UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
CF ACQUISITION CORP. IV
(Exact name of registrant as specified in its
charter)
Delaware | | 001-39824 | | 85-1042073 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
110 East 59th Street, New York, NY | | 10022 |
(Address of principal executive offices) | | (Zip Code) |
(212) 938-5000
Registrant’s telephone number, including
area code
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Units, each consisting of one share of Class A common stock and one-third of one redeemable warrant | | CFIVU | | The Nasdaq Stock Market LLC |
Class A common stock, par value
$0.0001 per share | | CFIV | | The Nasdaq Stock Market LLC |
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share | | CFIVW | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | | | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | | | Smaller reporting company | ☒ | |
| | | | Emerging growth company | ☒ | |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of August 14, 2023, there were 20,915,927 shares
of Class A common stock, par value $0.0001 per share, and 133,750 shares of Class B common stock, par value $0.0001 per share, of the
registrant issued and outstanding.
CF ACQUISITION CORP. IV
Quarterly Report on Form 10-Q
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CF ACQUISITION CORP. IV
CONDENSED BALANCE SHEETS
| |
June 30, 2023 | | |
December 31, 2022 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | |
| |
Current Assets: | |
| | |
| |
Cash | |
$ | 25,000 | | |
$ | 370,444 | |
Prepaid expenses | |
| 368,669 | | |
| — | |
Total Current Assets | |
| 393,669 | | |
| 370,444 | |
Cash held in the Trust Account | |
| 79,418,550 | | |
| 104,179,365 | |
Total Assets | |
$ | 79,812,219 | | |
$ | 104,549,809 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Deficit: | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accrued expenses | |
$ | 1,457,705 | | |
$ | 1,131,523 | |
Sponsor loan – promissory notes | |
| 6,053,832 | | |
| 3,008,656 | |
Franchise tax payable | |
| 50,000 | | |
| 40,050 | |
Payable to related party | |
| — | | |
| 38,686 | |
Other current liability | |
| — | | |
| 1,247,404 | |
Total Current Liabilities | |
| 7,561,537 | | |
| 5,466,319 | |
Warrant liability | |
| 1,077,800 | | |
| 1,309,000 | |
FPS liability | |
| 985,827 | | |
| 1,037,644 | |
Total Liabilities | |
| 9,625,164 | | |
| 7,812,963 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
Class A common stock subject to possible redemption, 7,549,677 and 10,251,420 shares issued and outstanding at redemption value of $10.38 and $10.06 per share as of June 30, 2023 and December 31, 2022, respectively | |
| 78,371,684 | | |
| 103,157,017 | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding as of both June 30, 2023 and December 31, 2022 | |
| — | | |
| — | |
Class A common stock, $0.0001 par value; 240,000,000 shares authorized; 13,366,250 and 1,000,000 shares issued and outstanding (excluding 7,549,677 and 10,251,420 shares subject to possible redemption) as of June 30, 2023 and December 31, 2022, respectively | |
| 1,337 | (1) | |
| 100 | |
Class B common stock, $0.0001 par value; 40,000,000 shares authorized; 133,750 and 12,500,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | |
| 13 | (1) | |
| 1,250 | |
Accumulated deficit | |
| (8,185,979 | ) | |
| (6,421,521 | ) |
Total Stockholders’ Deficit | |
| (8,184,629 | ) | |
| (6,420,171 | ) |
| |
| | | |
| | |
Total Liabilities, Stockholders’ Deficit and Commitments and Contingencies | |
$ | 79,812,219 | | |
$ | 104,549,809 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
CF ACQUISITION CORP. IV
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
For the Three Months Ended June 30, | | |
For the Six Months Ended June 30, | |
| |
2023 | | |
2022 | | |
2023 | |
|
2022 | |
| |
| | |
| | |
| |
|
| |
General and administrative costs | |
$ | 246,916 | | |
$ | 43,954 | | |
$ | 536,155 | |
|
$ | 315,414 | |
Administrative expenses - related party | |
| 30,000 | | |
| 30,000 | | |
| 60,000 | |
|
| 60,000 | |
Franchise tax expense | |
| 80,000 | | |
| 66,521 | | |
| 130,000 | |
|
| 116,521 | |
Loss from operations | |
| (356,916 | ) | |
| (140,475 | ) | |
| (726,155 | ) |
|
| (491,935 | ) |
Interest income on cash and investments held in the Trust Account | |
| 1,392,330 | | |
| 1,212,899 | | |
| 3,396,476 | |
|
| 1,225,230 | |
Interest expense on mandatorily redeemable Class A common stock | |
| (859,362 | ) | |
| — | | |
| (859,362 | ) |
|
| — | |
Changes in fair value of warrant liability | |
| 622,200 | | |
| 5,191,799 | | |
| 231,200 | |
|
| 10,975,199 | |
Changes in fair value of FPS liability | |
| (132,034 | ) | |
| 1,012,176 | | |
| 51,817 | |
|
| 1,206,184 | |
Net income before provision for income taxes | |
| 666,218 | | |
| 7,276,399 | | |
| 2,093,976 | |
|
| 12,914,678 | |
Provision for income taxes | |
| 486,496 | | |
| 192,748 | | |
| 896,866 | |
|
| 192,748 | |
Net income | |
$ | 179,722 | | |
$ | 7,083,651 | | |
$ | 1,197,110 | |
|
