References to the "Company," "our," "us" or "we" refer to CF Acquisition Corp.
V. The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the unaudited
condensed financial statements and the notes thereto contained elsewhere in this
report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in Delaware on January 23, 2020 for
the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more
businesses (the "Initial Business Combination"). Our sponsor is CFAC Holdings V,
LLC (the "Sponsor").
Although we are not limited in our search for target businesses to a particular
industry or sector for the purpose of consummating the Initial Business
Combination, we are focusing our search on companies operating in the financial
services, healthcare, real estate services, technology and software industries.
We are an early stage and emerging growth company and, as such, we are subject
to all of the risks associated with early stage and emerging growth companies.
Our registration statement for our initial public offering (the "Initial Public
Offering") became effective on January 28, 2021. On February 2, 2021, we
consummated the Initial Public Offering of 25,000,000 units (each, a "Unit" and
with respect to the shares of Class A common stock included in the Units sold,
the "Public Shares"), at a purchase price of $10.00 per Unit, generating gross
proceeds of $250,000,000. Each Unit consists of one share of Class A common
stock and one-third of one redeemable warrant. Each whole warrant entitles the
holder to purchase one share of Class A common stock at a price of $11.50. Each
warrant will become exercisable on the later of 30 days after the completion of
the Initial Business Combination or February 2, 2022 (12 months from the closing
of the Initial Public Offering) and will expire 5 years after the completion of
the Initial Business Combination, or earlier upon redemption or liquidation.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 600,000 Units (the "Private Placement Units") at a price of $10.00
per Private Placement Unit to the Sponsor in a private placement (the "Private
Placement"), generating gross proceeds of $6,000,000.
Following the closing of the Initial Public Offering and sale of Private
Placement Units on February 2, 2021, an amount of $250,000,000 ($10.00 per Unit)
from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Units was placed in a trust account (the
"Trust Account") located in the United States at UMB Bank, N.A., with
Continental Stock Transfer & Trust Company acting as trustee, which may be
invested only in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), with a maturity of 185 days or less or in any
open-ended investment company that holds itself out as a money market fund
selected by us meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of
Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier
of: (i) the completion of the Initial Business Combination and (ii) the
distribution of the Trust Account, as described below.
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We have until February 2, 2023 (24 months from the closing of the Initial Public
Offering), or a later date approved by our stockholders in accordance with the
Amended and Restated Certificate of Incorporation (the "Combination Period"). If
we are unable to complete the Initial Business Combination by the end of the
Combination Period, 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 the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust
Account including interest earned on the funds held in the Trust Account and not
previously released to us to pay our taxes (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish our public stockholders'
rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate,
subject in the case of clauses (ii) and (iii) above to our obligations under
Delaware law to provide for claims of creditors and the requirements of other
applicable law. There will be no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to complete
the Initial Business Combination within the Combination Period.
Liquidity and Capital Resources
As of both September 30, 2021 and December 31, 2020, we had $25,000 of cash in
our operating account. As of September 30, 2021 and December 31, 2020, we had a
working capital deficit of $3,021,894 and $107,200, respectively. During the
three and nine months ended September 30, 2021, we had $6,302 and $14,385,
respectively, in interest income in the Trust Account available to pay taxes
(less up to $100,000 of such net interest to pay dissolution expenses).
Our liquidity needs through September 30, 2021 have been satisfied through a
contribution of $25,000 from the Sponsor in exchange for the issuance of the
founder shares, a loan of $148,445 from the Sponsor pursuant to a promissory
note (the "Pre-IPO Note"), the proceeds from the consummation of the Private
Placement with the Sponsor not held in the Trust Account, and the Sponsor Loan
(as defined below). We fully repaid the Pre-IPO Note upon completion of the
Initial Public Offering. In addition, in order to finance transaction costs in
connection with the Initial Business Combination, our Sponsor has committed up
to $1,750,000 to be provided to us to fund our expenses relating to
investigating and selecting a target business and other working capital
requirements after the Initial Public Offering and prior to the Initial Business
Combination (the "Sponsor Loan"). If the Sponsor Loan is insufficient, the
Sponsor or an affiliate of the Sponsor, or certain of our officers and directors
may, but are not obligated to, provide us additional loans. As of September 30,
2021 and December 31, 2020, there was $1,197,223 and $0, respectively,
outstanding under the Sponsor Loan.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from the Sponsor to meet our needs through the
earlier of the consummation of the Initial Business Combination or one year from
the date of this Report. Over this time period, we will be using these funds for
paying existing accounts payable, identifying and evaluating prospective target
businesses, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Initial Business Combination.
Results of Operations
Our entire activity from inception through September 30, 2021 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, toward locating and completing a
suitable Initial Business Combination. We have neither engaged in any operations
nor generated any revenues to date. We will not generate any operating revenues
until after completion of our Initial Business Combination. We will generate
non-operating income in the form of interest income on investments held in the
Trust Account. We expect to incur increased expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
For the three months ended September 30, 2021, we had a net loss of
approximately $1,210,000, which consisted of approximately $2,403,000 in general
and administrative expenses, approximately $55,000 of franchise tax expense and
$30,000 in administrative expenses paid to the Sponsor, which were partially
offset by approximately $1,109,000 of gain from the change in fair value of
warrant liability, approximately $163,000 of gain from the change in fair value
of FPS liability and approximately $6,000 of interest income on investments held
in the Trust Account.
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For the nine months ended September 30, 2021, we had a net loss of approximately
$3,324,000, which consisted of approximately $3,127,000 in general and
administrative expenses, approximately $2,056,000 of loss from the change in
fair value of FPS liability, approximately $148,000 of franchise tax expense and
approximately $79,000 in administrative expenses paid to the Sponsor, which were
partially offset by approximately $2,072,000 of gain from the change in fair
value of warrant liability and approximately $14,000 of interest income on
investments held in the Trust Account.
