NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1—Description
of Organization, Business Operations and Basis of Presentation
CF
Acquisition Corp. VIII (the “Company”) was incorporated in Delaware on July 8, 2020. The Company was formed 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 “Business Combination”).
Although
the Company is not limited in its search for target businesses to a particular industry or sector for the purpose of consummating a Business
Combination, the Company intends to focus its search on companies operating in the financial services, healthcare, real estate services,
technology and software industries. The Company is an early stage and emerging growth company and, as such, the Company is subject to
all of the risks associated with early stage and emerging growth companies.
As
of March 31, 2022, the Company had not commenced operations. All activity through March 31, 2022 relates to the Company’s formation,
the initial public offering (the “Initial Public Offering”) described below, and the Company’s efforts toward locating
and completing a suitable Business Combination. The Company will not generate any operating revenues until after the completion of its
initial Business Combination, at the earliest. The Company has generated non-operating income in the form of interest income on investments
in money market funds that invest in U.S. Treasury Securities and cash equivalents from the proceeds derived from the Initial Public
Offering, and recognized changes in the fair value of the warrant liability and FPS (as defined below) liability as other income (expense).
The
Company’s sponsor is CFAC Holdings VIII, LLC (the “Sponsor”). The registration statements for the Initial Public Offering
became effective on March 11, 2021. On March 16, 2021, the Company 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, which is described in Note 3. 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 30 days after the completion of the Business Combination and will expire 5
years after the completion of the Business Combination, or earlier upon redemption or liquidation.
Simultaneously
with the closing of the Initial Public Offering, the Company 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, generating gross proceeds of $5,400,000, which
is described in Note 4. The proceeds of the Private Placement Units were deposited into the Trust Account (as defined below) and will
be used to fund the redemption of the Public Shares subject to the requirements of applicable law (see Note 4).
Offering
costs amounted to approximately $4,900,000, consisting of $4,500,000 of underwriting fees and approximately $400,000 of other costs.
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 (see
Note 4) was placed in a trust account (the “Trust Account”) located in the United States at J.P. Morgan Chase 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
the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as
described below.
Initial
Business Combination - The Company’s management has broad discretion with respect to the specific application of the net proceeds
of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to
be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of
at least 80% of the assets held in the Trust Account (excluding taxes payable on income earned on the Trust Account) at the time of the
agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
CF
ACQUISITION CORP. VIII
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
Company will provide the holders of the Public Shares (the “public stockholders”) with the opportunity to redeem all or a
portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called
to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder
approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public
Share). The per share amount to be distributed to public stockholders who redeem the Public Shares will not be reduced by the Marketing
Fee (as defined in Note 4). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s
warrants. The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either immediately
prior to or upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination.
If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,
the Company will, pursuant to its amended and restated certificate of incorporation (as may be amended, the “Amended and Restated
Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange
Commission (the “SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however,
stockholder approval of the Business Combination is required by law, or the Company decides to obtain stockholder approval for business
or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether
they vote for or against the proposed Business Combination. If the Company seeks stockholder approval in connection with a Business Combination,
the initial stockholders (as defined below) have agreed to vote their Founder Shares (as defined in Note 4), their Private Placement
Shares and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the
initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and any Public Shares held by
the initial stockholders in connection with the completion of a Business Combination.
Notwithstanding
the foregoing, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming its
shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the Initial Public Offering, without
the prior consent of the Company.
The
Sponsor and the Company’s officers and directors (the “initial stockholders”) have agreed not to propose an amendment
to the Amended and Restated Certificate of Incorporation (i) that would affect the substance or timing of the Company’s obligation
to allow redemption in connection with its initial Business Combination or to redeem 100% of the Public Shares if the Company does not
complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination
activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with
any such amendment.
Forward
Purchase Contract — In connection with the Initial Public Offering, the Sponsor committed, pursuant to a forward purchase contract
with the Company (the “FPA”), to purchase, in a private placement for gross proceeds of $10,000,000 to occur concurrently
with the consummation of an initial Business Combination, 1,000,000 of the Company’s Units on substantially the same terms as the
sale of Units in the Initial Public Offering at $10.00 per Unit, and 250,000 shares of Class A common stock (for no additional consideration)
(the securities issuable pursuant to the FPA, the “FPS”). The funds from the sale of the FPS will be used as part of the
consideration to the sellers in the initial Business Combination; any excess funds from this private placement will be used for working
capital in the post-transaction company. This commitment is independent of the percentage of stockholders electing to redeem their Public
Shares and provides the Company with a minimum funding level for the initial Business Combination.
