References to the "Company," "our," "us" or "we" refer to CF Acquisition Corp.
VIII. 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 July 8, 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
VIII, 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 statements for our initial public offering (the "Initial Public
Offering") became effective on March 11, 2021. On March 16, 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"), including 3,000,000 Units sold upon the partial exercise of the
underwriters' over-allotment option, 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-fourth 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 March 16, 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 540,000 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 $5,400,000.
20
Following the closing of the Initial Public Offering and sale of Private
Placement Units on March 16, 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.
We have until March 16, 2022 (12 months from the closing of the Initial Public
Offering) (or a later date approved by the Company's stockholders in accordance
with our 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 June 30, 2021 and December 31, 2020, we had $66,065 and $25,000,
respectively, of cash in our operating account. As of June 30, 2021 and December
31, 2020, we had a working capital deficit of $547,513 and a working capital of
$23,579, respectively. As of June 30, 2021 and December 31, 2020, we had $5,138
and $0 of interest income in the Trust Account available to pay taxes.
Our liquidity needs through June 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 approximately $79,000 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 June
30, 2021 and December 31, 2020, there was approximately $617,500 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 June 30, 2021 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective 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 the 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.
21
For the three months ended June 30, 2021, we had net income of approximately
$438,000, which consisted of approximately $1,092,000 of gain from the change in
the fair value of warrants liability and approximately $5,000 in interest income
on investments held in the Trust Account, which were partially offset by
approximately $324,000 in general and administrative expenses, approximately
$245,000 of loss from the change in fair value of the forward purchase
securities liability, approximately $60,000 of franchise tax expense and $30,000
in administrative expenses paid to the Sponsor.
For the six months ended June 30, 2021, we had a net loss of approximately
$1,386,000, which consisted of approximately $2,103,000 of loss from the change
in fair value of the forward purchase securities liability, approximately
$402,000 in general and administrative expenses, approximately $81,000 of
franchise tax expense and $35,000 in administrative expenses paid to the
Sponsor, which were partially offset by approximately $1,230,000 of gain from
the change in fair value of warrants liability and approximately $5,000 in
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 the Company's 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
$9,350,000, which is equal to, in the aggregate, 3.5% of the gross proceeds of
the base offering in the Initial Public Offering and 5.5% of the gross proceeds
from the exercise of the underwriters' over-allotment option.
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 June 30, 2021 and December 31,
2020, we had borrowed approximately $617,500 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 June 30, 2021 and December 31, 2020, we had
accounts payable outstanding to the Sponsor for such expenses paid on our behalf
of approximately $597,000 and $0, respectively.
Critical Accounting Policies and Estimates
The Company has identified the following as its 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.
Going Concern
In connection with the Company's going concern considerations in accordance with
ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue
as a Going Concern", the Company has until March 16, 2022 to consummate a
Business Combination. The Company's mandatory liquidation date raises
substantial doubt about the entity's ability to continue as a going concern.
These financial statements do not include any adjustments related to the
recovery of the recorded assets or the classification of the liabilities should
the Company be unable to continue as a going concern. As discussed in Note 1, in
the event of a mandatory liquidation, within ten business days, the Company will
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 the
Company to pay franchise and income taxes (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then outstanding Public
Shares.
22
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.
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 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 are measured at fair value. Shares of
conditionally redeemable Class A common stock (including 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. Our
Class A common stock features certain redemption rights that are considered to
be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of June 30, 2021 and December 31, 2020, 23,582,375 and
0, respectively, shares of Class A common stock subject to possible redemption
are presented as temporary equity, outside of the stockholders' equity section
of our balance sheets.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of ASC Topic 260, Earnings
Per Share. Net income per common share is computed by dividing net income (loss)
applicable to common stockholders by the weighted average number of shares of
common stock outstanding for the period. We have not considered the effect of
the warrants sold in the Initial Public Offering and the concurrent Private
Placement to purchase an aggregate of 6,385,000 , shares of Class A common stock
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
common share is the same as basic earnings per common share for the period.
Our statement of operations includes a presentation of income (loss) per share
for common stock subject to redemption in a manner similar
to the two-class method of income per share. Net income per share, basic and
diluted for shares of Class A common stock are calculated by dividing the
interest income (loss) earned on cash equivalents and investments and held in
the Trust Account, net of applicable taxes available to be withdrawn from the
Trust Account, by the weighted average number of shares of Class A common stock
outstanding for the applicable period, excluding 540,000 shares of Class A
common stock held by the Sponsor, which is not subject to redemption. Net income
(loss) per share, basic and diluted for shares of Class B common stock is
calculated by dividing the net income (loss), less income attributable to the
shares of redeemable Class A common stock by the weighted average number of
shares of Class B common stock and 540,000 shares of Class A common stock held
by the Sponsor outstanding for the applicable period.
23
Off-Balance Sheet Arrangements and Contractual Obligations
As of June 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.
© Edgar Online, source Glimpses