press release, the investor presentation previously provided to certain potential investors and current OPES stockholders, and the Acquisition Agreement.

On September 15, 2020, our stockholders approved an amendment to our Certificate of Incorporation to extend the period of time for which we are required to consummate a Business Combination from September 16, 2020 to November 15, 2020 (the “Sixth Extension”). In connection with the approval of the Sixth Extension, stockholders elected to redeem an aggregate of 497 shares of common stock, of which we paid cash in the aggregate amount of approximately $5,297, or approximately $10.66 per share, to redeeming stockholders.

On November 13, 2020, our stockholders approved the latest amendment to our Certificate of Incorporation to extend the period of time for which we are required to consummate a Business Combination from November 15, 2020 to January 31, 2021 (the “Seventh Extension”). In connection with the approval of the Seventh Extension, certain stockholders elected to redeem an aggregate of 174,482 shares of common stock, for which we paid cash in the aggregate amount of $1,857,216.45, or approximately $10.64 per share, to redeeming stockholders.

OPES’S Board’s Reasons for the Approval of the Business Combination

In evaluating the transaction with BurgerFi, OPES’s Board of Directors consulted with management and OPES’s legal counsel as well as financial and other advisors. The OPES Board of Directors considered and evaluated several factors, including, but not limited to, the factors discussed below. In light of the number and wide variety of factors considered in connection with its evaluation of the Business Combination, the OPES Board of Directors did not assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. The OPES Board of Directors based its decision on all the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of our reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements.”

Before reaching its decision, the OPES Board of Directors discussed the material results of its management’s due diligence activities, which included:

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The OPES Board of Directors considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Acquisition Agreement, and the transactions contemplated thereby, including but not limited to, the following material factors and viewpoints:

In assessing the achievability of BurgerFi’s value creation strategies, the OPES Board of Directors also considered our management team’s historical experience overseeing and successfully executing a similar value creation strategy with our Sponsor. Mr. Sternberg has over 28 years of extensive experience deploying a proven value creation toolkit including recruiting world-class talent, identifying value enhancements, delivering operating efficiencies and successfully integrating strategic acquisitions. Mr. Sternberg serves as Chief Executive Officer of our Sponsor. Mr. Sternberg has been able to drive stockholder value through an operating philosophy consisting of:

The OPES Board of Directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

In addition to considering the factors described above, the OPES Board of Directors also considered the following:

The OPES Board of Directors concluded that the potential benefits that it expected OPES and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, the OPES Board of Directors unanimously determined that the Acquisition Agreement, and the transactions contemplated thereby, including the Business Combination, were advisable, fair to, and in the best interests of, OPES and its stockholders.

Recommendation of OPES’s Board of Directors

After careful consideration, OPES’s Board of Directors determined that the Business Combination with BurgerFi is fair to, and in the best interests of, OPES and its stockholders. On the basis of the foregoing, OPES’s Board of Directors has approved and declared advisable the Business Combination and recommends that you vote or give instructions to vote “FOR” each of the Business Combination Proposal and the other Proposals.

OPES’s Board of Directors have interests that may be different from or in addition to your interests as a stockholder. See “— Interests of Certain Persons in the Business Combination” below for further information.

Interests of Certain Persons in the Business Combination

When you consider the recommendation of OPES’s Board of Directors in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that OPES’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder, including:

Appraisal Rights

OPES’s stockholders do not have dissenters’ rights in connection with the Business Combination under the DGCL.

Accounting Treatment

The Business Combination will be accounted for as a business combination in accordance with U.S. GAAP accounting under ASC 805, Business Combinations. OPES is both the legal and the accounting acquiror. BurgerFi will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the expectation that the former Stockholders of OPES will have a majority of the voting power of the Post-Combination Company, that the Board will consist of the Chairman of OPES, the minority Members of BurgerFi and three board members appointed by the Chairman of OPES with approval of the majority Member of BurgerFi, which approval will not be unreasonably withheld. In addition, the Board members, the founders of OPES and the Members, agree to vote their stock as a block. Although the business of BurgerFi will comprise the ongoing operations of the Post-Combination Company, and BurgerFi’s senior management will comprise the majority of the senior management of the Post-Combination Company, they report to the Board which is controlled by the appointments of the Chairman of OPES. The net assets of BurgerFi will be recorded at fair value, with goodwill and other intangible assets recorded. Operations prior to the Business Combination will be deemed to be those of OPES.

Regulatory Approvals Required for the Business Combination

The Business Combination and the transactions contemplated by the Acquisition Agreement are not subject to any federal or state regulatory requirement or approval, except for filings with the State of Delaware necessary to effectuate the transactions contemplated by the Acquisition Agreement.

THE ACQUISITION AGREEMENT

The following is a brief summary of the material provisions of the Acquisition Agreement and the Amendment, copies of which are attached as Annex A and Annex A-1, respectively, to this proxy statement and are incorporated by reference into this summary. This summary may not contain all of the information about the Acquisition Agreement that is important to OPES stockholders, and OPES stockholders are encouraged to read the Acquisition Agreement carefully in its entirety. The legal rights and obligations of the parties are governed by the specific language of the Acquisition Agreement and not this summary.

Business Combination

On June 29, 2020, OPES entered into the Acquisition Agreement with BurgerFi, the Members and the Members’ Representative. At the Closing of the transactions contemplated by the Acquisition Agreement, OPES will purchase 100% of the Interests from the Members, which will result in BurgerFi becoming a wholly owned subsidiary of OPES. In connection with the Business Combination, OPES will change its name to “BurgerFi International, Inc.”

Acquisition Consideration

The consideration for the Business Combination shall be payable as follows (subject to reduction for indemnification claims and potential changes due to a working capital adjustment as described below):

(i) a cash payment in the aggregate amount of $30,000,000 payable to the Members;

(ii) $20,000,000 payable either in cash or 1,886,792 shares of Common Stock based upon a pre-determined price of $10.60 per share in the sole and absolute discretion of the OPES Board of Directors; and

(iii) the issuance of the Closing Payment Shares.

Of the Closing Payment Shares, 943,396 Escrow Shares shall be deposited into an escrow account with Continental, as escrow agent pursuant to the Escrow Agreement, to satisfy any potential indemnification claims brought pursuant to the Agreement.

Working Capital Adjustment

The closing consideration payable to the Members of BurgerFi is also subject to adjustment based on BurgerFi’s working capital as of the Closing Date.

Earnout Share Consideration; Earnout Tranches

The Members will be entitled to receive additional consideration in the form of shares of OPES Common Stock (“Earnout Share Consideration”) on a pro-rata basis based on their ownership percentages in the Company, subject to the Post-Combination Company achieving certain share price targets in each of the following post-Closing periods (each an “Earnout Tranche”) as follows:

The Earnout Share Consideration payable with respect to each Earnout Tranche, when issued, shall be subject to a lockup for a period of six months from the date such Earnout Tranche is earned (provided that the Members shall be permitted to undertake block trades during each such lockup period). The Members shall only be entitled to receive the Earnout Share Consideration from one Earnout Tranche in any twelve-month period and if the Members qualify to receive two or more Earnout Tranches in any such twelve-month period, the Members’ Representative can elect which such Earnout Tranche the Members will receive. No more than one Earnout Tranche shall be payable in any twelve-month period.

Indemnification Escrow Shares

The 943,396 Indemnification Escrow Shares will be deposited into the escrow account for the Escrow Period to satisfy any potential indemnification claims against BurgerFi brought pursuant to the Acquisition Agreement. If any claims for indemnification are to be satisfied by withholding any or all Indemnification Escrow Shares from the Members at the end of the Escrow Period, those Indemnification Escrow Shares shall be forfeited and cancelled. Any Indemnification Escrow Shares remaining in the escrow account after the expiration of the Escrow Period shall be released to the Members’ Representative for distribution to the Members.

Lock-Ups

In connection with the Business Combination, the Members shall enter into a lock-up agreement with OPES pursuant to which the (i) Closing Payment Shares shall be subject to a lock-up until the earlier of (x) six months after the Closing Date of the Business Combination, and (y) if, subsequent to the Closing Date, the Post-Combination Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Post-Combination Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property, the date of such transaction; and (ii) the Earnout Share Consideration shall be subject to a lock-up for a period of six months from the date the applicable Earnout Tranche is earned (provided that the Members shall be permitted to undertake block trades during each such lockup period).

Representations and Warranties

BurgerFi and the Members make certain representations and warranties (with certain exceptions set forth in the disclosure schedules to the Agreement) relating to, the following: (a) corporate existence and power; (b) authorization, execution, delivery and enforceability of the Agreement and other transaction documents; (c) governmental authorization (d) non-contravention; (e) capitalization; (f) certificate of formation; operating agreement; (g) corporate records; (h) subsidiaries; (i) consents; (j) financial statements; (k) books and records; (l) absence of certain changes; (m) properties, title to the Company’s assets; (n) litigation; (o) contracts, (p) insurance, (q) licenses and permits; (r) compliance with laws; (s) intellectual property; (t) customers, suppliers and franchisees; (u) accounts receivable and payable loans; (v) employees; (w) employment matters, employee benefits and compensation; (z) real property; (aa) tax matters; (bb) environmental laws; and (cc) certain business practices. 

OPES makes certain representations and warranties relating to, among other things: (a) corporate existence and power; (b) authorization, execution, delivery and enforceability of the Agreement and other transaction documents; (c) governmental authorization (d) non-contravention; (e) capitalization; (f) trust fund; (g) listing; (h) reporting company; (i) undisclosed liabilities; (j) interested party transactions; (k) board approval; (l) SEC documents and financial statements; (m) absence of certain changes; (n) certain business practices; (o) money laundering laws; (p) business activities; (q) purpose; (r) purchaser contracts; (s) vote required; (t) investment company; (u) minute books; and (v) application of takeover provisions.

BurgerFi’s Covenants

The Agreement contains certain customary covenants of BurgerFi prior to the Closing, including, among other things, the following:

Covenants of OPES

The Acquisition Agreement contains the following covenants of OPES prior to the Closing:

Actions Prior to Closing

In addition, the parties agreed to take the following actions, among others, before the completion of the Business Combination:

Conditions to Closing

General Conditions

The obligation of OPES and BurgerFi to consummate the Business Combination is conditioned on, among other things, (a) no court, arbitrator or other authority shall have issued any judgment, injunction, decree or order, or have pending before it a proceeding for the issuance of any thereof, and there shall not be any provision of any applicable law restraining or prohibiting the consummation of the Closing, the ownership by OPES of the Interests of the Members, or the effective operation of the business after the Closing Date; (b) no action brought by a third-party non-affiliate to enjoin or otherwise restrict the consummation of the Closing; (c) the requisite majority of OPES’s stockholders shall have approved the Business Combination; (d) the Closing Payment Shares, the Stock Portion, if issued, and the Earnout Share Consideration to be issued as part of the consideration shall have been approved for listing on Nasdaq; (e) after giving effect to any OPES Common Stock redemptions, OPES shall have net tangible assets of at least $5,000,001 upon consummation of the Business Combination; (f) the OPES Common Stock redemptions shall have been completed in accordance with the terms of the Acquisition Agreement and the proxy statement; (g) the D&O Policy shall be in force and full effect; and (h) there shall have been no event, change or occurrence which individually or together with any other event, change or occurrence, could reasonably be expected to have a material adverse effect on either OPES or BurgerFi, regardless of whether it involved a known risk.

BurgerFi’s Conditions to Closing

The obligations of BurgerFi and the Members to consummate the Closing is subject to the satisfaction, or the waiver at Members’ Representative’s discretion, of all of the following further conditions:

(a) OPES performing in all material respects all of its obligations under the Agreement required to be performed by it at or prior to the Closing Date;

(b) The representations and warranties of OPES in the Agreement, shall be true and correct in all material respects at and as of the Closing Date, as if made at and as of such date, except where the failure of such representations and to be so true and correct, has not had, and would not have, a material adverse effect;

(c) BurgerFi shall have received a certificate signed by an authorized officer of OPES stating that the closing conditions have been satisfied;

(d) OPES shall have delivered to BurgerFi (i) certified copies of the resolutions duly adopted by OPES’s Board of Directors authorizing the execution, delivery and performance of the Acquisition Agreement; and (ii) written resignations, in forms satisfactory to BurgerFi, dated as of the Closing Date and effective as of the Closing, executed by (X) all officers of OPES and (Y) all persons serving as directors of OPES immediately prior to the Closing who are not selected as directors post-closing;

(e) OPES shall have cash in the trust account at Closing, in addition to the cash portion of the Acquisition Consideration being paid to Members at Closing, in the amount of at least $15,000,000, inclusive of the balance of the funds in the trust account after OPES Common Stock redemptions and repayment of the Notes;

(f) OPES shall have executed and delivered to BurgerFi a copy of each Additional Agreement to which it is a party;

(g) The Post-Closing Board of Directors shall have been appointed effective as of the Closing; and

(h) Mr. Sternberg shall have executed and delivered to OPES the Standstill Letter.

OPES’s Conditions to Closing

The obligation of OPES to consummate the Closing is subject to the satisfaction, or the waiver at OPES’s sole and absolute discretion, of all the following further conditions:

(a) BurgerFi performing in all material respects all of its obligations under the Acquisition Agreement required to be performed by it at or prior to the Closing Date;

(b) The representations and warranties of BurgerFi in the Agreement, shall be true and correct in all material respects at and as of the Closing Date, as if made at and as of such date except where the failure of such representations and to be so true and correct, has not had, and would not have, a material adverse effect;

(c) BurgerFi, the Members and the Members’ Representative, as applicable, shall have executed and delivered to OPES a copy of each Additional Agreement to which it is a party;

(d) The Members shall have executed and delivered to OPES the Standstill Letter;

(e) Counsel to BurgerFi shall have delivered an opinion in form and substance satisfactory to OPES’s counsel;

(f) There shall have been no event, change or occurrence which individually or together with any other event, change or occurrence, could reasonably be expected to have a material adverse effect, regardless of whether it involved a known risk;

(g) Mr. Rosatti and/or BurgerFi shall irrevocably convey, assign, and transfer, and license, if necessary, all of his or its rights, title and interests in the intellectual property of the business;

(h) OPES shall have received copies of all required third party consents, if any, in form and substance reasonably satisfactory to OPES, and no such third-party consents shall have been revoked;

(i) OPES shall have received copies of all governmental approvals, if any, in form and substance reasonably satisfactory to OPES, and no such governmental approval shall have been revoked;

(j) OPES shall have received disclosure schedules updated as of the Closing Date, which shall not be materially different from the disclosure schedules provided as of the date hereof; and

(k) BurgerFi shall have provided to OPES estoppel certificates from the top ten (10) franchisees for BurgerFi’s December 31, 2018 and 2019 fiscal years.

Indemnification

From and after the Closing, BurgerFi and the Members, severally (but not jointly or jointly and severally), agree to indemnify and hold harmless OPES against, among other things, and in respect of specified actual out-of- pocket losses, damages, liabilities, costs or expenses, including reasonable attorneys’ fees (“Losses”), incurred or sustained by OPES as a result of: (a) any breach or inaccuracy in any of the representations or warranties of BurgerFi or the Members contained in the Agreement; or (b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by BurgerFi or the Members contained in the Acquisition Agreement or to be performed prior to or at the Closing. The total payments made by BurgerFi and the Members to OPES with respect to Losses shall not exceed the Indemnification Escrow Shares in the Escrow Fund. Any liability incurred by the Members pursuant to the terms of this indemnification shall be paid by the return for cancellation of the Indemnification Escrow Shares in accordance with the terms of the Escrow Agreement. The Indemnification Escrow Shares shall serve as OPES’s sole and exclusive remedy for BurgerFi and the Members’ obligation to indemnify OPES under the Acquisition Agreement. BurgerFi and the Members shall not be liable to OPES for indemnification until the aggregate amount of all Losses exceeds 0.40% of the Acquisition Consideration (the “Deductible”), in which event the Members shall only be required to pay or be liable for Losses in excess of the Deductible.

