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 June 30, 2022, the Company had not commenced
operations. All activity through June 30, 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 from direct investments in U.S. government debt securities
and investments in money market funds that invest in U.S. government debt securities and classified as 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 the 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 the 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. The Extension Loan will not bear interest and will be repayable by the Company
to the Sponsor or its designees upon consummation of an initial Business Combination. As a result of the approval of the Extension and the Extension Loan, the amount in the trust account was increased
to approximately $10.20 per Public Share.
On August 12, 2022, the Company filed a preliminary proxy statement in connection with a special meeting
of its stockholders (the “Extension Meeting”), at which the Company will seek the approval of its stockholders to extend the
expiration of the period in which it must complete a business combination from September 30, 2022 to March 16, 2023. The Company’s
public stockholders will have the ability to redeem their Public Shares in connection with the Extension Meeting, which could result in
a smaller number of Public Shares outstanding following the Extension Meeting.
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 June 30, 2022 and December 31, 2021, the
Company had approximately $1,475,000 and $25,000, respectively, of cash in its operating account. As of June 30, 2022 and December 31,
2021, the Company had a working capital deficit of approximately $6,801,000 and $2,634,000, respectively. As of June 30, 2022 and December
31, 2021, $291,000 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 June
30, 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. On June 30, 2022, the Company entered into a Working Capital Loan (the
“2022 Working Capital Loan”) with the Sponsor in the amount of up to $1,000,000 in connection with advances the Sponsor
will make to the Company for working capital expenses. Both the Extension Loan and the 2022 Working Capital Loan bear no interest
and are due and payable on the date on which the Company consummates its initial Business Combination. The principal balance may be
prepaid at any time. As a result of the approval of the Extension and the Extension Loan, the amount in the trust account was increased
to approximately $10.20 per Public Share.
As of June 30, 2022 and December 31, 2021, there
was approximately $6,902,000 and $734,000, respectively, outstanding under the loans payable by the Company to the Sponsor. As of June
30, 2022 and December 31, 2021, these amounts included approximately $1,750,000 and $734,000, respectively, outstanding under the Sponsor
Loan, $4,424,105 and $0, respectively, outstanding under the Extension Loan, and approximately $728,000 and $0, respectively, 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 June 30, 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 unaudited condensed 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 unaudited condensed 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 June 30, 2022 and December 31, 2021. Certain of the Company’s investments held in the Trust Account as of both
June 30, 2022 and December 31, 2021 were comprised of cash equivalents.
Available-for-Sale Debt Securities
Certain of the Company’s investments held
in the Trust Account as of June 30, 2022 comprised of a direct investment in U.S. government treasury bills.
The Company accounts for its investment in debt
securities in accordance with the guidance in ASC 320, Investments — Debt and Equity Securities. When the Company has the
ability and positive intent to hold debt securities until maturity, such securities are classified as held-to-maturity and carried at
amortized cost. None of the Company’s debt securities met the criteria for held-to-maturity classification as of June 30, 2022.
As the Company does not have the ability or positive intent to hold its debt securities until maturity, the securities are classified
as available-for-sale. Unrealized gains and losses from available-for-sale debt securities carried at fair value are reported as a separate
component of Accumulated other comprehensive income (loss), net of deferred income taxes, in stockholders’ equity. Interest income
recognized on the unaudited condensed statements of operations reflects accretion of discount. Investments in debt securities are recorded
on a trade-date basis.
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 and investments in the U.S.
