Filing summary
Entity note: Although the request identifies XBP Global Holdings, Inc., this 10-Q is filed by CF Acquisition Corp. VIII, a SPAC. It reports no XBP operating-company results; its proposed target is XBP Europe, Inc. The filing covers the quarter and six months ended June 30, 2023, and was signed August 14, 2023.
Business context and reporting period
CF Acquisition Corp. VIII had not commenced operations and had generated no operating revenue. Its activity consisted of formation, its 2021 IPO, and efforts to complete a business combination. It had an agreement to combine with XBP Europe, Inc.; closing remained subject to stockholder approval and other customary conditions, including regulatory approvals.
Financial results and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| 2023 net income (loss) | $(386,084) | $(1,979,609) |
| 2022 net income (loss) | $965,436 | $4,377,849 |
| 2023 interest income | $239,555 | $584,364 |
| 2023 operating costs and franchise taxes | $525,547 | $1,135,109 |
| 2023 basic and diluted loss per share | $(0.05) | $(0.22) |
- Net results include significant noncash fair-value movements. In Q2 2023, the company recorded a $353,091 warrant-liability gain and a $427,499 FPS-liability loss. For the first half, it recorded a $137,916 warrant-liability loss and a $687,157 FPS-liability loss, plus $578,107 of interest expense on sponsor loans and mandatorily redeemable shares.
- At June 30, 2023, total assets were $15.95 million, including $15.71 million in the Trust Account and only $25,000 in operating cash. Total liabilities were $14.42 million; sponsor-loan carrying value was $9.49 million. Working-capital deficit was approximately $10.67 million, versus $9.21 million at December 31, 2022. Stockholders’ deficit was $13.99 million.
- Trust assets fell from $31.45 million at December 31, 2022, largely reflecting redemptions. Public shares subject to redemption declined from 2,960,098 to 1,436,589. The company reported $10.81 per redeemable share at June 30, versus $10.53 at year-end.
- For the first half, net cash from operating activities was reported as zero. Investing activities provided $16.32 million, primarily from Trust Account withdrawals; financing activities used $16.34 million, primarily for public-share redemptions. Operating cash ended at $25,000, down $16,154 from year-end.
- Trust funds were moved in March 2023 from government-securities or money-market investments to an interest-bearing bank demand account. The filing gives no operating-company revenue, gross margin, or operating cash-flow metrics because the SPAC had no operating business.
Material changes, outlook, and risks
- Compared with 2022, the company shifted from net income to losses in both the quarter and first half. Lower fair-value gains (and, in the first half, fair-value losses and sponsor-loan-related interest expense) were key drivers; 2022 results also included substantial warrant-liability gains.
- Management stated it expected sponsor borrowing capacity and working capital to cover needs through the earlier of a business-combination closing or one year from the report. Sponsor loans generally bear no interest and, under the XBP Europe transaction terms, outstanding amounts were to convert into Class A shares at $10 per share at closing.
- The then-current deadline to complete a business combination was September 16, 2023. Failure to close or obtain another extension would require winding up and redeeming public shares; warrants would expire worthless. The company disclosed substantial doubt about its ability to continue as a going concern if it did not complete a combination by the deadline.
- The XBP Europe transaction’s stated share-consideration formula starts with $220 million less XBP Europe closing indebtedness, divided by $10 per share, plus 1,330,650 shares. The filing anticipated closing during the combination period, but did not assure completion. In August 2023, the company filed a preliminary proxy seeking an extension to March 16, 2024, assuming all six one-month extensions were used.
- For the XBP Europe combination, Cantor Fitzgerald agreed to waive the $9.35 million marketing fee, conditional on closing. A 1% federal excise tax on certain repurchases could affect available cash, although management did not expect it to apply to redemptions in the same tax year as a consummated combination based on guidance then available.
- Risks include the short remaining transaction timetable, substantial working-capital deficit and reliance on sponsor financing, potential redemptions, fair-value estimation uncertainty, and economic or geopolitical volatility. Management reported disclosure controls were effective at quarter-end and no material change in internal controls; it reported no pending or contemplated litigation known to management.
Important facts for investors to verify
- Confirm the correct issuer and security: this filing is for CF Acquisition Corp. VIII, not an operating-company 10-Q for XBP Global Holdings, Inc.
- Check subsequent filings for whether the XBP Europe transaction closed, whether the proposed extension was approved, and the final deadline and transaction terms.
- Reconcile sponsor-loan balances and conversion into equity at closing, including the share count and resulting dilution.
- Verify Trust Account cash, redemption levels, and any excise-tax or other transaction costs that could reduce cash available after closing.
- Assess the fair-value assumptions for the FPS liability and warrants; those movements materially affected reported earnings but are not operating performance.