With respect to current litigation in which BurgerFi is a party, the Members have agreed to indemnify the OPES for any and all Losses arising from the current litigation. Such Losses arising from the current litigation shall be paid, in the sole discretion of the Post-Closing Board of Directors, by (i) the return for cancellation of Escrow Shares in accordance with the terms of the Escrow Agreement (valued at $10.60 per share), or (ii) the payment in cash by the Members.

Except for representations and warranties on corporate existence and power, authorization, governmental authorization, capitalization, certificate of formation and operating agreement, properties, title to BurgerFi’s assets, employment matters, employee benefits and compensation, tax matters and finder’s fees, which shall survive until sixty (60) days after the expiration of the statute of limitations with respect thereto, the representations and warranties of the Company and the Members shall survive only until eighteen months following the Closing.

Termination Without Default

The Agreement may be terminated and/or abandoned at any time prior to the Closing:

Termination Upon Default

Amendment to Acquisition Agreement

On September 22, 2020, OPES, the Members and Members’ Representative entered into the Amendment. The Amendment provides the following changes to the Acquisition Agreement:

1. to amend the schedule identifying entities controlled by Mr. Rosatti to reflect that certain entities will no longer be transferred to OPES at Closing, and to include a new entity to be transferred that holds BurgerFi Intellectual Property, as well as the transfer of any other entity that holds BurgerFi Intellectual Property;

2. to amend the schedule that identifies the Key Employees of BurgerFi to include solely senior management as Key Employees, which consists of the President, Chief Financial Officer, Chief Legal Officer, Chief Operating Officer and Executive Vice President of Culinary & Procurement;

3. to remove all references to a Consulting Agreement to be entered into with Mr. Rosatti;

4. to update the covenants with respect to the BurgerFi Intellectual Property to ensure the transfer and assignment or license to OPES of all Intellectual Property used by BurgerFi or its franchisees at or prior to Closing, and to include a post-closing obligation by BurgerFi to pursue the transfer of any remaining Intellectual Property to OPES that BurgerFi could not, after diligent efforts, assign prior to or at Closing; and

5. to correct certain incorrect cross –references in Article XI.

The foregoing summaries of the Acquisition Agreement and the Amendment do not purport to be complete and are qualified in their entirety by reference to the Acquisition Agreement and the Amendment, which are filed as Annex A and Annex A-1 hereto, respectively.

Additional Agreements

In addition to the Acquisition Agreement, at the Closing, the parties shall enter into the following agreements:

PROPOSAL #2:

AMENDMENT PROPOSAL: APPROVAL OF THE AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION OF OPES

General

The Board of Directors of OPES has unanimously approved a proposal to amend the OPES Certificate of Incorporation to (i) change the name of the corporation from “OPES Acquisition Corp.” to “BurgerFi International, Inc.” immediately following the completion of the Business Combination, (ii) include the rights of the holders of OPES common stock to receive dividends, (iii) remove the provisions in Article SIXTH relating to consummation of a business combination, which will no longer be relevant after the consummation of the Business Combination, (iv) clarify the Post-Combination Company’s indemnification obligations to its officers, directors; (v) include a new provision with respect to stockholder meetings, the process for advance notice of proposals to be brought by stockholders, and to include that any court of equitable jurisdiction within the State of Delaware may order a meeting of the creditors or class of creditors, or stockholders or class of stockholders and the Post-Combination Company whenever a compromise or arrangement has been reached and such compromise, subject to approval by a majority in number representing 75% in value of the creditors or class of creditors, or stockholders or class of stockholders, shall be binding upon such creditors or class of creditors, or stockholders or class of stockholders and the Post-Combination Company, (vi) include a provision with respect to the vote required to amend the Amended and Restated Certificate of Incorporation, and (vii) include a provision with respect to the vote required to amend the Amended and Restated Bylaws.

The Board of Directors of OPES has recommended that this proposal be presented to the OPES stockholders for approval. The following summary of the amendments to the Certificate of Incorporation is qualified in its entirety by the complete text of the form of the Amended and Restated Certificate of Incorporation attached to this proxy statement as Annex B. References to the Corporation below and in the Amended and Restated Certificate of Incorporation refer to the Post-Combination Company.

Name Change

The primary reason for the corporate name change is to allow for recognition of the Post-Combination Company’s business following the completion of the Business Combination and to comply with OPES’s obligations under the Acquisition Agreement. The current name will no longer accurately reflect the business of the Post-Combination Company’s and its mission subsequent to the completion of the Business Combination.

Insofar as the proposed new corporate name will reflect the combined company’s business following the completion of the Business Combination, the proposed name change and the amendment to the OPES Certificate of Incorporation, even if approved by the OPES stockholders at the Meeting, will only be filed with the office of the Secretary of State of the State of Delaware and, therefore become effective, if the Business Combination is completed.

Common Stock: Dividends

The OPES Certificate of Incorporation does not address the rights holders of OPES common stock have to dividends declared by the Board. The Amended and Restated Certificate of Incorporation clearly sets forth that, subject to the rights of any holders of any series of outstanding preferred stock, holders of shares of common stock shall have equal rights of participation in the dividends and other distributions in cash, stock or the property of the Post-Combination Company when, as and if declared by the Board from time to time. The Amended and Restated Certificate Incorporation also provides that the holders of Post-Combination Company common stock shall also have equal rights to receive the assets and funds of the Post-Combination Company available for distribution to stockholders in the event of any liquidation, dissolution, or winding up of the affairs of the Post-Combination Company, whether voluntary or involuntary.

Deletion of Article SIXTH of the OPES Certificate of Incorporation

Article SIXTH of the OPES Certificate of Incorporation is only relevant until such time as a business combination is consummated, or if a business combination is not consummated within the approved time period, until the dissolution and liquidation of OPES. If the Business Combination is approved by the OPES stockholders and is consummated, Article SIXTH will no longer be relevant or necessary for the Post-Combination Company.

Indemnification

Article EIGHTH more clearly sets forth the indemnification obligations of the Post-Combination Company. The Certificate of Incorporation and the Amended and Restated Certificate both provide that the Post-Combination Company shall indemnify, to the fullest extent authorized or permitted by the DGCL, any director or officer of the Corporation who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation in such role. The right to indemnification includes the right to be paid by the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition, provided that such director or officer presents to the Corporation a written undertaking to repay such amount if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation.

The Amended and Restated Certificate of Incorporation includes the following new provisions:

(i) The Post-Combination Company shall have power to purchase and maintain insurance on behalf of any person who is or at the request of the company, was a director, officer, employee or agent of the Post-Combination Company;

(ii) The indemnification rights and authority set forth in the Amended and Restated Certificate of Incorporation won’t be exclusive of, nor in limitation of, any rights to which any person may otherwise be or become entitled or permitted under this Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws, any statute, agreement, vote of stockholders or disinterested directors or otherwise.

(iii) The Post-Combination Company shall be permitted, to the extent and in the manner permitted by law, to indemnify and to advance expenses to, or to purchase and maintain insurance on behalf of, persons other than the directors and officers.

(iv) Any amendment, repeal or modification of any provisions related to indemnification under the Amended and Restated Certificate of Incorporation, unless otherwise required by law, will be prospective only and will not adversely affect any right or protection of a current or former director or officer with respect to any acts or omissions occurring prior to the time of such amendment, repeal or modification.

Stockholders

Article NINTH has been added to (i) specify that, except as otherwise expressly provided by the terms of any series of preferred stock only the Chairman of the Board, the Chief Executive Officer of the Post-Business Combination or the Board has the right to call a special meeting of stockholders, and that stockholders do not have the ability to call a special meeting of stockholders, (ii) provide that advance notice of stockholder nominations for the election of directors and of other business brought by stockholders shall be given in the manner and to the extent provided in the Amended and Restated Bylaws, and (iii) include that whenever a compromise or arrangements between the Post-Combination Company and its creditors or any class of them, and/or stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders, as the case may be, to be summoned as the said court directs. The Amended and Restated Certificate of Incorporation also provides that if a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Post-Combination Company, as the case may be, agree to any compromise or arrangement and to any reorganization of the Post-Combination Company as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, as the case may be, and also on the Post-Combination Company.

Amendments to Amended and Restated Certificate of Incorporation

Article ELEVENTH has been added to specify the voting standard required for approval by the stockholders of amendments to the Amended and Restated Certificate of Incorporation. The current OPES voting standard for amendments had been included in Article SIXTH. Article ELEVENTH of the Amended and Restated Certificate of Incorporation provides that the majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision of the Amended and Restated Certificate of Incorporation. Article ELEVENTH also adds a new voting standard that the affirmative vote of the holders of at least 75% of the voting power of all then outstanding shares of capital stock of the Post-Combination Company entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision of the Amended and Restated Certificate of Incorporation inconsistent with the purpose and intent of Article FIFTH (Size of the Board), Article SIXTH (Classified Board), Article SEVENTH (Management of the Corporation), Article EIGHTH (Limitation of Liability and Indemnification), Article NINTH (Stockholders), Article TENTH (Forum for Certain Actions) or Article ELEVENTH (Amendment).

Amendment to Bylaws

Our Certificate of Incorporation allowed the Board to amend the Bylaws without the assent or vote of the stockholders, as provided in the Bylaws. The Amended and Restated Certificate of Incorporation includes that the Amended and Restated Bylaws may also be adopted, amended, altered or repealed by the stockholders by the affirmative vote of at least 75% of the voting power of the outstanding shares of the Post-Combination Company.

Required Vote; Recommendation of the Board of Directors

Approval of the Amendment Proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of OPES Common Stock.

Unless marked otherwise, proxies received will be voted FOR Proposal #2.

THE BOARD OF DIRECTORS OF OPES UNANIMOUSLY RECOMMENDS THAT THE OPES STOCKHOLDERS VOTE “FOR” THE amendment PROPOSAL.

PROPOSAL #3

INCENTIVE PLAN PROPOSAL: APPROVAL OF THE 2020 OMNIBUS EQUITY INCENTIVE PLAN

The Board of Directors is asking stockholders to approve the proposed 2020 OPES Acquisition Corp. Omnibus Equity Incentive Plan (“Omnibus Plan”), that will be effective at the closing of the Business Combination. The following summary of the Omnibus Plan is qualified in its entirety by the complete text of the Omnibus Plan contained in Annex C. For the purposes of this Proposal #3, please note that certain references to OPES and shares of OPES Common Stock, will mean the Post-Combination Company and the shares of common stock of the Post-Combination Company, assuming the Business Combination is approved. OPES and BurgerFi have agreed to adopt the Omnibus Plan and have it approved by the OPES stockholders now, so that it will be in place and effective for awards by the Post-Combination Company immediately upon the Closing of the Business Combination. After the Business Combination the Omnibus Plan will be called the “2020 BurgerFi International, Inc. Omnibus Equity Incentive Plan.”

Explanation

On November 18, 2020, the Board of Directors approved the Omnibus Plan for submission to the stockholders at the Meeting, to be effective upon consummation of the Business Combination, provided that it is approved by OPES stockholders. The Board of Directors is seeking to reserve two million shares of OPES Common Stock for issuance pursuant to the Omnibus Plan. Equity compensation is an important component of the future executive, employee, and director compensation programs of the Post-Combination Company. We believe it aligns employee and director compensation with stockholder interests and motivates participants to achieve long-range goals. Stockholder approval of the Omnibus Plan would permit shares of Common Stock to be awarded as employee incentive compensation, allowing the Board of Directors to attract and retain key employees, provide them competitive compensation, adapt to evolving compensation practices and account for the Post-Combination Company’s growth. Upon stockholder approval, awards to participants will be made pursuant to the Omnibus Plan. We are seeking stockholder approval to make shares of OPES Common Stock available for future grants under the Omnibus Plan as described below.

Purpose of the Omnibus Plan

As described more generally above, the purpose of the Omnibus Plan is to:

The Omnibus Plan promotes the long-term financial interest of our company and its subsidiaries, including the growth in value of our company’s equity and enhancement of long-term stockholder return.

We use equity-based compensation granted under our long-term incentive plans as a key element of our executives’ compensation packages, and each year we disclose the prior year grants to and other compensation of our named executive officers in our proxy statement. We believe the Omnibus Plan assists with linking executives’ overall compensation opportunities to the enhancement of long-term stockholder return.

The Omnibus Plan provides for the grant of non-qualified stock options, incentive stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards, performance unit awards, unrestricted stock awards, distribution equivalent rights or any combination of the foregoing. The flexibility inherent in the plan permits the Board of Directors to change the type, terms, and conditions of awards as circumstances may change. We believe that this flexibility and the resulting ability to more affirmatively adjust the nature and amounts of executive compensation are particularly important for our industry and to a global company such as ours, given the volatility of the public markets and reactions to economic and world events. Equity compensation, which aligns the interests of executives and our stockholders, is an important tool for the Board of Directors.

General Terms of the Omnibus Plan

The Omnibus Plan will be administered by the compensation committee of the Post-Closing Board of Directors (the “Compensation Committee” or the “Committee”), unless otherwise provided by the Post-Closing Board of Directors. The Committee selects the Participants, the time or times of receipt of awards, the types of awards to be granted and the applicable terms, conditions, performance targets, restrictions and other provisions of such awards, to cancel or suspend awards, and to accelerate the exercisability or vesting of any award under circumstances designated by it. The Committee may delegate all or any portion of its responsibilities or powers under the Omnibus Plan to persons selected by it. If the Committee does not exist or for any other reason determined by the Post-Closing Board of Directors, and to the extent not prohibited by applicable law or the applicable rules of any stock exchange, the Post-Closing Board of Directors may take any action under the Omnibus Plan that would otherwise be the responsibility of the Committee.

If the Omnibus Plan is approved by stockholders, the maximum number of shares that may be delivered to Participants and their beneficiaries under the Omnibus Plan will be two million. The Omnibus Plan contains an “evergreen” provision, which allows for an automatic annual increase in the number of shares of Common Stock available under the Omnibus Plan (other than incentive stock options) on the first day of each fiscal year, in an amount equal to 5% of the then-outstanding shares of Common Stock, provided that the Committee may take action prior to the first day of the fiscal year to lower the amount of such increase (the “Annual Increase”). To the extent that an award lapses, expires, is canceled, is terminated unexercised or ceases to be exercisable for any reason, or the rights of its holder terminate, any ordinary shares subject to such award shall again be available for the grant of a new award.

If an award of common stock is settled in cash, the total number of shares with respect to which such payment is made shall not be considered to have been delivered. However, (i) if shares covered by an award are used to satisfy the applicable tax withholding obligation, the number of shares held back by the Post-Combination Company to satisfy such withholding obligation shall be considered to have been delivered; (ii) if the exercise price of any option granted under the Omnibus Plan is satisfied by tendering shares of Common Stock (including shares of Common Stock that would otherwise be distributable upon the exercise of the option), the number of shares of Common Stock tendered to satisfy such exercise price shall be considered to have been delivered; and (iii) if we repurchase shares of Common Stock with proceeds received from the exercise of an option issued under the Omnibus Plan, the total number of shares repurchased shall be deemed delivered.

If the Omnibus Plan is approved by stockholders, the following additional limits apply to awards under the Omnibus Plan:

At the discretion of the Committee, an award under the Omnibus Plan may be settled in cash, shares of Common Stock, the granting of replacement awards, or a combination thereof.

The Committee may use shares of Common Stock available under the Omnibus Plan as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Post-Combination Company or a subsidiary, including the plans and arrangements of the Post-Combination Company or a subsidiary assumed in business combinations.

In the event of a corporate transaction involving the Post-Combination Company (including, without limitation, any share dividend, share split, extraordinary cash dividend, recapitalization, reorganization, merger, amalgamation, consolidation, share exchange, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares), the Committee shall adjust outstanding awards to preserve the benefits or potential benefits of the awards. Action by the Committee may include:

Except as otherwise provided by the Committee, awards under the Omnibus Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution.