Failure
to Consummate a Business Combination — The Company has until September 30, 2022 (which was originally March 16, 2022 but has
been extended by the stockholder approval of the Extension (as defined below)), or a later date approved by the Company’s stockholders
in accordance with the Amended and Restated Certificate of Incorporation, to consummate a Business Combination (the “Combination
Period”). If the Company is unable to complete a Business Combination by the end of the Combination Period, the Company 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 the Company to pay 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 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
the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of
clauses (ii) and (iii), to the Company’s 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 the Company’s warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
On
March 8, 2022, at a special meeting of the Company’s stockholders, the Company’s stockholders approved an extension of the
expiration of the period in which the Company has to consummate a Business Combination from March 16, 2022 to September 30, 2022 (the
“Extension”). In connection with the approval of the Extension, on March 9, 2022, the Sponsor loaned the Company an aggregate
amount of $4,424,015 ($0.20 for each Public Share that was not redeemed in connection with the Extension) (the “Extension Loan”).
The proceeds of the Extension Loan were deposited in the Trust Account on March 9, 2022.
CF
ACQUISITION CORP. VIII
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete
a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial
Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the
Company fails to complete a Business Combination within the Combination Period. In the event of such distribution, it is possible that
the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than $10.00
per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be
liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account
below $10.00 per share. This liability will not apply with respect to any claims by a third party who executed a waiver of any right,
title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a
third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company will seek to
reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all
vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account, except for the Company’s
independent registered public accounting firm.
Liquidity
and Capital Resources
As
of both March 31, 2022 and December 31, 2021, the Company had $25,000 of cash in its operating account. As of March 31, 2022 and December
31, 2021, the Company had a working capital deficit of approximately $6,819,000 and $2,634,000, respectively. As of March 31, 2022 and
December 31, 2021, $0 and approximately $18,000 of interest income earned on funds held in the Trust Account was available to pay taxes.
The
Company’s liquidity needs through March 31, 2022 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”) (see Note 4), the proceeds from the sale of the Private Placement Units not held in the Trust Account, and the Sponsor Loan
(as defined below). The Company fully repaid the Pre-IPO Note upon completion of the Initial Public Offering. In addition, in order to
finance transaction costs in connection with a Business Combination, the Sponsor has committed up to $1,750,000 to be provided to the
Company to fund the Company’s expenses relating to investigating and selecting a target business and other working capital requirements
after the Initial Public Offering and prior to the Company’s initial Business Combination (the “Sponsor Loan”). If
the Sponsor Loan is insufficient, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors
may, but are not obligated to, provide the Company with Working Capital Loans (as defined in Note 4).
On
March 9, 2022, the Company borrowed $4,424,015 ($0.20 for each Public Share that was not redeemed in connection with the Extension) from
the Sponsor pursuant to the Extension Loan, which was deposited in the Trust Account.
As
of March 31, 2022 and December 31, 2021, there was approximately $5,452,000 and $734,000, respectively, outstanding under the loans payable
by the Company to the Sponsor. As of March 31, 2022 and December 31, 2021, these amounts included approximately $1,028,000 and $734,000,
respectively, outstanding under the Sponsor Loan, and $4,424,105 and $0, respectively, outstanding under the Extension Loan. As of both
March 31, 2022 and December 31, 2021, there were no amounts outstanding under the Working Capital Loans.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or
an affiliate of the Sponsor, or certain of the Company’s officers and directors, to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company 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 Business Combination.
Basis
of Presentation
The
unaudited condensed financial statements are presented in accordance with accounting principles generally accepted in the United States
of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC and reflect all adjustments, consisting only
of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position
as of March 31, 2022 and the results of operations and cash flows for the periods presented. Certain information and disclosures normally
included in unaudited condensed financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and
regulations. Interim results are not necessarily indicative of results for a full year or any future period. The accompanying unaudited
condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the
Form 10-K and the final prospectus filed by the Company with the SEC on March 31, 2022 and March 15, 2021, respectively.
CF
ACQUISITION CORP. VIII
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Going
Concern
In
connection with the Company’s going concern considerations in accordance with guidance in the Financial Accounting Standards Board
(the “FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements –
Going Concern, the Company has until September 30, 2022 to consummate a Business Combination. The Company’s mandatory liquidation
date, if a Business Combination is not consummated, raises substantial doubt about the Company’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 taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares.