Contractual Obligations
Business Combination Marketing Agreement
We engaged Cantor Fitzgerald& Co. ("CF&Co."), an affiliate of the Sponsor, as an
advisor in connection with the Initial Business Combination to assist us in
holding meetings with our stockholders to discuss the Initial Business
Combination and the target business' attributes, introduce us to potential
investors that are interested in purchasing our securities, assist us in
obtaining stockholder approval for the Initial Business Combination and assist
us with our press releases and public filings in connection with the Initial
Business Combination. We will pay CF&Co. a cash fee for such services upon the
consummation of the Initial Business Combination in an amount of $8,750,000,
which is equal to 3.5% of the gross proceeds of the Initial Public Offering.
Related Party Loans
In order to finance transaction costs in connection with an intended Initial
Business Combination, the Sponsor has committed up to $1,750,000 in the Sponsor
Loan to be provided to us to fund expenses relating to investigating and
selecting a target business and other working capital requirements, including
$10,000 per month for office space, administrative and shared personnel support
services that will be paid to the Sponsor, after the Initial Public Offering and
prior to the Initial Business Combination. As of September 30, 2021 and December
31, 2020, we had borrowed $1,197,223 and $0, respectively, under the Sponsor
Loan.
The Sponsor pays expenses on our behalf. We reimburse the Sponsor for such
expenses paid on our behalf. As of September 30, 2021 and December 31, 2020, we
had accounts payable outstanding to the Sponsor for such expenses paid on our
behalf of $0 and $37,640, respectively.
Critical Accounting Policies and Estimates
We have identified the following as our critical accounting polices:
Use of Estimates
The preparation of our unaudited condensed financial statements and related
disclosures in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the unaudited
condensed financial statements, and income and expenses during the periods
reported. Actual results could materially differ from those estimates. These
accounting estimates require the use of assumptions about matters, some of which
are highly uncertain at the time of estimation. To the extent actual experience
differs from the assumptions used, our unaudited condensed balance sheets,
unaudited condensed statements of operations and unaudited condensed statements
of cash flows could be materially affected. We believe that the following
accounting policies involve a higher degree of judgment and complexity.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") exempts emerging growth companies from being required to comply with new
or revised financial accounting standards until private companies (that is,
those that have not had a registration statement under the Securities Act of
1933, as amended (the "Securities Act") declared effective or do not have a
class of securities registered under the Exchange Act) are required to comply
with the new or revised financial accounting standards. The JOBS Act provides
that a company can elect to opt out of the extended transition period and comply
with the requirements that apply to non-emerging growth companies but any such
election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised
and it has different application dates for public or private companies, we, as
an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard.
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Warrant and Forward Purchase Securities Liability
We account for our outstanding public warrants and private placement warrants
and the securities underlying the forward purchase agreement with the Sponsor
(the "FPA" and such securities, the "FPS") in accordance with guidance in
Financial Accounting Standards Board Accounting Standards Codification ("ASC")
815-40, Derivatives and Hedging - Contracts in Entity's Own Equity, under which
the warrants and FPS do not meet the criteria for equity classification and must
be recorded as liabilities. As both the public and private placement warrants
and FPS meet the definition of a derivative under ASC 815, Derivatives and
Hedging, they are measured at fair value at inception and at each reporting date
in accordance with the guidance in ASC 820, Fair Value Measurement, with any
subsequent changes in fair value recognized in the statement of operations in
the period of change.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity.
Shares of Class A common stock subject to mandatory redemption (if any) are
classified as liability instruments and measured at fair value. Shares of
conditionally redeemable Class A common stock (including shares of Class A
common stock that feature redemption rights that are either within the control
of the holder or subject to redemption upon the occurrence of uncertain events
not solely within our control) are classified as temporary equity. At all other
times, shares of Class A common stock are classified as stockholders' equity.
All of the Public Shares feature certain redemption rights that are considered
to be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of September 30, 2021 and December 31, 2020, 25,000,000
and 0 shares of Class A common stock subject to possible redemption,
respectively, are presented as temporary equity outside of the stockholders'
equity section of our balance sheet. We recognize any subsequent changes in
redemption value immediately as they occur and adjust the carrying value of
redeemable Class A common stock to the redemption value at the end of each
reporting period. Immediately upon the closing of the Initial Public Offering,
we recognized the accretion from initial book value to redemption amount value
of redeemable Class A common stock. The change in the carrying value of
redeemable Class A common stock also resulted in charges against Additional
paid-in capital and Accumulated deficit.
Net Income (Loss) Per Share of Common Stock
We comply with the accounting and disclosure requirements of ASC 260, Earnings
Per Share. Net income (loss) per share of common stock is computed by dividing
net income (loss) applicable to stockholders by the weighted average number of
shares of common stock outstanding for the applicable periods. We apply the
two-class method in calculating earnings per share. Accretion associated with
the redeemable shares of Class A common stock is excluded from earnings per
share as the redemption value approximates fair value.
We have not considered the effect of the warrants to purchase an aggregate
of 8,533,333 shares of Class A common stock sold in the Initial Public Offering
and the Private Placement in the calculation of diluted earnings per share,
since their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted earnings per share of common stock is the same as basic
earnings per share of common stock for the periods presented.
Off-Balance Sheet Arrangements and Contractual Obligations
As of September 30, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
Recent Accounting Pronouncements
See Note 2-"Summary of Significant Accounting Policies" to our unaudited
condensed financial statements in Part I, Item 1 of this Quarterly Report on
Form 10-Q for information regarding recent accounting pronouncements.
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