Eligibility

All employees and directors of, and consultants and other persons providing services to, the Post-Combination Company or any of its subsidiaries (or any parent or other related company, as determined by the Committee) are eligible to become Participants in the Omnibus Plan, except that non-employees may not be granted incentive stock options.

Section 409A compliance

With respect to restricted stock unit awards, performance stock awards, performance unit awards and distribution equivalent rights, payment, distribution, or the settlement in cash, as applicable based on the award, shall be made no later than by the fifteenth (15th) day of the third (3rd) calendar month next following the end of the Post-Combination Company’s fiscal year to which such performance goals and objectives relate, unless otherwise structured to comply with Code Section 409A.

Options

The Committee may grant an incentive stock option or non-qualified stock option to purchase shares of Common Stock at an exercise price determined by the Committee. Each option shall be designated as an incentive stock option, a tax-qualified option or non-qualified stock option when granted. An incentive stock option is a stock option intended to satisfy additional requirements required by federal tax rules in the United States as specified in the Omnibus Plan (and any incentive stock option granted that does not satisfy such requirements shall be treated as a non-qualified stock option).

Except as described below, the exercise price for an option shall not be less than the fair market value of a share of Common Stock at the time the option is granted; provided, that the exercise price of an incentive stock option granted to any employee who owns more than 10 percent of the voting power of all classes of stock in our company or a subsidiary shall not be less than 110 percent of the fair market value of a share of Common Stock at the time of grant. The exercise price of an option may not be decreased after the date of grant nor may an option be surrendered to OPES as consideration for the grant of a replacement option with a lower exercise price, except as approved by our stockholders or as adjusted for corporate transactions described above. In addition, the aggregate fair market value of the shares subject to an incentive stock option (determined at the time of grant) which are exercisable for the first time by an employee during any calendar year under all plans of the Post-Combination Company and any parent corporation or subsidiary corporation thereof (both as defined in Section 424 of the Code) which provide for the grant of ISOs may not exceed $100,000.

No option shall be surrendered to the Post-Combination Company in consideration for a cash payment or grant of any other award if at the time of such surrender the exercise price of such option is greater than the then current fair market value of a share of Common Stock, except as approved by our stockholders.

The option shall be exercisable in accordance with the terms established by the Committee. In the event the Participant’s termination occurs for any reason other than death, disability, retirement, or involuntary termination without cause, any unvested options will be forfeited. In the event the Participant’s termination occurs due to death, disability, retirement or involuntary termination without cause, any unvested options shall be exercisable only as determined by the Committee in its sole discretion.

The full purchase price of each share of Common Stock purchased upon the exercise of any option shall be paid at the time of exercise of an option. Except as otherwise determined by the Committee, the purchase price of an option shall be payable in cash, by promissory note, or by shares of Common Stock (valued at fair market value as of the day of exercise), including shares of stock otherwise distributable on the exercise of the option, or a combination thereof. If the shares remain publicly traded, the Committee may permit a Participant to pay the exercise price by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares of Common Stock) acquired upon exercise of the option and remit to the Post-Combination Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise. The Committee, in its discretion, may impose such conditions, restrictions, and contingencies on shares of Common Stock acquired pursuant to the exercise of an option as the Committee determines to be desirable. In no event will an option expire more than ten years after the grant date; provided, that an incentive stock option granted to any employee who owns more than 10 percent of the voting power of all classes of stock in the Post-Combination Company or a subsidiary shall not be more than 5 years.

The option will expire on the earliest to occur of (i) the last day of the term of the option as described in the award agreement; (ii) if the Participant’s termination occurs by reason of death, disability, retirement or an involuntary termination without cause, the one-year anniversary of such termination date; or (iii) if the Participant’s termination occurs for any reason other than those listed in clause (ii), the Participant’s termination date.

Unrestricted Stock Awards. Pursuant to the terms of the applicable unrestricted stock award agreement, an unrestricted stock award is the award or sale of shares of Common Stock to employees, non-employee directors or non-employee consultants, which are not subject to transfer restrictions in consideration for past services rendered to the Post-Combination Company or any of its subsidiaries or for other valid consideration.

Restricted Stock Awards. A restricted stock award is a grant or sale of shares of Common Stock to the holder, subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee or the Board of Directors may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee or the Board of Directors may determine at the date of grant or purchase or thereafter. During the restricted period applicable to the restricted stock, subject to certain exceptions, the restricted stock may not be sold, transferred, pledged, exchanged, hypothecated, or otherwise disposed of by the participant.

Restricted Stock Unit Awards. A restricted stock unit award provides for a grant of shares of Common Stock or a cash payment to be made to the holder upon the satisfaction of predetermined individual service-related vesting requirements, based on the number of units awarded to the holder, the vesting requirements of which shall be determined by the Committee. The Committee shall set forth in the applicable restricted stock unit award agreement The holder of a restricted stock unit shall be entitled to receive a cash payment equal to the fair market value of one (1) share of Common Stock, as determined in the sole discretion of the Committee and as set forth in the restricted stock unit award agreement, if and to the extent the holder satisfies the applicable vesting requirements.

Performance Stock Awards. A performance stock award provides for the distribution of shares of Common Stock (or cash equal to the fair market value of shares of Common Stock) to the holder upon the satisfaction of predetermined individual and/or Company goals or objectives, which performance goals and objectives (and the period of time to which such goals and objectives shall apply) shall be determined by the Committee and shall set forth in the applicable performance stock award agreement. The holder of a performance stock award shall have no rights as a stockholder until such time, if any, as the holder actually receives shares pursuant to the performance stock award.

Performance Unit Awards. A performance unit award provides for a cash payment to be made to the holder upon the satisfaction of predetermined individual and/or Company (or affiliate) performance goals or objectives based on selected performance criteria, based on the number of units awarded to the holder, which performance unit award agreement the performance goals and objectives (and the period of time to which such goals and objectives shall apply) shall be determined by the Committee and shall set forth in the applicable performance unit award agreement. The holder of a performance unit shall be entitled to receive a cash payment equal to the dollar value assigned to such unit under the applicable performance unit award agreement if the holder and/or the Company satisfies (or partially satisfies, if applicable under the applicable performance unit award agreement) the performance goals and objectives set forth in such performance unit award agreement.

Stock Appreciation Rights. A Stock Appreciation Right (“SAR”) provides the participant to whom it is granted the right to receive, upon its exercise, cash or shares of Common Stock equal to the excess of (A) the fair market value of the number of shares of Common Stock subject to the SAR on the date of exercise, over (B) the product of the number of shares of Common Stock subject to the SAR multiplied by the base value for the SAR, as determined by the Committee or the Board of Directors. The Committee shall set forth in the applicable SAR award agreement the terms and conditions of the SAR, including the base value for the SAR (which shall not be less than the fair market value of a shares of Common Stock on the date of grant), the number of shares of Common Stock subject to the SAR and the period during which the SAR may be exercised and any other special rules and/or requirements which the Committee imposes on the SAR. No SAR shall be exercisable after the expiration of ten (10) years from the date of grant. A tandem SAR is a SAR granted in connection with a related option, the exercise of some or all of which results in termination of the entitlement to purchase some or all of shares of Common Stock under the related option. If the Committee grants a SAR which is intended to be a tandem SAR, the tandem SAR shall be granted at the same time as the related option and additional restrictions apply.

Distribution Equivalent Rights. A distribution equivalent right (“DER”) entitles the holder to receive bookkeeping credits, cash payments and/or distributions of shares of Common Stock equal in amount to the distributions that would be made to the holder had the holder held a specified number of shares of Common Stock during the period the holder held the distribution equivalent rights. The Committee shall set forth in the applicable DER award agreement the terms and conditions, if any, including whether the holder is to receive credits currently in cash, is to have such credits reinvested (at fair market value determined as of the date of reinvestment) in additional share of Common Stock or is to be entitled to choose among such alternatives. DER awards may be settled in cash or in shares of Common Stock, as set forth in the applicable DER award agreement. A DER award may, but need not be, awarded in tandem with another award (but not an option or SAR award, whereby, if so awarded, such DER award shall expire, terminate or be forfeited by the holder, as applicable, under the same conditions as under such other award.

Change in Control

A Change in Control shall have such effect on an award as is provided in the applicable award agreement, or, to the extent not prohibited by the Omnibus Plan or the applicable award agreement, as provided by the Committee. In the event of a Change in Control, the Committee may cancel any outstanding awards in return for cash payment of the current value of the award, determined with the award fully vested at the time of payment, provided that in the case of an option, the amount of such payment will be the excess of value of the shares of Common Stock subject to the option at the time of the transaction over the exercise price (and the option will be cancelled with no payment if the value of the shares at the time of the transaction are equal to or less than the exercise price).

For the purposes of the Omnibus Plan, a “change in control” is generally deemed to occur when:

Amendment and Termination

The Board of Directors may amend or terminate the Omnibus Plan at any time, and the Board of Directors or the Committee may amend any award granted under the Omnibus Plan, but no amendment or termination may adversely affect the rights of any Participant without the Participant’s written consent. The Board of Directors may not amend the provision of the Omnibus Plan related to re-pricing without approval of stockholders or make any material amendments to the Omnibus Plan without stockholder approval. The Omnibus Plan will remain in effect as long as any awards under the Omnibus Plan remain outstanding, but no new awards may be granted after the tenth anniversary of the date on which the stockholders approve the Omnibus Plan.

United States Income Tax Considerations

The following is a brief description of the U.S. federal income tax treatment that will generally apply to stock option awards under the Omnibus Plan based on current U.S. income taxation with respect to Participants who are subject to U.S. income tax. Participants subject to taxation in other countries should consult their tax advisor.

Non-Qualified Options. The grant of a non-qualified option will not result in taxable income to the Participant. Except as described below, the Participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the Post-Combination Company’s shares of common stock acquired over the exercise price for those shares. Gains or losses realized by the Participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such the Post-Combination Company’s shares of common stock equal to the fair market value of the shares at the time of exercise.

Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the Participant. The exercise of an incentive stock option will not result in taxable income to the Participant provided that the Participant was, without a break in service, an employee of the Post-Combination Company or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the Participant is “disabled,” as that term is defined in the Internal Revenue Code).

The excess of the fair market value of the Post-Combination Company’s shares of common stock at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the Participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the Participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the Participant will have a basis in those shares equal to the fair market value of the Post-Combination Company’s shares of common stock at the time of exercise.

If the Participant does not sell or otherwise dispose of the Post-Combination Company’s shares of common stock within two years from the date of the grant of the incentive stock option or within one year after the transfer of the Post-Combination Company’s shares of common stock to the Participant, then, upon disposition of such Post-Combination Company’s shares of common stock, any amount realized in excess of the exercise price will be taxed to the Participant as capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.

If the above holding period requirements are not met, the Participant will generally realize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of (i) the excess of the fair market value of the Post-Combination Company’s shares of common stock on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be capital gain. If the amount realized is less than the exercise price, the Participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.

A Participant generally does not recognize income upon the grant of a SAR. The Participant recognizes ordinary compensation income upon exercise of the SAR equal to the increase in the value of the underlying shares, and the Post-Combination Company generally will be entitled to a deduction for such amount.

A Participant generally does not recognize income on the receipt of a performance stock award, performance unit award, restricted stock unit award, unrestricted stock award or dividend equivalent rights award until a cash payment or a distribution of ordinary shares is received thereunder. At such time, the Participant recognizes ordinary compensation income equal to the excess, if any, of the fair market value of the shares of Common Stock or the amount of cash received over any amount paid therefor, and the Post-Combination Company generally will be entitled to deduct such amount at such time.

A Participant who receives a restricted stock award generally recognizes ordinary compensation income equal to the excess, if any, of the fair market value of such shares of Common Stock at the time the restriction lapses over any amount paid for the ordinary shares. Alternatively, the Participant may make an election under Section 83(b) of the Code to be taxed on the fair market value of such shares of Common Stock at the time of grant. The Post-Combination Company generally will be entitled to a deduction at the same time and in the same amount as the income that is required to be included by the Participant.

Withholding of Taxes.  The Post-Combination Company may withhold amounts from Participants to satisfy withholding tax requirements. Except as otherwise provided by the Committee, Participants may satisfy withholding requirements through cash payment, by having the Post-Combination Company’s shares of common stock withheld from awards or by tendering previously owned Post-Combination Company’s shares of common stock to the Post-Combination Company to satisfy tax withholding requirements. The Post-Combination Company’s shares of common stock withheld from awards may be used to satisfy not more than the maximum individual tax rate for the Participant in the applicable jurisdiction for such Participant (based on the applicable rates of the relevant tax authorities, including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations, or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction, even if that rate exceeds the highest rate that may be applicable to the specific Participant).

Change In Control. Any acceleration of the vesting or payment of awards under the Omnibus Plan in the event of a change in control in the Post-Combination Company may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Internal Revenue Code, which may subject the Participant to a 20 percent excise tax and preclude deduction by a subsidiary.

ERISA. The Omnibus Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended and is not intended to be qualified under Section 401 of the Internal Revenue Code.

Tax Advice

The preceding discussion is based on U.S. tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the U.S. income tax aspects of the Omnibus Plan. A Participant may also be subject to state and local taxes in connection with the grant of awards under the Omnibus Plan. In addition, if a Participant resides outside the U.S., the Participant may be subject to taxation in other countries. The actual tax implications for any Participant will depend on the legislation in the relevant tax jurisdiction for that Participant and their personal circumstances.

What Happens If Stockholders Do Not Approve This Proposal?

In the event this proposal is not approved by stockholders, OPES will not have the ability to grant equity compensation as a component of our executive, employee, and director compensation programs.

New Plan Benefits

Because benefits under the Omnibus Plan will depend on the Committee’s actions and the fair market value of the shares of Common Stock on future dates, it is not possible to determine the benefits that will be received by directors, executive officers and other employees if the Omnibus Plan is approved by the OPES stockholders.

Required Vote; Recommendation of the Board of Directors

Approval of the Incentive Plan Proposal requires the affirmative of a majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote.

Unless marked otherwise, proxies received will be voted FOR Proposal #3.

THE BOARD OF DIRECTORS OF OPES UNANIMOUSLY RECOMMENDS THAT THE OPES STOCKHOLDERS VOTE “FOR” THE INCENTIVE PLAN PROPOSAL.

PROPOSAL #4

THE NASDAQ PROPOSAL: APPROVAL OF THE ISSUANCE OF MORE THAN 20% OF THE ISSUED AND OUTSTANDING SHARES OF OPES COMMON STOCK

Overview

In connection with the Business Combination, the following shares are issuable or may be issuable to the Members of BurgerFi (i) the Closing Payment Shares, (ii) the Stock Portion, and (iii) the Earnout Shares. In addition, 3,000,000 shares of Common Stock are issuable, in the aggregate, to Lion Point and an affiliate of Sponsor in a private placement transaction pursuant to the Forward Purchase Contract. Because the foregoing issuances will represent more than of 20% of the issued and outstanding shares of common stock of OPES, we are required to obtain stockholder approval in order to comply with Nasdaq Listing Rules 5635(a), (b) and (d).

Why OPES Needs Stockholder Approval

Under Nasdaq Listing Rule 5635(a), stockholder approval is required for an acquisition of stock or assets of another company if the present or potential issuance of common stock, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for common stock, other than a public offering for cash, may equal or exceed 20% of the voting power or the total shares outstanding on a pre-transaction basis. Under Nasdaq Listing Rule 5635(b), stockholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control.

OPES will issue the Closing Payment Shares and the Stock Portion, and may issue the Earnout Shares (subject to the conditions set forth in the Acquisition Agreement) to the Members in accordance with the Acquisition Agreement, which in the aggregate would exceed 20% of the voting power or the total shares outstanding on a pre-transaction basis, and will result in a change of control.

Under Nasdaq Listing Rule 5635(d), stockholder approval is required prior to a transaction, other than a public offering, involving the sale, issuance or potential issuance by a company of common stock (or securities convertible into or exercisable for common stock), which alone or together with sales by officers, directors or substantial stockholders of the Company, equals 20% or more of the voting power outstanding before the issuance at a price below the Minimum Price. “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock for the five trading days immediately preceding the signing of the binding agreement.

