Filing summary
Entity mismatch: The supplied filing is for CF Acquisition Corp. VIII, a blank-check company, not XBP Global Holdings, Inc. It covers the quarter ended March 31, 2021 and was signed May 17, 2021. Verify the filing belongs to the intended company before relying on it.
Business context and reporting period
CF Acquisition Corp. VIII was formed to pursue a business combination, with a stated focus on financial services, healthcare, real estate services, technology and software. It had not begun operating or generating operating revenue by quarter-end. The company completed its IPO on March 16, 2021, raising $250 million from 25 million units, and sold $5.4 million of private-placement units. The filing provides no prior-year comparable operating quarter; its balance sheet compares with December 31, 2020.
Financial position and results
- Revenue: No operating revenue. The company reported no trust-account interest income for the quarter.
- Results: Net loss was $1.823 million, comprising $77,761 in general and administrative costs, $5,187 in related-party administrative expense, $20,450 in franchise tax expense, a $1.858 million loss from the change in fair value of forward-purchase securities liability, partly offset by a $137,916 gain from the change in warrant liability. Results primarily reflect formation and IPO-related activity and noncash fair-value changes.
- Cash flow: Operating cash flow was zero; investing cash flow was negative $250 million as funds were deposited into the trust account, offset by $250 million of net financing cash flow. Cash outside the trust remained $25,000.
- Assets and liquidity: Total assets were $250.978 million, including $250 million held in trust and $952,883 of prepaid expenses. Working capital was reported as $422,860, versus $23,579 at December 31, 2020. Trust funds are restricted for the business combination or permitted redemptions.
- Liabilities and equity: Total liabilities were $10.592 million, including $8.179 million of warrant liability and $1.858 million of forward-purchase securities liability. Current liabilities were $555,024, including approximately $508,200 outstanding under the sponsor loan. Stockholders’ equity was $5.0 million; $235.386 million of Class A shares was presented as temporary equity subject to possible redemption.
- Margins and debt: Operating margins are not meaningful without revenue. No conventional third-party debt is reported; the company had sponsor-loan borrowings and derivative liabilities.
Material changes, outlook and risks
- The quarter’s activity included the IPO, trust funding and related transactions. No meaningful year-over-year comparison is provided.
- Management said available working capital and sponsor borrowing capacity should meet needs through the earlier of a business combination or one year from the filing. The sponsor committed up to $1.75 million under the sponsor loan; about $508,200 was drawn at March 31. Additional working-capital loans, if needed, are not committed.
- The company had until March 16, 2022 to complete a business combination, unless stockholders approved an extension. Failure to complete one would require liquidation and redemption of public shares; warrants could expire worthless. The filing states this deadline raises substantial doubt about the company’s ability to continue as a going concern.
- A $9.35 million marketing fee to Cantor Fitzgerald & Co., an affiliate of the sponsor, is payable upon completion of a business combination. A forward-purchase contract provides for a proposed $10 million purchase by the sponsor at that time.
- Warrants and forward-purchase securities were classified as liabilities and remeasured at fair value each period using Level 3 inputs. Resulting noncash gains or losses may cause material earnings volatility. The filing describes correction of previously issued balance-sheet amounts after the company changed its warrant and forward-purchase accounting treatment.
- Management concluded disclosure controls were ineffective due to a material weakness related to the accounting treatment of warrants and forward-purchase securities. Management said additional analyses were performed and the filed statements fairly present the reported period.
- Management noted COVID-19 could affect the company’s position or target search, but the specific impact was not determinable. No legal proceedings or material changes to previously disclosed risk factors were reported.
Important facts to verify
- Confirm the filing entity: this is CF Acquisition Corp. VIII, not XBP Global Holdings, Inc.
- Confirm the reported working-capital figure against the balance-sheet line items; the filing reports $422,860.
- Review the corrected warrant and forward-purchase accounting, Level 3 valuation assumptions, and effect of fair-value changes on reported earnings.
- Assess the going-concern disclosure, business-combination deadline, sponsor-loan availability and any extension or transaction developments after the reporting date.
- Review potential dilution, redemption levels, the $9.35 million contingent marketing fee and the terms of the sponsor forward-purchase commitment.