SEC Filing Summary: CF Acquisition Corp. VIII (10-Q)
Reporting period: Quarter ended September 30, 2023; filed November 13, 2023. The filing is by CF Acquisition Corp. VIII, a SPAC pursuing a merger with XBP Europe, Inc. It is not an operating-company quarterly report for XBP Global Holdings, Inc.; the company name in the request metadata does not match the registrant named in this filing.
Business context and transaction
The registrant had not commenced operations and had no operating revenue through September 30, 2023. Its activities were formation, its 2021 IPO, and efforts to complete a business combination. Stockholders approved the proposed XBP Europe transaction on August 24, 2023, but closing remained subject to customary conditions, including regulatory approvals. The SPAC’s deadline to complete a combination was extended to March 16, 2024.
Financial results and position
| Metric | Quarter ended September 30, 2023 | Nine months ended September 30, 2023 |
|---|---|---|
| Operating revenue | None | None |
| Net income (loss) | $(19.045) million | $(21.025) million |
| Interest income | $0.169 million | $0.753 million |
| Fair-value loss on FPS liability | $16.859 million | $17.546 million |
| Fair-value loss on warrant liability | $1.280 million | $1.417 million |
- The quarterly loss was principally driven by a noncash increase in the estimated fair value of the forward purchase securities (FPS) liability. That liability was $20.050 million at quarter-end, measured using Level 3 inputs; management used a 100% probability of transaction completion.
- At September 30, cash outside the trust was $65,000; trust-account cash was $7.835 million. Total assets were $7.918 million, total liabilities $33.295 million, and working capital deficit approximately $11.566 million.
- Sponsor loans totaled $9.906 million at carrying value. Under the merger terms described, specified sponsor loans are to convert into Class A shares at $10 per share upon closing, subject to the merger agreement.
- Net cash from operating activities was zero for the nine-month period. Investing activities provided $24.364 million, largely reflecting trust-account withdrawals, while financing activities used $24.340 million, including public-share redemptions. Cash increased by $23,846.
- No revenue-based margins are meaningful because the SPAC had no operating revenue.
Changes versus prior comparable periods
- Third-quarter net loss increased from $0.811 million in 2022 to $19.045 million in 2023. The main change was the FPS fair-value loss; the prior-year quarter included a $1.103 million warrant fair-value gain.
- Nine-month results moved from net income of $3.566 million in 2022 to a net loss of $21.025 million in 2023. The prior-year period included a $4.726 million warrant fair-value gain and $0.249 million FPS fair-value gain; 2023 recorded losses on both liabilities.
- Trust-account funds fell from $31.446 million at December 31, 2022 to $7.835 million at September 30, 2023, amid extensions and redemptions. Public shares subject to possible redemption declined from 2,960,098 to 706,319.
Outlook, risks, and unusual items
- Management said sponsor borrowing capacity and working capital were expected to cover needs through the earlier of the transaction closing or one year from the report. The filing also states that the March 16, 2024 mandatory liquidation date raises substantial doubt about the company’s ability to continue as a going concern if the business combination is not completed.
- At the September extension vote, 730,270 public shares were redeemed for approximately $8.075 million. Separately, holders of 669,661 shares had tendered for redemption in connection with the proposed transaction, subject to closing.
- The filing notes potential uncertainty from the Inflation Reduction Act’s 1% excise tax on certain share repurchases; management did not expect it to apply to the contemplated 2023 transaction redemptions based on its assumptions, but said a tax obligation could reduce cash available.
- CF&Co., an affiliate of the sponsor, agreed to waive the $9.350 million business-combination marketing fee if the XBP Europe transaction closes. The filing reports no pending or contemplated litigation known to management and no material changes to previously disclosed risk factors.
Key facts investors should verify
- Whether the XBP Europe transaction closed, obtained required regulatory approvals, and met all merger conditions after the filing date.
- Final redemption totals and cash remaining in the trust account at closing, including the status of the 669,661 shares tendered for redemption.
- The treatment and conversion into shares of the approximately $9.906 million of sponsor loans, and the resulting dilution and capitalization.
- The transaction’s final equity consideration, which the filing describes by reference to $220 million less XBP Europe closing indebtedness, divided by $10, plus 1,330,650 shares.
- The FPS liability valuation and the assumptions behind its 100% transaction-completion probability, as well as any excise-tax exposure.
- Whether the transaction closed before the March 16, 2024 deadline or the SPAC pursued another extension; if no combination is completed, public warrants may expire worthless.