$ | 12,721,930 | |
| |
| | | |
| | | |
| | |
|
| | |
Weighted average number of shares of common stock outstanding: | |
| | | |
| | | |
| | |
|
| | |
Class A – Public shares | |
| 9,954,525 | | |
| 50,000,000 | | |
| 10,101,323 | |
|
| 50,000,000 | |
Class A – Private placement | |
| 3,581,964 | (1) | |
| 1,000,000 | | |
| 2,305,326 | (1) |
|
| 1,000,000 | |
Class B – Common stock | |
| 9,918,036 | (1) | |
| 12,500,000 | | |
| 11,194,674 | (1) |
|
| 12,500,000 | |
Basic and diluted net income per share: | |
| | | |
| | | |
| | |
|
| | |
Class A - Public shares | |
$ | 0.01 | | |
$ | 0.11 | | |
$ | 0.05 | |
|
$ | 0.20 | |
Class A - Private placement | |
$ | 0.01 | | |
$ | 0.11 | | |
$ | 0.05 | |
|
$ | 0.20 | |
Class B - Common stock | |
$ | 0.01 | | |
$ | 0.11 | | |
$ | 0.05 | |
|
$ | 0.20 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
CF ACQUISITION CORP. IV
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT
(UNAUDITED)
For the Three and Six Months Ended June 30,
2023
| |
Common Stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-In | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance - December 31, 2022 | |
| 1,000,000 | | |
$ | 100 | | |
| 12,500,000 | | |
$ | 1,250 | | |
$ | — | | |
$ | (6,421,521 | ) | |
$ | (6,420,171 | ) |
Accretion of redeemable shares of Class A common stock to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,746,007 | ) | |
| (2,746,007 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,017,388 | | |
| 1,017,388 | |
Balance – March 31, 2023 | |
| 1,000,000 | | |
$ | 100 | | |
| 12,500,000 | | |
$ | 1,250 | | |
$ | — | | |
$ | (8,150,140 | ) | |
$ | (8,148,790 | ) |
Share conversion (1) | |
| 12,366,250 | | |
| 1,237 | | |
| (12,366,250 | ) | |
| (1,237 | ) | |
| — | | |
| — | | |
| — | |
Accretion of redeemable shares of Class A common stock to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (215,561 | ) | |
| (215,561 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 179,722 | | |
| 179,722 | |
Balance – June 30, 2023 | |
| 13,366,250 | | |
$ | 1,337 | | |
| 133,750 | | |
$ | 13 | | |
$ | — | | |
$ | (8,185,979 | ) | |
$ | (8,184,629 | ) |
For the Three and Six Months Ended June 30,
2022
| |
Common Stock | | |
Additional | | |
| | |
Accumulated
Other | | |
Total | |
| |
Class A | | |
Class B | | |
Paid-In | | |
Accumulated | | |
Comprehensive | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Loss | | |
Deficit | |
Balance – December 31, 2021 | |
| 1,000,000 | | |
$ | 100 | | |
| 12,500,000 | | |
$ | 1,250 | | |
$ | 282,902 | | |
$ | (17,132,396 | ) | |
$ | — | | |
$ | (16,848,144 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,638,279 | | |
| — | | |
| 5,638,279 | |
Balance - March 31, 2022 | |
| 1,000,000 | | |
$ | 100 | | |
| 12,500,000 | | |
$ | 1,250 | | |
$ | 282,902 | | |
$ | (11,494,117 | ) | |
$ | — | | |
$ | (11,209,865 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 7,083,651 | | |
| — | | |
| 7,083,651 | |
Other comprehensive loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,086,111 | ) | |
| (1,086,111 | ) |
Balance – June 30, 2022 | |
| 1,000,000 | | |
$ | 100 | | |
| 12,500,000 | | |
$ | 1,250 | | |
$ | 282,902 | | |
$ | (4,410,466 | ) | |
$ | (1,086,111 | ) | |
$ | (5,212,325 | ) |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
CF ACQUISITION CORP. IV
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Six Months Ended
June 30, | |
| |
2023 | | |
2022 | |
Cash flows from operating activities | |
| | | |
| | |
Net income | |
$ | 1,197,110 | | |
$ | 12,721,930 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
General and administrative expenses paid by related party | |
| 1,254,209 | | |
| 1,193,673 | |
Interest income on cash and investments held in the Trust Account | |
| (3,396,476 | ) | |
| (1,225,230 | ) |
Interest expense on mandatorily redeemable Class A common stock | |
| 574,869 | | |
| — | |
Changes in fair value of warrant liability | |
| (231,200 | ) | |
| (10,975,199 | ) |
Changes in fair value of FPS liability | |
| (51,817 | ) | |
| (1,206,184 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 278,487 | | |
| 277,443 | |
Accrued expenses | |
| 326,182 | | |
| (653,363 | ) |
Franchise tax payable | |
| 9,950 | | |
| (158,070 | ) |
Net cash used in operating activities | |
| (38,686 | ) | |
| (25,000 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Cash deposited in the Trust Account | |
| (2,417,883 | ) | |
| — | |
Proceeds from the Trust Account to pay franchise taxes | |
| 80,000 | | |
| 37,628 | |
Proceeds from the Trust Account to pay income taxes | |
| 926,000 | | |
| — | |
Proceeds from the Trust Account to repay bank overdraft facility | |
| 1,247,404 | | |
| — | |
Purchase of available-for-sale debt securities held in the Trust Account | |
| — | | |
| (496,865,556 | ) |
Sale of cash equivalents held in the Trust Account | |
| — | | |
| 496,865,556 | |
Proceeds from the Trust Account to redeem Public Shares | |
| 28,321,769 | | |
| — | |
Net cash provided by investing activities | |
| 28,157,290 | | |