At the time of the IPO, we also entered into the Forward Purchase Contract with Lion Point, wherein Lion Point agreed to purchase in a private placement to occur concurrently with the consummation of our initial business combination the Forward Purchase Units, for aggregate gross proceeds of $30,000,000. The Forward Purchase Contract is subject to conditions, including that Lion Point consents to our initial business combination. Lion Point granting its consent to the purchase is entirely within its sole discretion. Accordingly, if it does not consent to the business combination, it will not be obligated to purchase the units. In connection with the consummation of the Business Combination, the Company will enter into Amended and Restated Forward Purchase Contracts with each of Lion Point and Lionheart Equities for the purchase of Forward Purchase Units. In the written notice from Lion Point to OPES on June 29, 2020, Lion Point confirmed that it will consent to the Business Combination and has agreed to purchase 2,000,000 Forward Purchase Units under the terms of the Amended and Restated Forward Purchase Contract it will enter into with the Company upon the consummation of the Business Combination. Lionheart Equities has also agreed to purchase 1,000,000 Forward Purchase Units under the terms of the Amended and Restated Forward Purchase Contract it will enter into with the Company upon the consummation of the Business Combination. In addition, OPES agreed to register a total of 5,029,376 shares of OPES Common Stock owned, or to be owned by Lion Point as of the consummation of the Business Combination, which is comprised of (i) 862,500 of the Founders’ Shares, (ii) 83,438 shares of OPES Common Stock underlying the Private Placement Units and 83,438 shares of OPES Common Stock underlying the Private Placement Warrants, and (iii) 2,000,000 shares of OPES Common Stock underlying the Forward Purchase Units and 2,000,000 shares of OPES Common Stock underlying the warrants that are part of the Forward Purchase Units, which shares would have priority registration rights over all other shares of OPES Common Stock to be registered under the New Registration Rights Agreement. Lion Point is entitled to make up to two demands that we register such shares. OPES and Lion Point have agreed to enter into definitive documentation with respect to the terms of the written notice from Lion Point to OPES on June 29, 2020.

OPES is required to issue the Forward Purchase Units, representing more than 20% of its issued and outstanding common stock to Lion Point and an affiliate of Sponsor at a price of $10.00 per unit which is less than the Minimum Price. Because the issuance is in excess of 20% of the outstanding common stock of OPES and below the Minimum Price, we are required to obtain stockholder approval.

Effect of Proposal on Current Stockholders

If the Nasdaq Proposal is adopted, OPES would issue shares representing more than 20% of its outstanding Common Stock. The issuance of such shares would result in dilution to the OPES stockholders and would afford such stockholders a smaller percentage interest in the voting power, liquidation value and aggregate book value of OPES.

If the Nasdaq Proposal is not approved and we consummate the Business Combination on its current terms, OPES would be in violation of Nasdaq Listing Rules 5635(a), (b) and (d), which could result in the delisting of our securities from The Nasdaq Stock Market, LLC. If The Nasdaq Stock Market, LLC delists our securities from trading on its exchange, we could face significant material adverse consequences. It is a condition to the obligation of the OPES to close the Business Combination that OPES’s common stock remain listed on The Nasdaq Stock Market, LLC. As a result, if the Nasdaq Proposal is not adopted, the Business Combination may not be completed.

Required Vote; Recommendation of the Board of Directors

Approval of the Nasdaq Proposal requires the affirmative of a majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote.

Unless marked otherwise, proxies received will be voted FOR Proposal #4.

THE BOARD OF DIRECTORS OF OPES UNANIMOUSLY RECOMMENDS THAT THE OPES STOCKHOLDERs vote for the APPROVAL OF THE nasdaq proposal.

PROPOSAL #5:

THE ADJOURNMENT PROPOSAL

The adjournment proposal allows the OPES Board of Directors to submit a proposal to adjourn the Meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event, based on the tabulated votes, there are not sufficient votes at the time of the Meeting to approve the consummation of the Business Combination. In no event will OPES solicit proxies to adjourn the Meeting or consummate the Business Combination beyond the date by which it may properly do so under Delaware law and its Certificate of Incorporation. The purpose of the adjournment proposal would be to provide more time for OPES and Advantage Proxy to further solicit proxies in the event, based on the tabulated votes, there are not sufficient votes at the time of the Meeting to approve the Proposals. Such additional time would increase the likelihood of obtaining a favorable vote on each of the Proposals.

In addition to an adjournment of the Meeting upon approval of an adjournment proposal, the OPES Board of Directors is empowered under Delaware law to postpone the meeting at any time prior to the meeting being called to order. In such event, OPES will issue a press release and take such other steps as it believes are necessary and practical in the circumstances to inform its stockholders of the postponement.

Consequences if the Adjournment Proposal is not Approved

If an adjournment proposal is presented at the Meeting and such proposal is not approved by its stockholders, OPES’s Board of Directors may not be able to adjourn the Meeting to a later date in the event, based on the tabulated votes, there are not sufficient votes at the time of the Meeting to approve the consummation of the Business Combination. In such event, the Business Combination would not be completed.

Required Vote; Recommendation of the Board of Directors

Approval of the proposal to adjourn the Meeting, whether or not a quorum is present, requires the affirmative of the majority of the shares of OPES Common Stock present in person or represented by proxy and entitled to vote. Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the other Proposals.

THE BOARD OF DIRECTORS OF OPES UNANIMOUSLY RECOMMENDS THAT THE OPES STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

BUSINESS OF BURGERFI

BurgerFi International, LLC was formed in Delaware on April 15, 2011. Unless the context otherwise requires, solely with respect to this section entitled “Business of BurgerFi,” all references to “we,” “us,” “our,” and the “Company” and other similar references refer to BurgerFi International LLC. and, unless otherwise stated, all of its subsidiaries.

OVERVIEW

BurgerFi is a fast-casual “better burger” concept with approximately 119 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, shakes, beer, wine and more. Originally founded in February 2011 by John Rosatti in sunny Lauderdale-by-the-Sea, Florida, the purpose was simple – redeFining the way the world eats burgers by providing an upscale burger offering, at a fast-casual price point. We’ve become the go-to 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.

Today, BurgerFi is among the nation’s fastest-growing better burger concepts and was ranked as one of the Top 10 Fastest and Smartest-Growing Brands in Franchising and named a leader in its category by Franchise Times in their Fast and Serious list for both 2017 and 2018. BurgerFi was also featured in the fourth annual Chain Reaction antibiotic scorecard by National Resources Defense Council and Consumer Reports with an “A” rating – one of only two brands serving passing grade beef.

Since its inception, BurgerFi has grown steadily—with approximately 119 BurgerFi restaurants, as of September 30, 2020, in 3 countries and 23 states, as well as Puerto Rico—and we continue to expand bringing the BurgerFi experience to new guests around the world.

Company owned restaurants

For the year ending December 31, 2019, average sales for our company owned restaurants were approximately $1.8 million. The typical per unit contribution at this sales level is about $250,000 annually or about 13.9%. Typically, we operate in a 2,200 to 2,400 square foot leased endcap and, to a lesser extent, free-standing or in-line space. BurgerFi does not own any real estate. We lease all our company-owned restaurant locations. Our lease term is generally 10 years plus two to four five-year options. We lease first- or second-generation space. Our build-out costs range from $650,000 to $1,100,000 but typically total $750,000. Our build-out costs consist of leasehold improvements, kitchen equipment, furniture, point of sale and computer equipment, security equipment and signage.

Franchise restaurants

We use a franchising strategy to augment new restaurant growth in new and established markets, allowing for brand expansion without significant capital investment. As of September 30, 2020, there were a total of 103 franchise restaurants. Franchisees range in size from single restaurant operators to multi-unit operators, the largest of which owns nine locations.

Franchise revenue is comprised of certain initial franchise fees and ongoing sales-based royalty fees from a franchised BurgerFi restaurant. Generally, the licenses granted to develop, open and operate each BurgerFi franchise in a specified territory are the predominant performance obligations transferred to the licensee in our contracts, and represent symbolic intellectual property. Ancillary promised services, such as training and assistance during the initial opening of a BurgerFi restaurant are typically combined with the licenses and considered as one performance obligation per BurgerFi franchise. Certain initial services such as site selection and lease review are considered distinct services that are recognized at a point in time when the performance obligations have been provided, generally when the BurgerFi restaurant has been opened. We determine the transaction price for each contract and allocate it to the distinct services based on their standalone selling price based on the costs to provide the service and a profit margin. The remainder of the transaction price is recognized over the remaining term of the franchise agreement once the BurgerFi restaurant has been opened. Because we are transferring licenses to access our intellectual property during a contractual term, revenue is recognized on a straight-line basis over the license term. Generally, payment for the initial franchise fee is received upon execution of the licensing agreement. These payments are initially deferred and recognized as revenue as the performance obligations are satisfied. Any related expenses are recognized in general and administrative expenses.

We believe that franchise revenue provides stable and recurring cash flows to us and, as such, we plan to continue expanding the base of franchise-operated restaurants. In established markets, we will encourage continued growth from current franchisees and assist them in identifying and securing new locations. In emerging and new markets, we will source highly qualified and experienced new franchisees for multi-unit development opportunities. We generally seek franchisees from successful, non-competitive brands operating within the expansion markets. We market franchise opportunities through strategic networking, participation in select industry conferences, our existing website and printed materials.

We have a Franchise Advisory Council (“FAC”) to enhance participation and engagement with the franchise community. The FAC provides input and feedback on operating and marketing strategy and initiatives.

We have structured our corporate staff, training programs, operational systems, and communication systems to ensure we are delivering strong support to franchisees. We assist franchisees with the site selection process, and every new franchise location is scrutinized by our corporate real estate committee. We provide template plans franchisees may use for new restaurant construction and work with franchisees and their design and construction vendors to ensure compliance with brand specifications. A training program is required for all franchisees, operating partners, and restaurant management staff. Training materials introduce new franchisees to our operational performance standards and the metrics that help maintain these high standards.

BurgerFi and its franchisees are subject to extensive government regulation at the federal, state, and local government levels. These include, but are not limited to, regulations relating to the preparation and sale of food, zoning and building codes, franchising, land use and employee, health, sanitation, and safety matters. BurgerFi and its franchisees are required to obtain and maintain a wide variety of governmental licenses, permits and approvals. Difficulty or failure in obtaining them in the future could result in delaying or canceling the opening of new restaurants. Local authorities may suspend or deny renewal of our governmental licenses if they determine that BurgerFi’s operations do not meet the standards for initial grant or renewal.

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

PURPOSE + BELIEFS

Purpose

BurgerFication [Bur-ger-Fi-ca-tion]

Def: RedeFining the way the world eats burgers.

Beliefs

There are cheaper and easier ways to cook burgers and fries, but that’s not what we do. In our modern world, efficiency and expediency often take priority over quality and savoring experiences. BurgerFi is redefining the better burger space by sticking to the tried and tested practices that make the classic American meal, well… classic. We use only the best ingredients: our beef comes from farms where cattle are humanely raised, vegetarian fed, and never exposed to steroids, antibiotics, or growth hormones – ever. We even hand-cut our potatoes, one at a time, because we know that’s how to serve crispy, crunchy fries that delight our guests every time. The truth is… All-Natural tastes better. It’s that simple.

We also believe that the All-Natural philosophy can be lived out by every team member by letting their hospitality shine. We encourage our team members to be genuine when engaging with guests, fellow team members, franchisees, and vendors alike.

At BurgerFi, we never settle. Every day we strive to be the best better burger company out there, and it shows. BurgerFi is the one of the fastest growing fast-casual brands with restaurant locations throughout the U.S. and around the world. BurgerFi consistently out-compete our peers because we are uncompromising when it comes to the quality of our food, hospitality, and people. RedeFining the way the world eats burgers requires that each and every one of us goes the extra mile in the pursuit of excellence. That means never settling for mediocrity and striving to put BurgerFi’s best foot forward every day. It’s not always going to be easy, but BurgerFi’s passion, determination, and perseverance sets BurgerFi apart.

BurgerFi is in the people business. Sometimes in the hustle and bustle of the restaurant industry, it’s easy to forget that everything BurgerFi does is by, through, and with people. Without people there would be no BurgerFi. As such, it is our responsibility to take the necessary time to be thoughtful when we consider the impact of our actions and interactions on others.

At BurgerFi, to be family means “I’ve got your back, you’ve got mine.” It’s a dynamic that plays an important role in how our teams perform day-to-day in a fast-paced, high pressure environment. The support of a tight-knit team is what allows us to brush off the fear of failure. Our team works in concert with one another towards a shared purpose. We don’t view our work relationships as merely transactional. This manifests itself in the way we watch out for, care for, and go above and beyond for each other.

Every day, BurgerFi restaurants around the world open to serve tens of thousands of people hot, juicy burgers and crispy, crunchy fries, in an exceptionally clean restaurant, by a highly energetic and motivated team. It happens like clockwork. And much like a clock, under the face, there are layers of complexity. Behind the scenes a lot of things must happen for us to deliver on our business plan. We teach our team that none of it is possible without “You”.

BurgerFi teaches its team members that they are uniquely powerful. That they have a background and perspective that makes up who each individual is and the lens through which they view the world. These factors play a role in developing and cultivating a team member’s strengths, what they are naturally good at.

We also actively encourage our team to take the time to learn about and appreciate other team member’s unique strengths. The most effective teams are made up of people with different abilities, who together, accomplish much more than they could alone. This focus on cultivating and enhancing our team member’s strengths has an important part in the success of the company.

It takes courage to live out the BurgerFi purpose and beliefs every day. BurgerFi believes in the old axiom, that nothing worth having or doing ever comes easy. We are uncompromising when it comes to staying true to who we are.

At the end of the day, we’re serving the classic American meal – burgers and fries. BurgerFi wants people to have some fun and find adventure in the every day. We have the courage to think originally and challenge the status quo. We are not averse to taking a calculated leap.

We are committed to serving all-natural menu offerings, we take pride in being excellent. We are thoughtful, genuine, and courageous. This is the BurgerFi culture.

PEOPLE

People are at the heart of everything we do. BurgerFi acts in ways that improve people’s personal and professional lives. Every single BurgerFi team member – with their unique strengths, perspective, and role – has an important part in the success of the company. That’s why at BurgerFi, we strive to create an environment that is inclusive and supportive of people’s aspirations and goals, so we can all continually learn and grow. Fostering this type of environment doesn’t happen by accident. It requires regular reflection, visioning, and collaboration between our team members and their managers.

At BurgerFi, we never settle. Our shared Purpose of redeFining the way the world eats burgers requires that every day we strive to be the best better burger company out there, and it shows in our people. Our team members are trained to understand and live the BurgerFi Beliefs: Be All Natural, Be Courageous, Be Excellent, Be Family, Be Thoughtful, and Be You. We believe that our Purpose and Beliefs are the foundational components of our culture and that’s key to the way we run our business – these beliefs guide our behaviors in how we act and interact with one another, our vendors, and our communities.

We know the most effective teams are made up of people with different abilities, who together, accomplish much more than they could alone. That is why we take the time to slow down, compassionately listen, and thoughtfully support every one of our team members and their journey towards realizing their potential. We hire for attitude and train for skill. Once we develop people’s skills, we follow a strengths philosophy and we put “aces in their places”, meaning the right person with the right skills is in the right position at the right time.

Lastly, at BurgerFi, we are family. To be family stems from a place of respect and appreciation for one another. The best team members know how important it is to cultivate a sense of family. They are the ones that always focus on helping others get better and succeed through ongoing training, learning, and development. To be family also extends beyond the four walls of our restaurants to include our loyal guests, vendors, and the communities within which we are embedded. We instill our family philosophy with all our team members from the moment they begin the recruitment process to BurgerFi all the way through their employee life cycle.