Emerging
Growth Company
The
Company is an “emerging growth company”, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of 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 Securities Act registration statement 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 an emerging growth 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 an election to opt out is irrevocable. The Company has 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, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard.
This
may make comparison of the Company’s unaudited condensed financial statements with another public company that is neither an emerging
growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because
of the potential differences in accounting standards used.
Note 2—Summary
of Significant Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements
is the determination of the fair value of the warrant liability and FPS liability. Such estimates may be subject to change as more current
information becomes available and accordingly, the actual results could differ significantly from those estimates.
CF
ACQUISITION CORP. VIII
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had no cash equivalents in its operating account as of both March 31, 2022 and December 31, 2021. The Company’s investments
held in the Trust Account as of both March 31, 2022 and December 31, 2021 were comprised of cash equivalents.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the Federal Deposit Insurance Corporation maximum coverage limit of $250,000, and cash equivalents held in
the Trust Account. For the three months ended March 31, 2022 and 2021, the Company has not experienced losses on these accounts and management
believes the Company is not exposed to significant risks on such accounts.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, Fair Value Measurement,
approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature, with the exception of
the warrant and FPS liabilities.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consisted of legal, accounting, and other costs incurred in connection with the preparation for the Initial Public Offering. These
costs, together with the underwriting discount, were charged against the carrying value of the shares of Class A common stock upon the
completion of the Initial Public Offering.
Warrant
and FPS Liability
The
Company accounts for the warrants and FPS as either equity-classified or liability-classified instruments based on an assessment of the
specific terms of the warrants and FPS using applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity
(“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the
warrants and FPS are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and meet all of the requirements for equity classification under ASC 815, including whether the warrants and FPS are indexed
to the Company’s own shares of common stock and whether the warrant holders could potentially require “net cash settlement”
in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of issuance of the warrants and execution of the FPA and as of each subsequent
quarterly period end date while the warrants and FPS are outstanding. For issued or modified warrants and for instruments to be issued
pursuant to the FPA that meet all of the criteria for equity classification, such warrants and instruments are required to be recorded
as a component of additional paid-in capital at the time of issuance. For issued or modified warrants and for the FPA instruments that
do not meet all the criteria for equity classification, such warrants and instruments are required to be recorded at their initial fair
value on the date of issuance, and on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified
warrants and the FPS are recognized on the statements of operations in the period of the change.
The
Company accounts for the warrants and FPS in accordance with guidance in ASC 815-40, Derivatives and Hedging - Contracts in Entity’s
Own Equity (“ASC 815-40”), pursuant to which the warrants and FPS do not meet the criteria for equity classification
and must be recorded as liabilities. See Note 7 for further discussion of the pertinent terms of the warrants and Note 8 for further
discussion of the methodology used to determine the fair value of the warrants and FPS.
CF
ACQUISITION CORP. VIII
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Class A
Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares
of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and measured at fair value.
Shares of conditionally redeemable Class A common stock (including shares of 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 the
Company’s control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as
stockholders’ equity. All of the Public Shares feature certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2022 and December 31, 2021, 22,120,073
and 25,000,000 shares of Class A common stock subject to possible redemption, respectively, are presented as temporary equity outside
of the stockholders’ equity section of the Company’s balance sheets. The Company recognizes any subsequent changes in redemption
value immediately as they occur and adjusts the carrying value of redeemable Class A common stock to the redemption value at the end
of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial
book value to redemption amount value of redeemable Class A common stock. This method would view the end of the reporting period as if
it were also the redemption date for the security. The change in the carrying value of redeemable Class A common stock also resulted
in charges against Additional paid-in capital and Accumulated deficit.
Net
Income (Loss) Per Share of Common Stock
The
Company complies with the accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per share of
common stock is computed by dividing net income (loss) applicable to stockholders by the weighted average number of shares of common
stock outstanding for the applicable periods. The Company applies the two-class method in calculating earnings per share and allocates
net income (loss) pro-rata to shares of Class A common stock subject to possible redemption, nonredeemable shares of Class A common stock
and shares of Class B common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case all
classes of common stock share pro-rata in the net income (loss) of the Company. Accretion associated with the redeemable shares of Class
A common stock is excluded from earnings per share as the redemption value approximates fair value.
