Business context and reporting period
This Form 10-Q covers the three months ended March 31, 2023. The filing is by CF Acquisition Corp. VIII, a SPAC and pre-combination shell company—not XBP Global Holdings, Inc. It had no operating business or revenue. It had agreed to merge with XBP Europe, Inc.; the proposed post-transaction name was XBP Europe Holdings, Inc.
Key financial metrics
| Metric | Q1 2023 / March 31, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None |
| Net income (loss) | $(1.59) million | Q1 2022: $3.41 million income |
| Operating loss | $(0.61) million | Q1 2022: $(0.41) million |
| Trust account interest income | $0.34 million | Q1 2022: $0.006 million |
| Operating cash flow | $0 | Q1 2022: $0 |
| Cash outside trust | $25,000 | December 31, 2022: $41,154 |
| Trust account | $15.47 million | December 31, 2022: $31.45 million |
| Working capital deficit | Approximately $10.12 million | December 31, 2022: approximately $9.21 million |
| Sponsor loans payable | $9.12 million carrying amount | December 31, 2022: $8.20 million |
| Total liabilities | $14.04 million | December 31, 2022: $12.14 million |
No meaningful operating margins apply because the company had no operating revenue. Net loss per share was $0.17 in Q1 2023, compared with net income per share of $0.11 in Q1 2022.
Material changes versus the prior comparable period
- Results shifted from net income to net loss. Q1 2022 included a $3.19 million gain from changes in warrant fair value and $0.58 million of other income. In Q1 2023, warrant and forward purchase securities (FPS) fair-value changes produced losses of $0.49 million and $0.26 million, respectively; sponsor-loan and redeemable-share interest expense was $0.58 million.
- At the March 2023 extension vote, 1,523,509 public shares were redeemed for approximately $16.29 million. Redeemable shares fell to 1,436,589 from 2,960,098 at year-end 2022, and the trust balance declined to $15.47 million.
- On March 6, the Sponsor converted 5 million Class B shares into nonredeemable Class A shares. This changed share classification, not total equity funding.
- On March 16, the trust’s investments were liquidated and the remaining funds moved to an interest-bearing demand account at Citibank.
Outlook, risks and unusual items
- The company’s deadline to complete a business combination was extended to September 16, 2023. Management anticipated the XBP Europe transaction would close within that period, subject to stockholder approval, regulatory approvals and other customary conditions; completion was not assured.
- The company reported substantial doubt about its ability to continue as a going concern if it did not complete a business combination by the deadline. Management said Sponsor borrowing capacity and working capital were expected to cover needs through the earlier of a transaction closing or one year from the filing, but certain further Sponsor or insider loans were not committed.
- Sponsor loans carried no interest and were due at a business-combination closing. Under the proposed transaction, specified working-capital and extension loans were to convert into Class A shares at $10 per share, subject to the merger agreement.
- The filing identifies liquidation by September 16, 2023, if no further extension or transaction occurs, as a key risk. Public shares would be redeemed from the trust; warrants could expire worthless. The filing also notes possible exposure to the federal stock-repurchase excise tax, though management did not expect it to apply to redemptions in the same tax year as the proposed transaction under its stated assumptions.
- The Sponsor’s Third Working Capital Loan facility was up to $500,000. The Sponsor had also committed up to $344,781 in monthly extension-loan deposits through the deadline, as needed.
- The company reported no pending or contemplated litigation known to management, no off-balance-sheet arrangements, and no material changes to previously disclosed risk factors. Disclosure controls were judged effective at quarter-end; the filing reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the reporting entity and transaction: this filing is for CF Acquisition Corp. VIII and concerns the proposed XBP Europe combination, not an operating-company quarterly report for XBP Global Holdings, Inc.
- Check the transaction’s status, required approvals, closing conditions, deadline extensions and final merger consideration, including the effect of closing indebtedness and redemptions.
- Verify the amount and terms of outstanding Sponsor loans, further funding availability, and the proposed conversion of specified loans into shares.
- Assess the remaining trust balance and public shares outstanding after redemptions, and the risks if the transaction fails or the deadline is not extended.
- Review the fair-value assumptions for warrant and FPS liabilities and the potential effect of any excise tax or other transaction costs on cash available after closing.