BurgerFi Pathway

At BurgerFi, we want our team members to recognize that the opportunity in front of them is more than a job; it is a career. A key element of that is our BurgerFi Pathway. The Pathway defines the steps each team member can take to advance their career and achieve happiness and success at BurgerFi. Beginning with a team member position and working up through the General Manager or New Restaurant Opening Specialist position, the Pathway clearly lays out the requirements, responsibilities, and training associated with each step along the way. Our “next person up” philosophy conditions our leaders to constantly train, develop, and mentor the future leaders of our company. We like to call that “building our bench”.

We first orient all new team members on the foundational components of our culture: our Purpose, Beliefs, the BurgerFi Business Plan, BurgerFi’s differentiating DNA, and our Non-Negotiables. From there, team members will learn our menu and become specialized in all aspects of our operations, one station at a time. It is all about mastering the fundamentals and we give our team members the tools and resources necessary to do that.

We rely on the Tell, Show, Do, Review method when it comes to our training. We recognize that our team members learn differently, so our training, learning, and development uses a variety of methods: interactive online courses, videos, gamified content through our cutting-edge learning management system, paper-based, and hands-on, real-life experiences. It is important that we offer training, learning, and development tailored to the preferred learning styles of our individual team members. Our BurgerFi Development Online (“FIDO”) learning management system offers our team members all our training content right at their fingertips. Our FIDO platform has a social newsfeed that allows team members to share exciting news and updates from their restaurant, challenge other restaurant teams to a dance video contest, and to send recognition messages, comments, and thanks to their fellow team members across the company. That is what it means to be family. And, at the end of the day, we’re serving the classic American meal – burgers and fries. We want people to have some fun and we embed that into our training.

For hands-on training, we gather teams in our premier training restaurants in South Florida, where our brand got started. Team members from both the restaurants and our Restaurant Support Center (RSC) become immersed in our BurgerFi restaurant culture through these training restaurants. All new RSC and restaurant managers begin with an Orientation at our RSC, headquartered in Palm Beach Gardens, Florida. We also use the RSC to host our multi-day Developing Impactful Leaders Program for our seasoned restaurant managers and for our month-long, interactive online Field Certification Program for new managers.

We care deeply about our people and are committed to setting them up for success, both at BurgerFi and in their future careers. We believe in a promote from within culture at BurgerFi and nothing makes us happier than when we see our team members develop into Team Leads, Assistant Managers, and General Managers. We are especially proud that we have current General Managers in the system that began their BurgerFi careers as hourly team members when we opened our first BurgerFi in Lauderdale-By-The-Sea in 2011.

The importance of retaining top talent cannot be understated. That’s why we are deeply committed to recognizing and developing our leaders through enhanced recognition, training, compensation, and benefits to do so. We are constantly looking at ways to support our restaurant leaders by giving them the opportunity to feel like owners, rewarding them for their performance, providing them with access to world-class coaching and leadership development opportunities, and always being there for them when they need anything. Again, that is what being family is all about.

Diversity, Equity, and Inclusion

BurgerFi is committed to creating an inclusive and equitable environment that supports the growth and success of our team members from a diversity of socioeconomic backgrounds, diversity of gender, diversity of race, diversity of experience, and more.

We are continually looking to enhance our culture of inclusion and in 2020 we have stepped up our efforts, highlighted by:

GUEST EXPERIENCE

At BurgerFi we strive to provide our guests with an unparalleled better burger experience.

Positioning and Brand Voice

Our unique positioning is seated within the high-growth, better-burger space. Our chef-driven menu offerings and eco-friendly restaurant design drive our brand communication. Our brand voice, derived from our commitment to better-for-you, indulgent food, is playful and emphasizes the BurgerFi Purpose and Beliefs to team members, guests and stakeholders alike. BurgerFi remains committed to redeFining the way the world eats burgers, and our guests understand our dedication to the values and causes that are important to them.

Technology-Enhanced Brand

Integral to our purpose, BurgerFi harnesses innovation and technology to offer our guests opportunities to enjoy our food when and where they want. In addition to ordering in-restaurant at the counter, guests can enjoy BurgerFi by ordering through 1.) the BurgerFi App 2.) the BurgerFi website 3.) their preferred third-party delivery service provider and 4.) on-site kiosks (available at 20% of our restaurants).

The BurgerFi App allows us to connect with guests in a meaningful way through a custom loyalty program tailored to reward users with offers based on their preferences, frequency, and order history. In addition, guests can order through the app for on-demand delivery, which results in lower delivery fees and transit times for the guest. The app can also be used for mobile payments and sharing the BurgerFi experience through gift cards.

Mobile and desktop web-based ordering is available to guests for all domestic BurgerFi restaurants through the BurgerFi website. Guests can order ahead for pick-up and delivery the same as they would using the BurgerFi app and are treated to an intuitive and highly customizable experience, appealing to a variety of food preferences.

In addition to online ordering options, BurgerFi routes all inbound phone orders to a centralized call center (instead of directly to a BurgerFi restaurant), to provide guests with an attentive operator to take their order, and so as to not distract team members from focusing on in-restaurant guest services.

As an early adopter of off-premises dining channels, BurgerFi has also invested heavily in partnerships with third-party delivery service providers (DSPs). 99% of BurgerFi restaurants are available on at least one third-party delivery provider and 90% are available on the top four U.S. DSPs – DoorDash, GrubHub, UberEats, and Postmates.

BurgerFi plans to expand its delivery presence nationwide through a strategic partnership with REEF Technology, which has created delivery-only neighborhood kitchens, otherwise known as “ghost kitchens.” With a distributed real estate network of more than 5,000 locations and 10,000 logistics and real estate professionals across 50 cities, REEF is the largest operator of logistics hubs and neighborhood kitchens in the United States. REEF develops ecosystems that connect people to the goods, services, and experiences that neighborhoods need to thrive.

Commissary and Test Kitchen

Our Test Kitchen and Commissary is located in North Palm Beach, FL and is connected to our Restaurant Support Center. The FDA approved kitchen is outfitted with state-of-the-art equipment that allows us to create unique and differentiating products for the system. The goal of the commissary is to provide BurgerFi an international supply chain advantage of proven, industry superior products with added control over ingredients and product quality and consistency.

Our Menu

BurgerFi’s highly customizable menu appeals to guests seeking both quality and transparency and features a broad selection of burgers including plant-based and veggie burgers, chicken, and fresh-made sides. BurgerFi offers only 100% natural angus beef with zero steroids, antibiotics, growth hormones, chemicals, or additives (~1% of U.S. beef meets this criteria).

In addition, BurgerFi serves a variety of craft beers and wines. Selections are locally sourced and tailored to each community that we serve. We constantly look to enhance our wine program with the addition of 350ml Splits, wines on tap, and canned rosé at participating locations.

All-Natural American Angus Beef

Angus is known for being a tender, flavorful, and juicy meat. We source from a coop of like-minded ranchers that follow strict practices to ensure their beef is raised entirely without antibiotics.

Why Use All-Natural Angus?

Wagyu Beef Burgers and Hot Dogs

Not only do we serve the highest quality Angus beef burgers, we also serve even higher quality Wagyu beef burgers and hot dogs. Wagyu beef contains a high level of marbling, flavor, and tenderness. We utilize Wagyu beef from Snake River Farms in our most premium burger, The CEO, and our premium Wagyu beef hot dogs.

All-Natural Cage-Free Chicken

At BurgerFi, we’re committed to providing our guests with the highest quality Angus, but we also hold the same standards when it comes to serving the highest quality, 100% all-natural chicken breast.

We source our chicken breasts and our Fi’ed Chicken Tenders from Springer Mountain Farms because of their commitment to quality and humane practices. Springer Mountain Farms is a family-owned business nestled in the hills of the Blue Ridge Mountains in Baldwin, Georgia. Their chickens are all-natural with no steroids or hormones, but also are produced with no antibiotics, are never fed animal by-products, and are American Humane Association certified.

Beyond Meat

At BurgerFi we want to satisfy as many burger cravings as we can, even for those who do not eat beef. In 2017 BurgerFi was the very first national restaurant brand to introduce the Beyond Burger, from Beyond Meat. The Beyond Burger is the world’s first plant-based burger that looks, cooks, and satisfies like beef without GMOs, soy, or gluten. We offer this burger in two ways – vegan and non-vegan.

Potatoes

At BurgerFi, we hand cut our fries every day. The potatoes we use are Idaho Burbank potatoes, prized for being the highest quality potato in the restaurant industry. We fry them in triple-refined peanut oil, which has a high smoking point and a better flavor for frying. The fries are cooked when you order them, not sitting under a heat lamp waiting for you.

Onion Rings

At BurgerFi, we use jumbo or colossal Spanish onions. The onions are cut in house, breaded with our secret seasoned flour recipe, then dipped in our homemade beer batter before they are fried to a crispy golden brown. Our onion rings are cooked to order, ensuring the crispiest onion ring possible.

Premium Custard

Guests can satisfy their sweet tooth with a wide selection of rich, creamy custard cups, concretes, and shakes. Our custard is made with high-quality ingredients, using dairy supply that is free from steroids and bovine growth hormones.

Coca-Cola Freestyle Machine

All traditional BurgerFi restaurants are equipped with the Coca-Cola Freestyle soda machine which features over 160 flavors for our guests to choose from. Included in BurgerFi restaurants only is the FI LIME FUSION, our signature soda co-created with our friends at Coca-Cola. The signature green soda is a tart lime flavor with juicy citrus notes.

System-Wide Limited Time Offerings (LTOs)

Our LTO program features unique sandwiches and custard shakes throughout the year. LTOs allow us to grow our following, increase guest frequency, and test new products that can potentially become permanent menu additions. We have historically rolled out LTOs on a consistent basis, with fan favorites, such as the CEO Burger, which has become a staple to the core menu. As a collaborative effort between culinary, operations and the marketing teams, the company carefully tests new products at corporate locations to obtain customer feedback and analyze the key performance indicators before rolling them out to the entire system. Some of our notable LTOs throughout 2019 and 2020 were:

Street Stack (Q2 2019): This sandwich was BurgerFi’s take on classic street food. The Street Stack featured griddle corn cakes (arepas), an all-natural Angus beef, melted white cheddar and mozzarella cheese, smoky bacon, and house-made charred jalapeño pico de gallo.

Fi’ed Chicken Tenders (Q3 2019): We launched the third of our Springer Mountain Farms Chicken offerings to further leverage BurgerFi’s responsible procurement positioning. Fi’ed Chicken Tenders were available in quantities of 3, 5, 10 and a 2-piece kids’ meal. This product has since been seated as a permanent menu item.

Wagyu Bacon Cheddar Melt + Milk & Cookies Shake (Q4 2019): This burger featured two ultra-high-quality Wagyu beef burgers, thick-cut crispy bacon, white cheddar cheese, caramelized onions, and a steak sauce aioli – served on thick-cut Texas-style toast. The shake was made with our creamy vanilla custard and loaded with chunky chocolate chip cookies and sprinkles in honor of the holiday season.

Conflicted Burger + Frozen Hot Chocolate Shake (Q1 2020): As a fun way for our guests to ditch their well-intentioned New Year’s resolutions, we promoted our Conflicted Burger and Conflicted Shake. Our Conflicted Burger features 100% Natural Angus Beef topped with American cheese stacked on top of our award-winning VegeFi Burger® topped with white cheddar and served on a potato bun with lettuce, tomato, and signature Fi Sauce. Our Frozen Hot Chocolate shake featured creamy chocolate custard made with real hot chocolate and toasted marshmallows.

The Baconian Burger + Bacon Jam Fries (Q1 2020): Bacon-lovers across the nation enjoyed our chef-inspired bacon burger featuring bacon prepared in four different ways. The Baconian incorporated 100% natural double angus beef and pork belly blend burgers, topped with smoked bacon cheddar cheese, thick-cut bacon, sautéed onions and bacon aioli. Bacon Jam Fries highlighted our fresh-cut, Idaho potatoes topped with melted cheese, pieces of bacon and bacon jam.

Other Notable Culinary Highlights

COVID-19 Delivery and Take-out Initiative

Delivery Initiative – Q2 2020 (COVID-19 Response): By mid-March 2020, BurgerFi redirected all efforts to support delivery and pre-paid pick-up orders through the BurgerFi App, DSPs (UberEats, GrubHub, Postmates, and others), and website. While most of the offers were optional to franchised stores, our participation rate in the system exceeded 90% (one offer or more) and included: 25% off deliveries over $25 (through the app only), free delivery, $5.00 off $15.00 and others. All were supported by aggressive CRM /email support and national and local social media.

Marquee Events

BurgerFi is a brand committed to giving back to the communities we are part of. In addition to our continuous charitable efforts, we participate in events to raise money for social good, while building brand awareness.

ENGAGING WITH OUR GUESTS

Social Media

BurgerFi’s digital strategy is to leverage social media and CRM platforms to continuously engage with guests – specifically Millennials who are highly active on social media, rely on technology to make informed purchasing decisions, and generally gravitate towards authentic brands that lack a “chain” feel. This tactical customer engagement approach has resulted in double digit-increases in web, search, and social media metrics, and has contributed store sales increases that have outperformed its industry segment.

BurgerFi’s Sprinklr software tracks guest sentiment through social channels and the Company’s own customer care website. Operating teams and franchisees are trained to quickly react to notifications that are integrated within BurgerFi’s system architecture, giving teams the ability to quickly affect operational corrections and “recapture” guests. Aspiring to win the hearts of its customers, BurgerFi engages with 100% of reviews (both positive and negative) across all channels. The Company is on pace to receive 50,000 reviews in 2020.

System-Wide Promotions (Rewards, Single Day Events, Other)

System-wide promotions are shared on social media, email, and other digital platforms to incentivize new guests to visit our restaurants and build frequency of existing guests. The following are some examples of our system-wide promotions:

2019

2020

DEVELOPMENT

Not only is BurgerFi committed to delivering an all-natural premium burger, we also strive to provide an elevated and contemporary dining experience. We put the same thoughtfulness and attention into site selection, construction, and design as we do with our food and hospitality.

Site Selection

BurgerFi’s Real Estate department functions in a manner consistent with the overall BurgerFi purpose and beliefs. This is evidenced by the holistic, perfectionist approach of our site selection criteria. We actively search specific, strategically selected markets for potential new BurgerFi locations. In each selected market, we evaluate these initial sites using the following criteria:

Our strategy is to cluster multiple BurgerFi’s in a Demographic Market Area (“DMA”). We believe this clustering allows efficiencies in labor, including knowledge base, “pro-teams”, cross-training and developing and training new managers. Additionally, we believe this clustering allows better leverage in media buying, brand awareness, and culture. We target demographics with high concentrations of well-educated consumers, with above average income levels, who care about what they eat. Beyond our great food, we offer our target consumers a contemporary restaurant design with eco-friendly fixtures and upcycled furniture. Our wholesome atmospheres are thoughtfully designed to enhance the guest experience and to complement shopping centers and communities as well.

Our ideal footprint is 2,200 to 2,400 square feet, usually an endcap in a shopping center. In selecting a site, we closely study key physical attributes, as well as trade area and other comparative data, to assess the quality and viability of a location. Each potential site is carefully analyzed and reviewed by our Real Estate team using the newest AI software. The best locations are analyzed for its internal rate of return (“IRR”) using multiple projected sales scenarios. Once the site has met our IRR criteria it is then brought to a Real Estate Committee for further consideration and scrutiny. We believe that aggressive and ongoing market review, coupled with detailed analysis and review, should provide a consistent stream of great locations for ongoing future development.

Construction

Once a site is successfully permitted, a BurgerFi restaurant can be built in approximately a 70- day period. During these 70 working days, all construction is completed, and the space is then turned over to the Operational team no later than 85 days from construction start. We partner with a number of general contractors regionally throughout the country, and strive to effectively manage the bidding process of each project to ensure quality standards are kept up to par.

Typically, a BurgerFi buildout ranges from $600,000 to $950,000 which includes the initial franchise fee of $37,500. The cost of leasehold improvements varies with the restaurant footprint and square footage, but on average the leasehold improvement costs for a 2,400 square foot space ranges from $110 to $140 per square foot.