government debt securities held in the Trust Account. For the three and six months ended June 30, 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 condensed balance sheets, primarily due to their short-term nature, with the exception of the available-for-sale debt
securities, and 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
8 for further discussion of the pertinent terms of the warrants and Note 9 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 June 30, 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’ deficit section
of the Company’s condensed 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. 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
June 30, 2022 | | |
For the Three Months Ended
June 30, 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 per share of common stock | |
| | |
| | |
| | |
| | |
| | |
| |
| Numerator: | |
| | |
| | |
| | |
| | |
| | |
| |
| Allocation of net income | |
$ | 738,688 | | |
$ | 18,033 | | |
$ | 208,715 | | |
$ | 344,221 | | |
$ | 7,435 | | |
$ | 86,055 | |
| Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average number of shares of common stock outstanding | |
| 22,120,073 | | |
| 540,000 | | |
| 6,250,000 | | |
| 25,000,000 | | |
| 540,000 | | |
| 6,250,000 | |
Basic and diluted net income per share of common stock | |
$ | 0.03 | | |
$ | 0.03 | | |
$ | 0.03 | | |
$ | 0.01 | | |
$ | 0.01 | | |
$ | 0.01 | |
| |
|
For the Six Months Ended
June 30, 2022 |
|
|
For the Six Months Ended
June 30, 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) |
|
$ |
3,384,097 |
|
|
$ |
79,032 |
|
|
$ |
914,720 |
|
|
$ |
(973,067 |
) |
|
$ |
(21,018 |
) |
|
$ |
(391,318 |
) |
| Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of shares of common stock outstanding |
|
|
23,122,479 |
|
|
|
540,000 |
|
|
|
6,250,000 |
|
|
|
14,779,006 |
|
|
|
319,227 |
|
|
|
5,943,370 |
|
Basic and diluted net income (loss) per share of common stock |
|
$ |
0.15 |
|
|
$ |
0.15 |
|
|
$ |
0.15 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.07 |
) |
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. As of both June 30, 2022 and December 31, 2021, the Company
had deferred tax assets with a full valuation allowance recorded against them.
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 June 30, 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.
The Company’s current taxable income primarily
consists of interest income on investments held in the Trust Account. The Company’s general and administrative costs are generally
considered start-up costs and are not currently deductible. During the three and six months ended June 30, 2022 and 2021, the Company
recorded income tax expense of approximately $40,000 and $0, respectively. The Company’s effective tax rate for the three and six
months ended June 30, 2022 and 2021 was approximately 0.9% and 0%, respectively, which differs from the federal statutory rate mainly
due to the change in fair value of warrant and FPS liabilities, which is not taxable and not deductible, and start-up costs which are
currently not deductible as they are deferred for tax purposes, partially offset by release of a portion of the valuation allowance against
net operating losses utilized during the three months ended June 30, 2022.
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 7). 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 no compensation expense and approximately $29,000 of compensation expense
at fair value that was presented in the Company’s statements of operations for the three and six months ended June 30, 2022, respectively.
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.
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 no compensation expense
and approximately $20,000 of compensation expense at fair value that was presented in the Company’s statement of operations for
the three and six months ended June 30, 2022, respectively. 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.
CF ACQUISITION CORP. VIII
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 consummation of the
Company’s initial Business Combination. For both the three months ended June 30, 2022 and 2021, the Company paid $30,000 for office
space and administrative fees. For the six months ended June 30, 2022 and 2021, the Company paid $60,000 and approximately $35,000, 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. The Extension Loan bears no interest and is due and payable on the date on which the Company
consummates its initial Business Combination. As a result of the approval of the Extension and the Extension Loan, the amount in the trust account was increased
to approximately $10.20 per Public Share.
As of June 30, 2022 and December 31, 2021, there
was approximately $6,902,000 and $734,000, respectively, outstanding under the loans payable by the Company to the Sponsor. As of June
30, 2022 and December 31, 2021, these amounts included approximately $1,750,000 and $734,000, respectively, outstanding under the Sponsor
Loan, $4,424,105 and $0, respectively, outstanding under the Extension Loan, and approximately $728,000 and $0, respectively, outstanding
under the Working Capital Loans.
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. On June 30, 2022, the
Company entered into the 2022 Working Capital Loan with the Sponsor in the amount of up to $1,000,000. The 2022 Working Capital Loan
bears no interest and is due and payable on the date on which the Company consummates its initial Business Combination. The principal
balance may be prepaid at any time. 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.
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 condensed balance sheets. As of June 30, 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 $1,450,000 and $571,000, respectively.