The
Company has not considered the effect of the warrants to purchase an aggregate of 6,385,000 shares of Class A common stock sold in the
Initial Public Offering and Private Placement in the calculation of diluted earnings per share, because their exercise is contingent
upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted earnings per share
of common stock is the same as basic earnings per share of common stock for the periods presented.
The
following table reflects the calculation of basic and diluted net income (loss) per share of common stock:
| |
For the Three Months Ended March 31, 2022 | | |
For the Three Months Ended March 31, 2021 | |
| |
Class A – Public shares | | |
Class A – Private placement shares | | |
Class B – Common stock | | |
Class A – Public shares | | |
Class A – Private placement shares | | |
Class B – Common stock | |
Basic and diluted net income (loss) per share of common stock | |
| | |
| | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | 2,663,197 | | |
$ | 59,584 | | |
$ | 689,632 | | |
$ | (796,432 | ) | |
$ | (17,203 | ) | |
$ | (1,009,479 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average number of shares of common stock outstanding | |
| 24,136,022 | | |
| 540,000 | | |
| 6,250,000 | | |
| 4,444,444 | | |
| 96,000 | | |
| 5,633,333 | |
Basic and diluted net income (loss) per share of common stock | |
$ | 0.11 | | |
$ | 0.11 | | |
$ | 0.11 | | |
$ | (0.18 | ) | |
$ | (0.18 | ) | |
$ | (0.18 | ) |
CF
ACQUISITION CORP. VIII
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”) which requires
an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to
be sustained upon examination by tax authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense.
No
amounts were accrued for the payment of interest and penalties as of both March 31, 2022 and December 31, 2021. The Company is currently
not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company is subject to income tax examinations by major taxing authorities since inception.
Recent
Accounting Pronouncements
In
August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity’s Own Equity. The standard is expected to reduce complexity and improve
comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity.
The ASU also enhances information transparency by making targeted improvements to the related disclosures guidance. Additionally, the
amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments.
The new standard will become effective for the Company beginning January 1, 2024, can be applied using either a modified retrospective
or a fully retrospective method of transition and early adoption is permitted. Management is currently evaluating the impact of the new
standard on the Company’s unaudited condensed financial statements.
The
Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company’s unaudited condensed financial statements.
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 3—Initial Public Offering
Pursuant to the Initial Public Offering, the Company
sold 25,000,000 Units at a price of $10.00 per Unit, including 3,000,000 Units sold upon the partial exercise of the underwriters’
over-allotment option. Each Unit consists of one share of Class A common stock and one-fourth of one redeemable warrant (each, a
“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price
of $11.50 per share, subject to adjustment (see Note 6). No fractional warrants will be issued upon separation of the Units and only whole
warrants will trade. On March 16, 2021, the Sponsor forfeited 75,000 shares of Class B common stock due to the underwriters not exercising
the remaining portion of the over-allotment option, such that the initial stockholders would collectively own 20% of the Company’s
issued and outstanding shares of common stock after the Initial Public Offering (not including the Private Placement Shares).
Note 4—Related Party Transactions
Founder Shares
On July 8, 2020, the Sponsor purchased 5,750,000
shares (the “Founder Shares”) of the Company’s Class B common stock, par value $0.0001 (“Class B common stock”)
for an aggregate price of $25,000. On March 8, 2021, the Sponsor transferred an aggregate of 20,000 Founder Shares to two of the independent
directors of the Company. As a result, the Company recognized approximately $29,000 of compensation expense at fair value that was presented
in the Company’s statements of operations for the three months ended March 31, 2022. On March 11, 2021, the Company effected a 1.1-for-1
stock split. All share and per share amounts have been retroactively adjusted. On March 16, 2021, the Sponsor forfeited 75,000 shares
of Class B common stock, due to the underwriter not exercising the over-allotment option in full, such that the initial stockholders would
collectively own 20% of the Company’s issued and outstanding shares of common stock after the Initial Public Offering (not including
the Private Placement Shares), resulting in an aggregate of 6,250,000 Founder Shares outstanding and held by the Sponsor and two of the
independent directors of the Company. The Founder Shares will automatically convert into shares of Class A common stock at the time of
the consummation of the Business Combination and are subject to certain transfer restrictions.