Design

BurgerFi restaurants feature an inviting, next-gen look and feel, appealing to consumers of all ages seeking an engaging, high-quality dining experience.

There are many fixtures and furnishings inside that tell a story of sustainability like upcycled furniture items, such as our 111 Navy Coca-Cola chairs, or our energy efficient Macro Air fans and LED lighting that reduce our overall carbon footprint. These products and materials are sourced through our preferred vendors to meet the needs of the restaurants. The main design goal at BurgerFi is to provide an updated, sleek look that is practical for our consumers and provides them with a warm inviting feel. Over the years we have gone through small design evolutions within the four restaurant walls to not only better suit the needs of our guests but also the needs of our team members. We strive to please our guests and in doing so need to create an open space with great quality materials that can be easily cleaned and will withstand the wear and tear of time.

Like most restaurants, we have learned that the delivery channel is an opportunity to innovate our kitchen design. We have worked to equip our kitchens with a layout that is both effective and efficient at increasing our output of products. We have vetted certain equipment pieces that allow us to keep up with desired cook times while providing the best possible end-product for the guest.

Over the years BurgerFi has been very adaptive with our direction of growth. As we move forward, we are constantly reinventing the overall size of our design so we can better fit into non-traditional, spaces that give us greater visibility in the fast-casual burger scene.

Franchise Program

Overview

We use a franchising strategy to augment new restaurant growth in new and established markets, allowing for brand expansion without significant internal capital investment. Our first franchise location was opened in 2012. As of September 30, 2020, there were a total of 103 franchise restaurants in the United States. Franchisees range in size from single restaurant operators to multi-unit operators, the largest of which owns 10 locations.

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

We have several forums to enhance participation and engagement with our franchise community. The Franchise Advisory Council (“FAC”) works with their group of franchise constituents to communicate and collaborate with our Restaurant Support Center providing input, feedback, and marketing strategy and system wide initiatives.  Cross functional teams comprised of company operators, franchise operators and executive team members collaborate to enhance vendor relationships and negotiate favorable win-win scenarios for both the BurgerFi system and our vendor partners.  

Franchise Owner Support

We have structured our corporate staff, training programs, operational systems, and communication systems to ensure we are delivering strong, effective support to our franchisees. We assist franchisees with the site selection process, and every new franchise location is scrutinized by our corporate real estate team. We provide template plans franchisees may use for new restaurant construction and work with franchisees and their design and construction vendors to ensure compliance with brand specifications. A training program is required for all franchisees, operating partners, and management staff. Training materials introduce new franchisees to our operational performance standards and the metrics that help maintain these high standards.

For the first two restaurant openings for a new franchisee, we typically provide significant on-site support, with more modest support for subsequent openings for that franchisee. On an ongoing basis, we collect and disseminate customer experience feedback on a real time basis through a third-party vendor. We also conduct regular on-site audits at each franchise location, although in the COVID-19 environment we perform our internal inspections through video collaboration and also use Steritech, a third-party vendor, to physically inspect each location and timely provide us with their full report. Our Regional Operations Leaders are dedicated to ongoing franchise support and oversight, regularly visiting each franchise territory. However, in the recent COVID-19 environment that we are experiencing, travel has been limited. Our marketing department assists franchisees with local marketing programs and guidance with our national marketing campaigns. We typically communicate with franchisees through our company newsletter, the “Bugle”, which is published monthly and hold weekly inter-active webinar meetings to update our franchisee teams and conduct additional training. We also hold an annual summit for franchisees, vendors, and company operations leaders to review overall performance, celebrate shared success, communicate best practices, and plan for the year ahead.

Charitable Partners

From 2017-2019, BurgerFi raised $236,235 to help fund St. Jude Children’s Research Hospital. The funds were raised through our limited time offer (LTO) products such as the Very Berry Wafflewich and the Steakhouse Bleu Burger. The donation from each LTO product sale was $1, which went directly to St. Jude.

In September of 2019, for Hunger Action Month and National Cheeseburger Day, BurgerFi partnered with Feeding South Florida to help “end hunger one bite at a time.” With the funds raised, we were able to provide 47,600 meals for food insecure individuals in the South Florida area. We are now in conversations with their parent organization, Feeding America, about a long-term partnership.

In May of 2020, BurgerFi partnered with the Marcum Foundation to deliver 20,000 meals to healthcare heroes on the frontlines of COVID-19 in major cities throughout the United States.

For new restaurant openings, we invite local ‘hometown heroes’ such as firefighters, police officers and EMT’s, to enjoy a complimentary meal in honor of the Grand Opening.

Additionally, each BurgerFi regularly hosts Give Back Nights to help raise funds for charitable causes in the communities that they serve. Supporters who attend these events will have a minimum of 15% of their order totals donated to benefit the charitable organization.

SUPPLY CHAIN

Sourcing

The Brand’s philosophy since day one is to work with best-in-class suppliers across our supply chain so that we can always provide top quality, better-for-you food for our guests. For our meat, we source from some of best ranches in the United States including Meyer Company Ranch, Snake River Farms, and Springer Mountain Farms, who share in our commitment to all-natural food, with no hormones or antibiotics, that is humanely raised and source verified. In 2018, we received an “A” grading from the Natural Resources Defense Council in their Chain Reaction Report for sourcing beef raised without any antibiotics (one of only two burger chains to have done so). In addition, our bread is free of synthetic chemicals, our ketchup is free of corn syrup, and we use cage-free eggs. For more information, our animal welfare policy can be found on our BurgerFi website.

At BurgerFi we ensure that our beef is always freshly ground and never frozen at all domestic locations. As we’ve grown, we have partnered with the largest and most respected grinding facility in the industry. With this partnership we have transparent auditable pricing, backup production facility plans, and have secured multiple vendor supply partnerships.

We have carefully selected domestic suppliers based on quality, transparency, and reliability for our major ingredients, including beef, chicken, potato buns, custard, produce, and potatoes. In 2019, we purchased all of our ground beef and chicken from two suppliers, potato buns from one supplier, and custard from two suppliers. Should we experience any interruptions or shortage, we have identified alternatives to substitute services and products which we believe will maintain our high standards of quality and transparency.

Distribution

We contract with one distributor to provide almost all of our food distribution services in the United States. This distributor processes approximately 90% of our core food and beverage ingredients and 100% of our paper goods and chemicals for distribution and delivery to each BurgerFi. We utilize 24 affiliated distribution centers to supply our domestic franchise and company-operated restaurants. We regularly assess our broadline distributor to ensure our strict safety and quality standards are met and that the prices they offer are competitive.

Food Safety

At BurgerFi, food safety is of the utmost importance. Within our restaurants we have stringent food safety and quality protocols that help our teams ensure they are providing a safe place to eat for our guests and team members alike. Utilizing in-house temperature and quality audits throughout the day, we strive to verify that all products are safe and of highest quality.

Additionally, we use a third-party auditing system, Steritech, designed to ensure we meet and exceed local health standards. These Steritech audits are completed periodically and without notice with the goal of ensuring that our restaurants maintain our high standards at all hours of the day. Since the onset of the COVID-19 pandemic, we have initiated an additional Steritech COVID-19 Protocol audit for each restaurant each quarter.

Through our Learning Management System, we provide our restaurants with tools and resources at the click of a button. These tools include COVID-19 reopening tactics, expectations for team members, disinfecting processes, and equipment cleaning protocols.

Management Information Systems

All of our traditional domestic and international company and franchise-operated restaurants use computerized point-of-sale and back-office systems that are designed specifically for the restaurant industry and are operated by highly trained BurgerFi team members. In addition, some domestic locations also offer guest facing self-ordering kiosk technology. Both point-of-sales systems provide touch screen interfaces, order confirmation displays, kitchen displays and integrated, high-speed credit card, gift card and BurgerFi loyalty program processing. The information collected from the point-of-sale system includes daily transaction data, which generates information about sales, average transaction size as well as product mix information. This system allows our management teams to run various reports and access vital information to assist them in controlling food and labor costs on a daily basis.

This information also provides the Regional Operations leaders and the Restaurant Support Center real-time, detailed information to assist our management teams with the day-to-day operations of each location so they can efficiently and confidently operate their restaurants.

GROWTH STRATEGIES

In 2019, BurgerFi opened 15 new restaurants, resulting in the creation of approximately 450 jobs. Through September 30, 2020 we have opened three company-owned restaurants, five franchise restaurants and seven delivery-only Reef Technology ghost kitchens. By December 31, 2020 we expect to open an additional two company-owned locations, three franchise locations and one Reef Technology ghost kitchen.

Traditional Company and Franchise Restaurant Development

BurgerFi currently enjoys a larger geographic footprint than several of its “better burger” competitors, with significant growth headroom for new development in greenfield areas as well as clustering in existing markets.

Our goal is to strategically position new units to either cluster within existing markets or to build-out important new DMA’s through multi-unit development. We believe BurgerFi is powerfully positioned with a pipeline of new units projected to open through the remainder of 2020 and into 2021 resulting from a combination of franchise and new corporate restaurant development.

A key indicator of the overall appeal and staying power of the BurgerFi model comes from existing multi-unit franchisees who continue to build on their initial successes by adding new BurgerFi units to their portfolio.

Non-Traditional Partnerships

In recent years BurgerFi has begun targeting “non-traditional” venues, like airports, transportation hubs, toll roads, higher education, military bases, and sporting venues, for restaurant locations. Initial promising licensing agreements with major food and beverage operators include Aramark, HMS Host, Delaware North, SSP America, and the US Air Force Services Activity. Expansion in these areas should produce significant additional growth through marquee, high-volume units.

Delivery Only Expansion

In April 2020, BurgerFi signed a license agreement with REEF Technology to open delivery-only kitchens, also known as “ghost kitchens,” in major markets throughout the United States. With a distributed real estate network of more than 5,000 locations and 10,000 logistics and real estate professionals across 50 cities, REEF is the largest operator of logistics hubs, and neighborhood kitchens, in the United States.

The partnership with REEF Technology will allow for BurgerFi to expand into new major markets like Los Angeles, Seattle, Chicago, Houston, Nashville, and Minneapolis. BurgerFi launched its first kitchen on June 15 in Miami and is committed to having approximately 25 operating kitchens by the end of 2021.

United States Air Force Services Activity Partnership

BurgerFi signed a license agreement with the US Air Force Services Activity in October 2019 with plans to open restaurants on five Air Force bases in the U.S. in 2021. The Air Force Services Activity chose BurgerFi as part of their global initiative to enhance food quality, variety and availability on Air Force bases throughout the U.S. and abroad.

Millennial and Gen-Z generations, who are largely represented in new recruits enlisting in military divisions, are more likely to demand high quality, natural food offerings. The military is turning to brands like BurgerFi to meet these preferences.

Centralized Commissary Kitchen

BurgerFi’s centralized commissary kitchen is located in North Palm Beach, FL and is equipped with high-speed, automated equipment for mass production of select products with greater efficiency and consistency under the supervision of a skilled food production team. The kitchen allows for BurgerFi to generate revenue by manufacturing and distributing proprietary products for the system that differentiate our brand among its competitors. It also gives BurgerFi added control over ingredients, quality, and product consistency.

Phase 2 of the Commissary, set to launch in September 2020, includes the production of BurgerFi’s proprietary sauces (Fi Sauce, Honey Mustard BBQ, Garlic Aioli, and others).

Expanding and Enhancing Guest Experience

Menu Innovation

BurgerFi continues to evaluate and enhance our menu offerings to highlight quality and value for our guests. Our menu represents our commitment to responsible procurement and showcases our 100% all-natural American Angus beef. In addition, our menu offerings also feature the farms and ranches where we source our Wagyu beef (Snake River Farms) and NAE Chicken (Springer Mountain Farms).

Digital Expansion - Loyalty Program

The BurgerFi App was rolled out in 2018. Since then, we have built usership to nearly 280,000 guests. The BurgerFi App and our Loyalty Program is a pillar for our rapid growth, and we are committed to continue our investment in and enhancement of the platform to provide the best experience for our guests, and in so doing, grow our user base exponentially.

In 2020, BurgerFi made enhancements to our rewards program with the goal of garnering more loyalty and frequency amongst our guests while improving the ROI and profitability of the platform at the restaurant level. In the first phase we focused on making the rewards program simpler to understand for guests and our front of house team members alike. Looking forward, we intend to continue to streamline the loyalty features, while increasing brand storytelling, surprise and delight opportunities, and offers to engage our most loyal guests.

Tapping into the Growing “Conscious Consumer” Market

We believe that many consumers and investors want to associate with brands that have a heightened commitment to environmental and social practices. As the Millennial and Gen Z generations continue to grow and exercise their spending powers towards higher quality, authentic brands, we believe BurgerFi will become the go-to destination for those consumers and investors whose beliefs align with ours.

BurgerFi believes in clean, transparent, and sustainable restaurant ecosystems, which includes a full commitment to the humane treatment of animals. Since its inception, BurgerFi has taken the position of advocating for best practices in humane animal treatment. In 2018, BurgerFi was named as one of the top two national brands in the burger industry maintaining the highest standards for the sourcing of our beef. We received an “A” on the fourth annual Chain Reaction scorecard released by six major consumer and environmental organizations. In 2019, BurgerFi was named Best Burger Joint by the Chain Reaction Report. We have had this commitment to excellence and the highest standards since our doors opened in 2011.

Environmental sustainability guides our decision-making when it comes to BurgerFi restaurant construction and design – we are all-natural and proud of it. From using number two southern pine lumber, some of the most renewable wood on the planet, to our energy efficient appliances, we constantly look at the ways in which we can minimize our environmental footprint.

Our commitment to environmental sustainability can be seen in the partners we work with, too. BurgerFi recently partnered with REEF Technology to deploy dozens of ghost kitchens throughout the USA in 2020 with additional vessel development planned for 2021 and beyond. REEF Technology’s neighborhood kitchens have a much smaller footprint than a traditional brick and mortar restaurant and they are using existing underutilized infrastructure in cities to bring BurgerFi to more consumers around the country.

Aggressive Growth Plans Deserve Aggressive Marketing Initiatives

BurgerFi’s has differentiated itself from other fast casual, better burger competitors through our product quality and transparency, continuous investment in a technology infrastructure, commitment to sustainability, and our industry-leading digital and social marketing strategy.

Rarely has a nearly 119-unit restaurant brand received such extensive recognition by industry and consumers in such a short period of time. BurgerFi has been named in Fast Casual’s Top 100 Movers and Shakers for 7 years in a row, was on Nation’s Restaurant’s News’ 2019 Fast Casual Top Movers and Shakers and was even recognized as New York City’s Best Veggie Burger by the New Yorker.

Additional notable placements include in Franchise Times, Restaurant Business, New York Times, Bloomberg, USA Today, Fox Business, Mashed, Thrillist, Delish, Ad Age and more, as well as on shows such as CNBC Squawk Alley, Fox & Friends morning show, and Fox News.

Properties

Our restaurants are primarily end-cap facilities, and, to a lesser extent in-line or free-standing. None of our restaurants feature a drive-thru. As of September 30, 2020, for all of the company-operated restaurants, we lease the premises in which our company-operated restaurants are operating. Our restaurant leases generally have initial terms of 10 to 15 years, with two renewal options of five years each. Most restaurant leases provide for a specified annual rent, although some call for additional or contingent rent. Generally, leases are “net leases” that require the restaurant to pay a pro rata share of property taxes, insurance and common area maintenance costs. As of September 30, 2020, our restaurant system consisted of 119 restaurants comprised of 16 company-operated restaurants and 103 franchise-operated restaurants located in 23 states throughout the United States, 3 franchise locations in Mexico, one franchise location in Puerto Rico and two franchise locations in Kuwait.