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 – Available-for-Sale Debt Securities
The following table presents the amortized cost,
gross unrealized gains (losses), fair value and other information for the available-for-sale debt securities held in the Trust Account:
| June 30, 2022 | |
Amortized Cost | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value | |
| U.S. government debt securities(1) (2) | |
$ | 224,485,500 | | |
$ | - | | |
$ | (329,250 | ) | |
$ | 224,156,250 | |
| (1) | Contractual maturities are one year or less. |
| (2) | One individual debt security was in a continuous unrealized
loss position for less than 12 months and for which no allowance for credit loss has been recorded. |
The Company did not recognize the unrealized
losses in earnings on its available-for-sale debt securities during the three and six months ended June 30, 2022, because it was determined
that such losses were due to non-credit factors. Additionally, as of June 30, 2022, the Company neither intended to sell nor did it believe
that it was more likely than not that it will be required to sell these securities before recovery of their amortized cost basis.
The Company did not have any sales of its available-for-sale
debt securities during the three and six months ended June 30, 2022.
Note 7 —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 June 30, 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 June 30, 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 June 30, 2022 and December
31, 2021, there were no shares of preferred stock issued or outstanding.
Note 8 – 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 9—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 June 30, 2022 and December 31,
2021 and indicate the fair value hierarchy of the inputs that the Company utilized to determine such fair value.
June 30, 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. government debt securities | |
$ | 225,727,465 | | |
$ | - | | |
$ | - | | |
$ | 225,727,465 | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Warrant liability | |
$ | - | | |
$ | 1,677,978 | | |
$ | - | | |
$ | 1,677,978 | |
| FPS liability | |
| - | | |
| - | | |
| 1,301,570 | | |
| 1,301,570 | |
| Total Liabilities | |
$ | - | | |
$ | 1,677,978 | | |
$ | 1,301,570 | | |
$ | 2,979,548 | |
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. government debt 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 June 30, 2022 and December
31, 2021 include investments in a money market fund classified as cash equivalents; the fund holds U.S. government debt securities. As
of June 30, 2022, Level 1 assets also include a direct investment in the U.S. government treasury bills classified as available-for-sale-debt
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 the 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 and six months ended June 30, 2022.
The following tables present the changes in the
fair value of warrant liability for the three and six months ended June 30, 2022, for the period from March 16, 2021 through June 30,
2021, and for the three months ended June 30, 2021:
| | |
Private
Placement | | |
Public | | |
Warrant
Liability | |
| Fair value as of December 31, 2021 | |
$ | 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 | |
| Change in valuation inputs or other assumptions(1) | |
| (9,072 | ) | |
| (420,000 | ) | |
| (429,072 | ) |
| Fair value as of June 30, 2022 | |
$ | 35,478 | | |
$ | 1,642,500 | | |
$ | 1,677,978 | |
| | |
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 | |
| Change in valuation inputs or other assumptions(1) | |
| (23,085 | ) | |
| (1,068,750 | ) | |
| (1,091,835 | ) |
| Fair value as of June 30, 2021(2) | |
$ | 149,850 | | |
$ | 6,937,500 | | |
$ | 7,087,350 | |
| (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 three and six months ended June 30, 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 June 30, 2022 and December 31, 2021,
the probability assigned to the consummation of the Business Combination was 43% 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 three and six months ended June 30, 2022, for the period from March 16, 2021 through March 31,
2021, and for the three months ended June 30, 2021:
| | |
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 | |
| Change in valuation inputs or other assumptions(1) | |
| (657,626 | ) |
| Fair value as of June 30, 2022 | |
$ | 1,301,570 | |
| | |
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 | |
| Change in valuation inputs or other assumptions(1) | |
| 245,264 | |
| Fair value as of June 30, 2021 | |
$ | 2,102,896 | |
| (1) | Changes
in valuation inputs or other assumptions are recognized in Change in fair value of FPS liability in the statement of operations. |
Note 10—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 other than the below.
On August 12, 2022, the Company filed a preliminary proxy statement in connection with a stockholders meeting
to vote on a proposed extension of time for the Company to consummate a business combination from September 30, 2022 to March 16, 2023.