The initial stockholders have agreed, subject
to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the
completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last reported sale price
of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20-trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,
or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results
in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Private Placement Units
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of 540,000 Private Placement Units at a price of $10.00 per Private Placement
Unit ($5,400,000 in the aggregate). Each Private Placement Unit consists of one share of Class A common stock (the “Private Placement
Shares”) and one-fourth of one warrant (each whole warrant, a “Private Placement Warrant”). Each Private Placement Warrant
is exercisable for one share of Class A common stock at a price of $11.50 per share. On March 25, 2022, the Sponsor transferred 2,500
shares of Class A common stock to an independent director of the Company. As a result, the Company recognized approximately $20,000 of
compensation expense at fair value that was presented in the Company’s statement of operations for the three months ended March
31, 2022. The proceeds from the Private Placement Units have been added to the net proceeds from the Initial Public Offering held in the
Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will
expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by
the Sponsor or its permitted transferees.
The Private Placement Warrants will expire five
years after the completion of the Business Combination or earlier upon redemption or liquidation.
The Sponsor and the Company’s officers and
directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Units until 30 days
after the completion of the initial Business Combination.
Underwriter
Cantor Fitzgerald & Co. (“CF&Co.”),
the lead underwriter of the Initial Public Offering, is an affiliate of the Sponsor (see Note 5).
Business Combination Marketing Agreement
The Company has engaged CF&Co. as an advisor
in connection with the Business Combination to assist the Company in holding meetings with its stockholders to discuss any potential Business
Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing
the Company’s securities, and assist the Company with its press releases and public filings in connection with any Business Combination.
The Company will pay CF&Co. a cash fee (the “Marketing Fee”) for such services upon the consummation of the Business Combination
in an amount equal to $9,350,000, which is equal to 3.5% of the gross proceeds of the base offering in the Initial Public Offering and
5.5% of the gross proceeds from the partial exercise of the underwriter’s over-allotment option.
Related Party Loans
The Sponsor made available to the Company, under
the Pre-IPO Note, up to $300,000 to be used for a portion of the expenses of the Initial Public Offering. Prior to the closing of the
Initial Public Offering, the amount outstanding under the Pre-IPO Note was approximately $79,000. The Pre-IPO Note was non-interest bearing
and was repaid in full upon the completion of the Initial Public Offering.
In order to finance transaction costs in connection
with an intended initial Business Combination, the Sponsor has committed, pursuant to the Sponsor Loan, up to $1,750,000 to be provided
to the Company to fund the Company’s 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, for the period commencing upon the consummation of the Initial Public Offering and concluding upon the Company’s initial
Business Combination. For the three months ended March 31, 2022 and 2021, the Company paid $30,000 and approximately $5,000, respectively,
for office space and administrative fees.
On March 9, 2022, the Company borrowed $4,424,015
($0.20 for each Public Share that was not redeemed in connection with the Extension) from the Sponsor pursuant to the Extension Loan,
which was deposited in the Trust Account.
As of March 31, 2022 and December 31, 2021, there
was approximately $5,452,000 and $734,000, respectively, outstanding under the loans payable by the Company to the Sponsor. As of March
31, 2022 and December 31, 2021, these amounts included approximately $1,028,000 and $734,000, respectively, outstanding under the Sponsor
Loan, and $4,424,105 and $0, respectively, outstanding under the Extension Loan.
If the Sponsor Loan is insufficient to cover the
working capital requirements of the Company, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company
completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released
to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that
a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms
of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of both
March 31, 2022 and December 31, 2021, there were no amounts outstanding under the Working Capital Loans.
The Sponsor pays expenses on the Company’s
behalf. The Company reimburses the Sponsor for such expenses paid on its behalf. The unpaid balance is included in Payables to related
parties on the accompanying unaudited condensed balance sheets. As of both March 31, 2022 and December 31, 2021, the Company had accounts
payable outstanding to the Sponsor for such expenses paid on the Company’s behalf of approximately $571,000.
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5—Commitments and Contingencies
Registration Rights
Pursuant to a registration rights agreement entered
into on March 11, 2021, the holders of Founder Shares and Private Placement Units (and component securities) are entitled to registration
rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock). These holders are
entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The Company granted CF&Co. a 45-day option
to purchase up to 3,300,000 additional Units to cover over-allotments at the Initial Public Offering price less the underwriting discounts
and commissions. On March 16, 2021, simultaneously with the closing of the Initial Public Offering, CF&Co. partially exercised the
over-allotment option for 3,000,000 additional Units and advised the Company that it would not exercise the remaining portion of the over-allotment
option.