We lease our executive offices, consisting of approximately 16,564 square feet in North Palm Beach, Florida, for a term expiring in 2023, with one option to extend the lease term for an additional five years. We believe our current office space is suitable and adequate for its intended purposes and provides opportunity for expansion. The following chart shows the number of restaurants in each of the states in which we operated as of September 30, 2020:

Legal Proceedings

BurgerFi International, LLC v Shree at Philly Downtown, LLC, et. al. (U.S. District Court for the Southern District of Florida, Case No. 15-81544-CIV filed November 10, 2015). BFI filed this suit against Shree at Philly Downtown LLC, a franchisee (and its principals). BFI seeks declaratory judgments and damages in an amount to be proven at trial for various breaches of the applicable franchise agreements resulting from the defendants’ closure of the New Brunswick, New Jersey restaurant, their failure to open the Secaucus, New Jersey restaurant, and their operational defaults at the Philadelphia, Pennsylvania restaurant. In April 2016, the defendants filed a counterclaim, asserting that they had no responsibility for their losses, and instead, alleged that we have engaged in breach of contract, fraud, misrepresentation, conversion in connection with the operation of the restaurant, and various other allegations, seeking damages of over $5 million. We denied any wrongdoing. On December 30, 2016, the court stayed the case pending the resolution of the bankruptcy filings made by some of the defendants. No further action has occurred.

DAJA I, LLC v BurgerFi International, LLC; BurgerFi International, LLC v DAJA I, LLC, Donald Simon, Andrew Balog, Anthony Kesselmark and Joseph Kesselmark (Seventeenth Judicial Circuit Court of Broward County, Florida, Case No. CACE-17-017155, filed September 7, 2017). DAJA I, LLC, a franchisee, filed this suit against BurgerFi International, LLC (“BFI”) seeking unspecified damages in connection with plaintiff’s execution of franchise agreements for the development of 11 BurgerFi restaurants in certain specified trade areas in New York and Connecticut. Plaintiff alleged that BFI fraudulently induced the franchisee to enter into these agreements, and in the complaint made the following claims against BFI: fraud in the inducement, negligent misrepresentation, breach of implied covenant of good faith and fair dealing, and violation of FDUTPA and Florida’s Franchise Misrepresentation Act. BFI denied any wrongdoing and has moved to dismiss plaintiff’s claims. On May 4, 2018, we filed a counterclaim for unspecified money damages against plaintiff, and a third-party complaint against the guarantors, asserting breach of contract for, among other things: (1) failing to adhere to BFI’s operating standards in connection with the operation of their BurgerFi restaurant in Poughkeepsie, NY, and (2) failing to open the required number of BurgerFi restaurants per the minimum performance schedule set forth in their multi-unit operator agreements. Plaintiff and the guarantors moved to dismiss BFI’s counterclaim and third-party complaint. The parties reached a settlement on November 17, 2020. This settlement resulted in (i) the termination of the franchise agreement and (ii) the Company will take ownership of the restaurant which this franchisee operated.

Corey Winograd v BurgerFi International, LLC (Fifteenth Judicial Circuit Court of Palm Beach County, Florida, Case No. 502019-CA015256, filed December 1, 2019). Corey Winograd, the former chief executive officer of the Company (“Plaintiff”), filed this suit against BurgerFi International, LLC (“BFI”) for certain alleged breaches of an employment agreement. BFI filed a motion to dismiss the complaint on February 13, 2020. On May 20, 2020, the motion to dismiss was heard being granted in part and denied in part. The portion of the complaint not dismissed was answered by BFI with affirmative defenses raised on July 7, 2020. The Plaintiff served various discovery requests (including notices of non-party subpoenas) on July 9, 2020 as well as a motion to strike BFI’s affirmative defenses on July 16, 2020. BFI filed objections to the non-party subpoenas on July 20, 2020. The case has not yet been set for trial, and is in the pleading, deposition and discovery pretrial stage. BFI is currently investigating and evaluating whether to file a Counterclaim against the Plaintiff.

On July 8, 2020, the Company received a letter from an attorney hired on behalf of a former employee of the Company. This former employee was terminated for cause on May 5, 2020. This letter claims that the former employee was terminated wrongfully by the Company. The Company is of the opinion that allegations included in this letter lack merit.

We have reported the claim to our insurance carrier and outside counsel has been retained. Our counsel sent a letter to this former employee’s attorney lawyer denying all claims and the parties met for mediation on September 4, 2020, but were unable to resolve this matter. We feel that all claims are meritless, and we plan to vigorously defend these allegations.

COMPETITION

The restaurant industry is highly competitive and fragmented, with restaurants competing on multiple areas, such as taste, price, food quality, service, location and the ambiance and condition of the restaurant. Our primary competitors include other fast casual restaurants, quick service restaurants and casual dining restaurants. Our competition includes multi-unit national and regional chains, as well as a wide variety of locally owned restaurants. Our competitors may operate company-owned restaurants, franchised restaurants, or some combination. Many of our competitors offer breakfast, lunch, and dinner, as well as dine-in, carry-out and delivery services. We may also compete with companies outside of the traditional restaurant industry, such as grocery store chains, meal subscription services and delicatessens, especially those that target customers who seek high-quality food, as well as convenience food stores, cafeterias and other dining outlets.

Our competition continues to intensify as new competitors enter both the burger and fast casual segments, and in addition, offer new digital experiences. We also face increasing competitive pressures from some of our competitors who have recently announced initiatives to offer better quality ingredients relative to their previous offerings, such as antibiotic-free meat or plant-based meat alternatives. Additionally, many of our competitors are nationally recognized brands with much more significant marketing and advertising resources than us. This can result in much better brand recognition for them, which makes it more difficult for us to gain a foothold of market share.

We strive to engage our guests with a differentiated experience that includes great food, unique and thoughtful integration with local communities and high standards of excellence and hospitality. We believe that we are well positioned to continue to grow our market position, as we believe consumers will continue to trade up to higher quality offerings given the increasing consumer focus on responsible sourcing, ingredients and preparation.

INTELLECTUAL PROPERTY

Since our inception, we have strived to strategically and proactively develop our intellectual property portfolio by registering our trademarks and service marks worldwide. As of August 1, 2020, we had 16 registered marks domestically, including registrations in our core marks BurgerFi and The BurgerFication of the World, and certain other key marks, such as VegeFi Burger, KetoFi Burger and Fi Lime Fusion.

Internationally, we have registered our core marks in 12 countries, including the European Union through the World Intellectual Property Organization and Madrid Protocol. Some of these marks are registered in multiple international trademark classes, including for restaurant services and various food categories. We also own the domain www.BurgerFi.com and other related domain names.

In addition, the vendors and suppliers of our proprietary products are contractually prohibited from disclosing our confidential recipes and production processes to any other party. Our proprietary products are protected through our distribution model and include but are not limited to our Angus patty grinding procedure, the VegeFi Burger®, and the product formulations for our Fi Sauce. We also have exclusive arrangements with our suppliers of our custom branded burger buns.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

We are subject to extensive federal, state, local and foreign laws and regulations, as well as other statutory and regulatory requirements, including those related to, among others, nutritional content labeling and disclosure requirements, food safety regulations, local licensure, building and zoning regulations, employment regulations and laws and regulations related to our franchised operations. New laws and regulations or new interpretations of existing laws and regulations may also impact our business. The costs of compliance with these laws and regulations are high and are likely to increase in the future and any failure on our part to comply with these laws may subject us to significant liabilities and other penalties.

We are not aware of any federal, state or local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, that have materially affected, or are reasonably expected to materially affect, our results of operations, competitive position, or capital expenditures.

SEASONALITY

Our business is subject to slight seasonal fluctuations which can impact sales from quarter to quarter. Year-over-year and quarter-to-quarter results can also be impacted by the number and timing of new BurgerFi openings. Additionally, there may be some fluctuations between quarters due to holiday shifts in the calendar year.

EMPLOYEES

As of September 30, 2020, we had 398 employees, 358 were hourly team members and restaurant level managers and 40 were Restaurant Resource Center (corporate) personnel.

SELECTED HISTORICAL
CONSOLIDATED FINANCIAL INFORMATION
OF BURGERFI INTERNATIONAL, LLC

The following tables set forth selected historical financial information derived from BurgerFi’s audited consolidated financial statements as of December 31, 2019 and 2018, as well as BurgerFi’s unaudited combined and consolidated financial statements for the nine months ended September 30, 2020 and 2019 which are included elsewhere in this proxy statement. Historical results are not necessarily indicative of the results to be expected for future periods.

The information is only a summary and should be read in conjunction with BurgerFi’s audited and unaudited consolidated financial statements and related notes, and the section titled “Management’s Discussion and Analysis of BurgerFi” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of BurgerFi.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF BURGERFI

The following discussion should be read in conjunction with our financial statements and footnotes thereto incorporated by reference included elsewhere in this proxy statement.

Overview

We are a fast-casual “better burger” concept with approximately 119 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, shakes, beer, wine and more. Originally founded in February 2011 by John Rosatti in sunny Lauderdale-by-the-Sea, Florida, the purpose was simple – redeFining the way the world eats burgers by providing an upscale burger offering, at a fast-casual price point. We’ve become the go-to 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.

Today, we are among the nation’s fastest-growing better burger concepts and was ranked as one of the Top 10 Fastest and Smartest-Growing Brands in Franchising and named a leader in its category by Franchise Times in their Fast and Serious list for both 2017 and 2018. BurgerFi was also featured in the fourth annual Chain Reaction antibiotic scorecard by National Resources Defense Council and Consumer Reports with an “A” rating – one of only two brands serving passing grade beef.

Since our inception, we have grown steadily—with approximately 119 BurgerFi restaurants, as of September 30, 2020, in 3 countries and 23 states and Puerto Rico—and we continue to expand bringing the BurgerFi experience to new guests around the world.

Significant Recent Developments Regarding COVID-19

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly spreading outbreak of a novel strain of coronavirus designated COVID-19. The pandemic has significantly impacted economic conditions in the United States, where all of our company restaurants are located. We first began to experience impacts from COVID-19 around the middle of March 2020, as federal, state and local governments began to react to the public health crisis by encouraging or requiring social distancing, instituting stay-at-home orders, and requiring, in varying degrees, restaurant dine-in limitations, capacity limitations or other restrictions that largely limited restaurants to take-out, drive-thru and delivery sales. While we cannot predict the extent to which COVID-19 will impact our business or the global economy, we believe our business is well-positioned for the transition to largely off-premise dining that has resulted from the outbreak. As a result of the required changes to consumer behavior to largely off-premises dining, as well as promotional activities associated with delivery, we have seen some recovery in sales at the end of the second quarter. Our most significant declines in same store sales were in late March through the third week in April, where we experienced same store declines of up to 60% in 2020 versus the same periods 2019. Beginning in May and through the end of June 2020, same store sales declines partially recovered to negative 20%. In the third quarter of 2020, same stores sales declines were in the negative single digits. We did not experience any supply chain difficulties as a result of COVID-19 during the first three quarters of 2020; however, there can be no assurances that we will not experience supply chain challenges in the future. We experienced negative cash flow during the months of April and May 2020 and have since turned cash positive in June through September. Although we have experienced some recovery since the initial impact of COVID-19, and are now able to meet our obligations as they become due with our cash flow from operations, the long-term impact of COVID-19 on the economy and on our business remains uncertain, the duration and scope of which cannot currently be predicted. Please refer to the matters discussed under the caption “Risk Factors” beginning on page 17.

Comparison of the Nine Months Ended September 30, 2020 and September 30, 2019

Company Restaurant Sales

Company restaurant sales increased $1,250,000 or 7.3% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This increase was primarily due to four new company restaurants opened and operating subsequent to September 30, 2019, which accounted for approximately $2.8 million of the increase. This increase was significantly offset by the COVID-19 outbreak which had a considerable impact on our business beginning in mid-March 2020. Same store sales were down $2.9 million or 17.1% for the nine months ended September 30, 2020 versus the nine months ended 2019. There was no such outbreak in the comparable nine-month period ending September 30, 2019.

Royalty and Other Fees

Royalty and other fees decreased $686,000, or 12.8% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This is primarily due to the COVID-19 outbreak which began in mid-March 2020 and continued through September 30, 2020. Since our royalty revenue primarily consists of fees charged as a percentage of franchisee restaurant sales, any fluctuation in franchisees’ sales would directly affect our royalty revenues. Our franchisees’ sales decreased approximately $10.6 million for the nine months ended September 30, 2020 versus the comparable nine-month period in 2019.

Terminated Franchise Fees

Terminated franchise decreased $651,000 or 95.2% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. Initial franchise fees are non-refundable payments of $37,500 per new location paid for by franchisees. In some cases, if the franchisee is in violation of its franchise agreement, the Company may terminate the franchise agreement. Since these fees are non-refundable, the Company is able to recognize these fees as revenues when the franchise agreement is terminated. The decrease in terminated franchise fees of $651,000 for the nine months ended September 30, 2020 versus the comparable period in 2019 was due to 14 less franchise agreements that were terminated during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019.

Royalties – Brand Development and Co-op

Royalties – brand development ad co-op advertising decreased $233,000, or 18.1% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This is primarily due to the COVID-19 outbreak which began in mid-March 2020 and impacted the remaining months through September 30, 2020. Since our royalties – brand development revenue is 1.5% of franchisee sales, any fluctuation in franchisee sales would directly affect our royalties – brand development revenues. Our Franchisees’ sales decreased approximately $10.6 million for the nine months ended September 30, 2020 versus the comparable nine-month period in 2019.

Initial Franchise Fees

Initial franchise fees decreased $78,000, or 22.7% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. For the nine months ended September 30, 2020, we had two new franchise openings, so the revenue for this period consisted of the $15,077 per store recognized upon opening of these two restaurants plus the amortization of the deferred initial franchise fees for franchise agreements entered into in prior periods. For the nine months ended September 30, 2019, we had 5 new openings which resulted in the carryforward amortization plus the recognition of $15,077 for distinct services performed by the Company at store opening date for these new locations.

Food, Beverage and Paper Costs

Food, beverage, and paper costs increased approximately $377,000, or 8.1% for the nine months ended September 30, 2020, versus the nine months ended September 30, 2019. This was primarily due to commodity cost inflation as well as four new company owned store openings subsequent to September 30, 2019. This was partially offset by the decrease in same store sales in 2020 versus 2019 due to the COVID-19 pandemic. As a percentage of company restaurant sales, food, beverage, and paper costs were 26.7% for the nine months ended September 30, 2020 versus 26.5% for the comparable period in 2019. The percentage increase resulted primarily from commodity cost increases during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019.

Labor and Related Expenses

Labor and related expenses decreased by $302,000, or 5.2% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This decrease was due primarily to less employees in our company locations relevant to the COVID-19 outbreak which occurred beginning in mid-March 2020 and continued through September 30, 2020. This decrease was partially offset by four new company restaurants in operation subsequent to September 30, 2019. As a percentage of company restaurant sales, labor and related expenses were 29.0% for the nine months ended September 30, 2020 versus 32.8% in the comparable period in 2019. This decrease was primarily due to the increased take-out and third-party delivery business resulting from the COVID-19 breakout which required less staff in our company operated restaurants, which resulted in less labor costs as a percentage of total company restaurant sales.

Other Operating Expenses

Other operating expenses increased $661,000, or 16.9% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This increase was primarily due to the four new company restaurants opened and operating in 2020 but not opened as of September 30, 2019, as well as an increase in delivery fees due to the significant increase in delivery business due to the COVID-19 outbreak in 2020. As a percentage of total company restaurant sales, other operating expenses were 24.2% of total restaurant sales for the nine months ended September 30, 2020 compared to 22.2% for the comparable period in 2019. This increase was primarily due to the increase in delivery fees and software fees during the nine months ended September 30, 2020 versus the comparable period in 2019. In 2020, we began to implement more cloud-based software solutions. As a result of this re-positioning, software costs include additional cloud-based services such as our new point of sale, Micros Simphony, and our new general ledger software, Restaurant 365, for which we make monthly periodic payments and, accordingly, expense as period costs beginning in 2020 and continuing into future periods.

Occupancy and Related Expenses

Occupancy and related expenses increased $534,000, or 33.9% during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This is due primarily to the additional four open and operating new company restaurants during the nine months ended September 30, 2020 versus the comparable period in 2019.

General and Administrative Expenses

General and administrative expenses decreased by $263,000, or 5.0% during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This decrease was due primarily to decreased headcount due to company ownership’s reducing and restructuring the company’s corporate staffing during the summer of 2019. As a percentage of total company revenue, general and administrative expenses were 20.0% during the nine months ended September 30, 2020 and 20.7% for the comparable period in 2019. This decrease was due to the headcount and staffing restructuring discussed above.

Depreciation and Amortization

Depreciation and amortization expenses increased by $221,000, or 37.5% during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This is primarily due to four new company operated restaurants opened and operating during the nine months ended September 30, 2020 versus the comparable period in 2019. As a percentage of total company revenues, depreciation and amortization expense was 3.3% versus 2.3% for the nine months ended September 30, 2020, and 2019 respectively. This increase in percentage of total company revenues is primarily due to the overall decrease in revenues in 2020 versus 2019 due to the COVID-19 outbreak. The fixed nature of depreciation and amortization as a percentage of a lower sales number resulted in a higher percentage for the nine months ended September 30, 2020 versus the comparable period in 2019.

Brand Development and Co-op advertising expense

Brand development and co-op advertising expense increased $423,000, or 30.3% for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This is primarily due to the Company spending approximately $475,000 additional during the nine months ended September 30, 2020 on production for BurgerFi commercials versus the comparable nine-month period ended September 30, 2020.

Interest Expense

Interest expense increased by $35,000 during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. This is primarily due to the increase in our line of credit by $785,000 on our line of credit during the period beginning October 1, 2019 through September 30, 2020. The remaining difference pertains to the notes payable at our two Jacksonville locations, as well as the interest on our seller note related to our purchase of the BurgerFi restaurant in Boca Raton, FL.

Income Tax Expense

The Company, with the consent of its members, has elected to be taxed as a partnership under the provisions of the Internal Revenue code and similar state provisions. Partnerships are generally not subject to federal and state income taxes, the partners reflect their respective share of the Company’s taxable income or loss on their individual tax returns, Therefore, there was no income tax recorded by the Company for the nine months ended September 30, 2020 nor the comparable period in 2019.

Net Income

Net income was $10,000 and $2,093,000 for the nine months ended September 30, 2020 and 2019, respectively. This represented a decrease in net income of $2,083,000 or 99.5%. This decrease was primarily due to the decrease in total revenues due to the COVID-19 pandemic in 2020, the decrease in royalty and other fees, terminated franchise fees, royalties – brand development and co-op revenues and initial franchise fees during the nine months ended September 30, 2020 versus the nine months ended September 30, 2019. Additionally, the decrease in net income was due to the increases in food, beverage and paper costs, occupancy and related expenses, and other operating expenses, partially offset by the decrease in labor and related expenses as well as general and administrative expenses. As a percentage of total company revenues, net income was 0.0% and 8.3% for the nine months ended September 30, 2020 and 2019, respectively.

Comparison of the Years Ended December 31, 2019 and 2018

Company Restaurant Sales

Company restaurant sales increased $2,995,000 or 14.4% for the year ended December 31, 2019 versus the year ended December 31, 2018. This was primarily due to three additional restaurants opened during the year ended December 31, 2019, which accounted for approximately $1.4 million in increased sales in for the year ended December 31, 2019 versus the year ended December 31, 2018. Additionally, the Company experienced an increase in same store sales of 7.5% for the year ended December 31, 2019 versus the comparable period in 2018.

Royalty and Other Fees

Royalty and other fees increased $264,000 for the year ended December 31, 2019 versus the year ended December 31, 2018 or 3.7%. This increase is primarily due to 13 franchise owned restaurants (less one closed franchise owned location) during 2019.

Terminated Franchise Fees

Terminated franchise fees increased $525,500 or 175.0% for the year ended December 31, 2019 versus the prior year ended December 31, 2018. Franchise fees are non-refundable payments of $37,500 per new location paid for by franchisees. In some cases, if the franchisee is in violation of its franchise agreement, the Company may terminate the franchise agreement. Since these fees are non-refundable, the Company is able to recognize these fees as revenues when the franchise agreement terminates. The increase in terminated franchise fees of $525,000 for the year ended December 31, 2019 versus the comparable period in 2018 was due to 14 more franchise agreements that were terminated during the year ended December 31, 2019 versus the prior year.

Royalties – Brand Development and Co-op Fees

Royalties – brand development and co-op fees were $1,720,000 during the year ended December 31, 2019 versus $0 for the prior year ending December 31, 2018. This is due to our adoption of Accounting Standards Codification Topic 606 (“ASC 606”) effective January 1, 2019 which required us to record the fees collected from our franchisees for our brand fund and advertising co-op separately as revenue (and expense, which is included in other operating expenses). For the year ended December 31, 2018, the revenues were netted with expense in accordance with Accounting Standards Codification Topic 605 (“ASC 605”) and included in brand development and co-op advertising expense. Expenses for the year ended December 31, 2019 exceeded revenues received by $13,000, as compared to the year ended December 31, 2018 of $802,000. This represented a decrease of $789,000. This decrease is due to the Company spending much less on production and media advertising during the year ended December 31, 2019 versus the year ended December 31, 2018.

Initial Franchise Fees

Through December 31, 2018, the Company recognized initial franchise fees upon the opening of the franchise location. However, on January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method applied to those franchise contracts which were not completed as of January 1, 2019. We elected a practical expedient to aggregate the effect of all contract modifications that occurred before the adoption date, which did not have a material impact to our consolidated financial statements. Results for reporting periods beginning on or after January 1, 2019 are presented under ASC 606. Prior period amounts were not revised and continue to be reported in accordance with ASC 605, the accounting standard then in effect. Therefore, the presentation of initial franchise fee revenue in 2019 is different from how it was presented in 2018.

Prior to the adoption of ASC 606, initial franchise fees were recorded as deferred revenue when received and proportionate amounts were recognized as revenue when a licensed BurgerFi opened and all material services and conditions related to the fee were substantially performed. Sales-based royalty fees were recorded as revenue when sales occurred.

Revenue recognized during the year ended December 31, 2019 under ASC 606 and revenue that would have been recognized during the year ended December 31, 2019 had ASC 605 been applied is as follows:

Initial franchise fees decreased $35,000, or 7.1% for the year ended December 31, 2019 versus the prior year ended December 31, 2018. This decrease is primarily due to less franchise openings during the year ended December 31, 2019 versus the comparable period December 31, 2018.

Food, Beverage and Paper Costs

Food and paper costs increased approximately $946,000, or 17.6% for the year ended December 31, 2019, versus the year ended December 31, 2018. This was primarily due to commodity cost inflation as well as three new company owned store openings. Additionally, as a percentage of company restaurant sales, food, beverage and paper costs were 26.5% for the year ended December 31, 2019 versus 25.7% for the comparable period in 2018. The percentage increase resulted primarily from commodity cost increases.

Labor and Related Expenses

Labor and related expenses increased by $796,000, or 11.3% for year ended December 31, 2019 versus the year ended December 31, 2018. This increase was due primarily to the additional three company owned stores that opened in 2019, partially offset by lower labor costs in our existing restaurants. As a percentage of company restaurant sales, labor and related expenses were 32.9% for the year ended December 31, 2019 versus 33.8% in the comparable period in 2018. The Company took initiatives to reduce its store level training managers and assistant managers during 2019, which resulted in lower restaurant level labor in 2019 versus 2018.

Other Operating Expenses

Other operating expenses increased $900,000, or 20.6% for the year ended December 31, 2019 versus the year ended December 31, 2019. This increase was primarily due to the three new company restaurants opened and operating in 2019 but not opened as of December 31, 2018. Additionally, delivery fees and equipment repairs increased by $278,000 and $136,000, respectively which accounted for much of the remaining increase. As a percentage of total company restaurant sales, Other operating expenses were 22.1% for the year ended December 31, 2019 compared to 21.0% for the comparable period in 2018. This increase was primarily due to the increase in delivery fees and equipment repairs during the year ended December 31, 2019 versus the year ended December 31, 2018.

Occupancy and Related Expenses

Occupancy and related expenses increased $423,000, or 24.5% during the year ended December 31, 2019 versus the year ended December 31, 2018. This is due primarily to an additional three open and operating new company restaurants during the year ended December 31, 2019 versus the comparable period in 2018.

General and Administrative Expenses

General and administrative expenses increased by $486,000, or 7.2% during the year ended December 31, 2019 versus the year ended December 31, 2018. This increase was due primarily to increased headcount at the corporate office for training and marketing for the first six months of 2019 versus 2018, partially offset by corporate initiatives to reduce executive, corporate trainers and marketing headcount during the summer of 2019. As a percentage of total company revenue, general and administrative expenses were 21.1% during the year ended December 31, 2019 and 23.5% for the comparable period in 2018. This decrease in general and administrative expenses as a percentage of total revenues is due primarily to the $5,469,000 increase in total revenue, combined with corporate initiative to reduce corporate headcount in the summer of 2019.

Depreciation and Amortization

Depreciation and amortization expenses decreased by $8,000, or .9% during the year ended December 31, 2019 versus the year ended December 31, 2018. This is primarily due to three of our company owned locations that had opening dates in 2013 and prior had fully depreciated furniture, fixtures and equipment through December 31, 2018, since these fixed assets were depreciated over five years. This was partially offset by the three new company owned restaurants which opened in 2019 which resulted in an increase in depreciation and amortization expense of approximately $34,000. As a percentage of total company revenues, depreciation and amortization expense was 2.4% versus 2.9% for the year ended December 31, 2019, and 2018 respectively. This decrease in percentage of total revenue was primarily due to the decrease in depreciation and amortization for our three locations which opened in 2013 and prior (discussed above) and the increase in total revenues in the year ended December 31, 2019 of $5,469,000 from the comparable period in 2018.

Brand development and co-op advertising expense

Brand development and co-op advertising expense increased by 931,000, or 116.1% during the year ended December 31, 2019 versus the prior year ending December 31, 2018. This is due to our adoption of ASC 606 effective January 1, 2019 which required us to record the fees collected from our franchisees for our brand fund and advertising co-op separately as revenue and expense, which is presented as brand development and co-op advertising expense. For the year ended December 31, 2018, the revenues were netted with expense in accordance with ACS 605 and included in brand development and co-op advertising expense. Expenses for the year ended December 31, 2019 exceeded revenues received by $13,000, as compared to the year ended December 31, 2018 of $802,000. This represented a decrease of $789,000. This decrease is due to the Company spending much less on production and media advertising during the year ended December 31, 2019 versus the year ended December 31, 2018.

Gain on disposal of property and equipment

Gain on disposal of property and equipment was $184,000 for the year ended December 31, 2019 versus 40 for the year ended December 31, 2018. This represents an increase of $184,000. This increase was due to the sale of one of our company owned restaurants to a franchisee which resulted in a gain of $184,000. There were no sales of company owned restaurants during the year ended 2018. As a percentage of total company revenues, gain on disposal of property and equipment was .5% for the year ended December 31, 2019 versus 0% for the comparable period in 2018.

Interest Expense

Interest expense increased by $34,000 during the year ended December 31, 2019 versus the year ended December 31, 2018. $17,000 of this was due to the increase in our line of credit by $2,317,000 on our line of credit. The remaining difference pertains to the notes payable at our two Jacksonville locations. We effectively took over these variable interest entities on April 23, 2018, which resulted in a partial year of interest expense in 2018, compared to the year ended December 31, 2019, in which we recognized interest expense on these notes for the full year. See the discussion on variable interest entities on page 103.

Net Income

Net income was $2,970,000 and $1,825,000 for the years ended December 31, 2019 and 2018, respectively. This represented an increase in net income of $1,146,000 or 62.8%. This increase was primarily due to increases total revenues discussed above, decrease in labor and related and in general and administrative expenses as a percentage of total revenue, the decrease in net brand development and co-op advertising expense, and the $184,000 gain on disposal of property and equipment partially offset by the increase (as a percentage of total revenue) in other operating expenses. As a percentage of total revenues, net income was 8.7% and 6.3% for the years ended December 31, 2019 and 2018, respectively.

Liquidity, Capital Resources, and COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, and deferment of employer side social security payments. While we cannot predict the extent to which COVID-19 will impact our business or the global economy, we believe our business is well-positioned for the transition to largely off-premise dining that has resulted from the outbreak. As a result of the required changes to consumer behavior to largely off-premises dining, as well as promotional activities associated with delivery, we have seen some recovery in sales at the end of the second quarter. Our most significant declines in same store sales were in late March through the third week in April, where we experienced same store declines of up to 60% in 2020 versus the same periods 2019. Beginning in May and through the end of June 2020, same store sales declines partially recovered to negative 20%. In the third quarter of 2020, same stores sales declines were in the negative single digits. We did not experience any supply chain difficulties as a result of COVID-19 during the first three quarters of 2020; however, there can be no assurances that we will not experience supply chain challenges in the future. We experienced negative cash flow during the months of April and May 2020 and have since turned cash positive in June through September 2020. Although we have experienced some recovery since the initial impact of COVID-19, and are now able to meet our obligations as they become due with our cash flow from operations, the long-term impact of COVID-19 on the economy and on our business remains uncertain, the duration and scope of which cannot currently be predicted. Please refer to the matters discussed under the caption “Risk Factors” beginning on page 17.

However, the Company has taken steps to reduce operating costs through reductions in labor hours to align with reduced demand and reducing non-essential controllable costs. We negotiated temporary rent deferrals with some of our landlords in the second quarter of 2020 and have begun to repay these rent deferrals during the third quarter of 2020. Additional actions taken during the second quarter of 2020 in response to the COVID-19 pandemic include elimination of all non-essential general and administrative expense, deferral of all open support center positions, as well as a reduction in force at the support center.

Our primary sources of liquidity and capital resources have been cash provided from operations, cash, and our line of credit. Our primary requirements for liquidity and capital are new restaurants, existing restaurants repair and maintenance expenses, lease obligations and general corporate needs, our working capital requirements are not significant since customers pay for their purchases in cash or by payment card (credit or debit) at the time of sale. Thus, we are able to sell many inventory items before we have to pay suppliers for such items since we typically have payment terms for our food and paper suppliers. Our company-operated restaurants do not require significant inventories.

We are currently able to pay our obligations as they become due, with our cash flow generated from operations. We are committed to construct two additional restaurants within the next 12 months. The total amount due on these contracts is approximately $750,000. We believe that we will be able to pay these commitments from our cash generated from operations. Should federal, state or municipal government authorities impose mandatory restrictions in excess of what they currently are, we believe that our $2.7 million in unused line of credit capacity will allow us the liquidity to meet these commitments.

The following table presents the summary cash flow information for the periods indicated:

Cash Flows Provided by Operating Activities

During the nine months ended September 30, 2020, cash flows provided by operating activities were approximately $2.3 million The cash flows provided by operating activities resulted from net income of $10,000, depreciation and amortization of $811,000 and net working capital decrease of $1,461,000. Our working capital decrease was due primarily to an increase in accounts payable and other current liabilities as well as a decrease in other assets. Our accounts payable increase was primarily due to us operating four new company-owned restaurants during the period beginning January 1, 2020 through September 30, 2020. Additionally, we have two company-owned restaurants under construction as of September 30, 2020.

Cash Flows Used in Investing Activities

During the nine months ended September 30, 2020 cash flows used in investing activities were $3.5 million, which were primarily the result of a $650,000 for the payment due at closing for the purchase of a franchise location, construction costs of $1.9 million for two new restaurants, $1.8 million in net advances to related parties, partially offset by deposit on sale of $906,500.

Cash Flows Provided by Financing Activities

During the nine months ended September 30, 2020 cash flows provided by financing activities were $2.0 million, which were primarily the result of a $2,406,000 in proceeds from notes payable from the CARES Act, $1,648,000 in proceeds from our revolving line of credit, partially offset by payments on line of credit of $1.3 million and members’ distributions of $714,000.