CF&Co. was paid a cash underwriting discount
of $4,400,000 in connection with the Initial Public Offering.
The Company also engaged a qualified independent
underwriter to participate in the preparation of the registration statement and exercise the usual standards of “due diligence”
in respect thereto. The Company paid the independent underwriter a fee of $100,000 upon the completion of the Initial Public Offering
in consideration for its services and expenses as the qualified independent underwriter. The qualified independent underwriter received
no other compensation.
Business Combination Marketing Agreement
The Company has engaged CF&Co. as an advisor
in connection with the Company’s Business Combination (see Note 4).
Risks and Uncertainties
Management continues to evaluate the impacts of
the COVID-19 pandemic and the military conflict in Ukraine on the financial markets and on the industry, and has concluded that while
it is reasonably possible that the pandemic and the conflict could have an effect on the Company’s financial position, results of
its operations and/or search for a target company, the specific impacts are not readily determinable as of the date of the unaudited condensed
financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of
these uncertainties.
Note 6 - Stockholders’ Deficit
Class A Common Stock – The
Company is authorized to issue 160,000,000 shares of Class A common stock, par value $0.0001 per share. As of March 31, 2022 and December
31, 2021, there were 540,000 shares of Class A common stock issued and outstanding, excluding 22,120,073 and 25,000,000 shares subject
to possible redemption, respectively. The outstanding shares of Class A common stock comprise of 540,000 shares included in the Private
Placement Units. The shares of Class A common stock included in the Private Placement Units do not contain the same redemption features
contained in the Public Shares.
Class B Common Stock – The
Company is authorized to issue 40,000,000 shares of Class B common stock, par value $0.0001 per share. Holders of Class B common stock
are entitled to one vote for each share. As of both March 31, 2022 and December 31, 2021, there were 6,250,000 shares of Class B common
stock issued and outstanding. In connection with the underwriter advising the Company that it would not exercise the remaining portion
of the over-allotment option, the Sponsor forfeited 75,000 shares of Class B common stock, such that the initial stockholders would collectively
own 20% of the Company’s issued and outstanding shares of common stock after the Initial Public Offering (not including the Private
Placement Shares).
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Prior to the consummation of the Business Combination,
only holders of Class B common stock have the right to vote on the election of directors. Holders of Class A common stock are not entitled
to vote on the election of directors during such time. Holders of Class A common stock and Class B common stock vote together as a single
class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of the Business Combination on a one-for-one basis, subject to adjustment. In
the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts
offered in the Initial Public Offering and related to the closing of the Business Combination, the ratio at which shares of Class B common
stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of
Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares
of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted
basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering
plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Business Combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination).
On March 8, 2021, the Sponsor transferred an aggregate
of 20,000 Founder Shares to two of the independent directors of the Company. On March 11, 2021, the Company effected a 1.1-for-1 stock
split. On March 16, 2021, the Sponsor forfeited 75,000 shares of Class B common stock, resulting in an aggregate of 6,250,000 Founder
Shares outstanding and held by the Sponsor and two of the independent directors of the Company. Information contained in the unaudited
condensed financial statements has been retroactively adjusted for this split.
Preferred Stock - The Company is
authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. As of both March 31, 2022 and December
31, 2021, there were no shares of preferred stock issued or outstanding.
Note 7 – Warrants
Public Warrants may only be exercised for a whole
number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable
30 days after the completion of a Business Combination; provided that the Company has an effective registration statement under the Securities
Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available.
The Company has agreed that as soon as practicable,
but in no event later than 15 business days after the closing of a Business Combination, the Company will use its commercially reasonable
best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common
stock issuable upon exercise of the Public Warrants. The Company will use its commercially reasonable best efforts to cause the same to
become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the
expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration
statement covering the shares of Class A common stock issuable upon exercise of the Public Warrants is not effective within a specified
period following the consummation of Business Combination, warrant holders may, until such time as there is an effective registration
statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants
on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.
If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The
Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Private Placement Warrants are identical to
the Public Warrants, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private
Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to
certain limited exceptions.
Additionally, the Private Placement Warrants will
be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company may redeem the Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | at any time during the exercise
period; |
| ● | upon a minimum of 30 days’
prior written notice of redemption; |
| ● | if, and only if, the last reported
sale price of the Company’s common stock equals or exceeds $18.00 per share for any 20-trading days within a 30-trading day period
ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders; and |
| ● | if, and only if, there is a
current registration statement in effect with respect to the shares of common stock underlying such warrants. |
If the Company calls the Public Warrants for redemption,
management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”
as described in the warrant agreement.
The exercise price and number of shares of Class
A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend,
or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common
stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If
the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the
Trust Account, holders of the warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire
worthless.
Note 8—Fair Value Measurements on
a Recurring Basis
Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs to valuation
techniques used in measuring fair value.
The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements). These three levels of the fair value hierarchy are:
| ● | Level 1 measurements - unadjusted
observable inputs such as quoted prices for identical instruments in active markets; |
| ● | Level 2 measurements - inputs
other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3 measurements - unobservable
inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived
from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the
fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
The following tables
present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March
31, 2022 and December 31, 2021 and indicate the fair value hierarchy of the inputs that the Company utilized to determine such fair value.
March 31, 2022
Description | |
Quoted
Prices in Active
Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | | |
Total | |
Assets: | |
| | |
| | |
| | |
| |
Assets held in Trust Account U.S. Treasury Securities | |
$ | 225,624,745 | | |
$ | - | | |
$ | - | | |
$ | 225,624,745 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liability | |
$ | - | | |
$ | 2,107,050 | | |
$ | - | | |
$ | 2,107,050 | |
FPS liability | |
| - | | |
| - | | |
| 1,959,196 | | |
| 1,959,196 | |
Total Liabilities | |
$ | - | | |
$ | 2,107,050 | | |
$ | 1,959,196 | | |
$ | 4,066,246 | |
December 31, 2021
Description | |
Quoted
Prices in Active
Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | | |
Total | |
Assets: | |
| | |
| | |
| | |
| |
Assets held in Trust Account U.S. Treasury Securities | |
$ | 250,017,673 | | |
$ | - | | |
$ | - | | |
$ | 250,017,673 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liability | |
$ | - | | |
$ | 5,300,188 | | |
$ | - | | |
$ | 5,300,188 | |
FPS liability | |
| - | | |
| - | | |
| 2,006,525 | | |
| 2,006,525 | |
Total Liabilities | |
$ | - | | |
$ | 5,300,188 | | |
$ | 2,006,525 | | |
$ | 7,306,713 | |
Level 1 assets as of
both March 31, 2022 and December 31, 2021 include investments in a money market fund that holds U.S. Treasury securities. The Company
uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine
the fair value of its investments.
Warrant Liability
The warrants are accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liability on the Company’s balance sheet. The warrant liability is
measured at fair value at inception and on a recurring basis, with any subsequent changes in fair value presented within change in fair
value of warrant liability in the Company’s statement of operations.
Initial Measurement
The Company established the initial fair value
for the warrants on March 16, 2021, the date of the closing of the Initial Public Offering. The Public Warrants and Private Placement
Warrants were measured at fair value on a recurring basis, using an Options Pricing Model (the “OPM”). The Company allocated
the proceeds received from (i) the sale of Units in the Initial Public Offering (which is inclusive of one share of Class A common stock
and one-fourth of one Public Warrant), (ii) the sale of the Private Placement Units (which is inclusive of one share of Class A common
stock and one-fourth of one Private Placement Warrant), and (iii) the issuance of Class B common stock, first to the warrants based on
their fair values as determined at initial measurement, with the remaining proceeds allocated to shares of Class A common stock subject
to possible redemption. The warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company utilized the OPM to value the warrants
as of March 16, 2021, with any subsequent changes in fair value recognized in the statement of operations. The estimated fair value of
the warrant liability as of March 16, 2021, was determined using Level 3 inputs. Inherent in the OPM are assumptions related to expected
share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimated the volatility of its shares
of common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate was
based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants.
The expected life of the warrants was assumed to be equivalent to their remaining contractual term. The dividend rate was based on the
historical rate, which the Company anticipated to remain at zero. The aforementioned warrant liability is not subject to qualified hedge
accounting.
The following table provides quantitative information
about the inputs utilized by the Company in the fair value measurement of the warrants as of March 16, 2021:
| |
March 16, 2021 (Initial Measurement) | |
Risk-free interest rate | |
| 1.05 | % |
Expected term (years) | |
| 5 | |
Expected volatility | |
| 17.5 | % |
Exercise price | |
$ | 11.50 | |
Stock price | |
$ | 10.00 | |
Dividend yield | |
| 0.0 | % |
Subsequent Measurement
During the year ended December 31, 2021, the fair
value measurement of the Public Warrants was reclassified from Level 3 to Level 2 due to the use of an observable quoted price in an inactive
market. As the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement
Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of the Private Placement
Warrants is equivalent to that of the Public Warrants. As such, the Private Placement Warrants were reclassified from Level 3 to Level
2 during the year ended December 31, 2021. There were no transfers into or out of Level 3 fair value measurement during the three months
ended March 31, 2022.
As of March 31, 2022, the aggregate fair values
of the Private Placement Warrants and Public Warrants were approximately $0.04 million and $2.1 million respectively. As of December 31,
2021, the aggregate fair values of the Private Placement Warrants and Public Warrants were approximately $0.1 million and $5.2 million,
respectively.
The following tables present the changes in the
fair value of warrant liability for the period from March 16, 2021 through March 31, 2021 and for the three months ended March 31, 2022:
| |
Private Placement | | |
Public | | |
Warrant Liability | |
Fair value as of March 16, 2021 | |
$ | 175,851 | | |
$ | 8,141,250 | | |
$ | 8,317,101 | |
Change in valuation inputs or other assumptions(1) | |
| (2,916 | ) | |
| (135,000 | ) | |
| (137,916 | ) |
Fair value as of March 31, 2021 | |
$ | 172,935 | | |
$ | 8,006,250 | | |
$ | 8,179,185 | |
| |
Private Placement | | |
Public | | |
Warrant Liability | |
Fair value as of December 31, 2021(2) | |
$ | 112,063 | | |
$ | 5,188,125 | | |
$ | 5,300,188 | |
Change in valuation inputs or other assumptions(1) | |
| (67,513 | ) | |
| (3,125,625 | ) | |
| (3,193,138 | ) |
Fair value as of March 31, 2022 | |
$ | 44,550 | | |
$ | 2,062,500 | | |
$ | 2,107,050 | |
(1) | Changes in valuation inputs
or other assumptions are recognized in Change in fair value of warrant liability in the statement of operations. |
(2) | Due to the use of quoted prices in an inactive market and the use of observable inputs for similar assets or liabilities (Level 2) for Public Warrants and Private Placement Warrants, respectively, subsequent to initial measurement, the Company had transfers out of Level 3 totaling approximately $7.1 million during the year ended December 31, 2021. |
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
FPS Liability
The liability for the FPS was valued using an adjusted
net assets method, which is considered to be a Level 3 fair value measurement. Under the adjusted net assets method utilized, the aggregate
commitment of $10.0 million pursuant to the FPA is discounted to present value and compared to the fair value of the shares of common
stock and warrants to be issued pursuant to the FPA. The fair value of the shares of common stock and warrants to be issued under the
FPA are based on the public trading price of the Units issued in the Initial Public Offering. The excess (liability) or deficit (asset)
of the fair value of the shares of common stock and warrants to be issued compared to the $10.0 million fixed commitment is then reduced
to account for the probability of consummation of the Business Combination. The primary unobservable input utilized in determining the
fair value of the FPS is the probability of consummation of the Business Combination. As of March 31, 2022 and December 31, 2021, the
probability assigned to the consummation of the Business Combination was 70% and 80%, respectively. The probability was determined based
on a hybrid approach of both observed success rates of business combinations for special purpose acquisition companies and affiliates
of the Sponsor’s track record for consummating similar transactions.
The following tables present the changes in the
fair value of the FPS liability for the period from March 16, 2021 through March 31, 2021 and for the three months ended March 31, 2022:
| |
FPS Liability | |
Fair value as of March 16, 2021 | |
$ | 1,933,236 | |
Change in valuation inputs or other assumptions(1) | |
| (75,604 | ) |
Fair value as of March 31, 2021 | |
$ | 1,857,632 | |
| |
FPS Liability | |
Fair value as of December 31, 2021 | |
$ | 2,006,525 | |
Change in valuation inputs or other assumptions(1) | |
| (47,329 | ) |
Fair value as of March 31, 2022 | |
$ | 1,959,196 | |
(1) | Changes in valuation inputs or other assumptions are recognized in Change in fair value of FPS liability in the statement of operations. |
Note 9—Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued and determined
that there have been no events that have occurred that would require adjustments to the disclosures in the unaudited condensed financial
statements.