| 37,628 | |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from related party – Sponsor loan | |
| 3,045,176 | | |
| 562,044 | |
Payment of related party payable | |
| (1,940,051 | ) | |
| (574,672 | ) |
Repayment of bank overdraft facility | |
| (1,429,436 | ) | |
| — | |
Utilization of bank overdraft facility | |
| 182,032 | | |
| — | |
Redemption payment for Public Shares | |
| (28,321,769 | ) | |
| — | |
Net cash used in financing activities | |
| (28,464,048 | ) | |
| (12,628 | ) |
| |
| | | |
| | |
Net change in cash | |
| (345,444 | ) | |
| — | |
Cash - beginning of the period | |
| 370,444 | | |
| 25,000 | |
Cash - end of the period | |
$ | 25,000 | | |
$ | 25,000 | |
| |
| | | |
| | |
Supplemental disclosure of non-cash financing activities | |
| | | |
| | |
Prepaid expenses paid with payables to related party | |
$ | 647,156 | | |
$ | 81,000 | |
Supplemental disclosure of cash flow information | |
| | | |
| | |
Cash paid for income taxes | |
$ | 926,000 | | |
$ | — | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1—Description of Organization, Business Operations
and Basis of Presentation
CF Acquisition Corp. IV (the “Company”)
was incorporated in Delaware on January 23, 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 the 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, 2023, the Company had not commenced
operations. All activity through June 30, 2023 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 the Business Combination, at the earliest. During the
three and six months ended June 30, 2023, the Company generated non-operating income in the form of interest income from cash deposited
in a demand account held at a U.S. bank. During the three and six months ended June 30, 2022, the Company 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 invested
in U.S. government debt securities and classified as cash equivalents from the proceeds derived from the Initial Public Offering. During
the three and six months ended June 30, 2023 and 2022, the Company also recognized changes in the fair value of the warrant liability
and FPS (as defined below) liability as other income (loss).
The Company’s sponsor is CFAC Holdings IV,
LLC (the “Sponsor”). The registration statements for the Initial Public Offering became effective on December 22, 2020. On
December 28, 2020, the Company consummated the Initial Public Offering of 50,000,000 units (each, a “Unit” and with respect
to the shares of Class A common stock included in the Units sold, the “Public Shares”), including 5,000,000 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 $500,000,000, which is described in Note 3. Each Unit consists of one share of Class A common stock and one-third 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 1,000,000 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 $10,000,000, 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 $9,600,000,
consisting of $9,100,000 of underwriting fees and approximately $500,000 of other costs.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Following the closing of the Initial Public Offering
and sale of the Private Placement Units on December 28, 2020, an amount of $500,000,000 ($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 (“Continental”) acting as trustee, which were initially 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. To mitigate the risk of the Company being deemed to be an unregistered investment company (including under the subjective test
of Section 3(a)(1)(A) of the Investment Company Act) and thus be subject to regulation under the Investment Company Act, upon the 24-month
anniversary of the effective date of the registration statement for the Initial Public Offering, the Company instructed Continental, the
trustee with respect to the Trust Account, to liquidate any U.S. government treasury obligations or money market funds held in the Trust
Account and thereafter to hold all funds in the Trust Account in an interest bearing demand deposit account at a U.S. bank until the earlier
of the consummation of the Business Combination or the distribution of the Trust Account.
On December 22, 2022, at a special meeting of
the Company’s stockholders, the Company’s stockholders approved an extension of time for the Company to consummate the Business
Combination from December 28, 2022 to June 28, 2023 (or such shorter period of time as determined by the Company’s board of directors)
(the “First Extension”). In connection with the First Extension, the Sponsor loaned the Company an aggregate amount of $2,767,883
(the “First Extension Loan”). In connection with the stockholder vote to approve the First Extension, 39,748,580 Public Shares
were redeemed at $10.11 per share, resulting in a reduction of $402,003,579 in the amount held in the Trust Account.
On June 22, 2023, at a special meeting of the
Company’s stockholders, the Company’s stockholders approved an additional extension of time for the Company to consummate
the Business Combination from June 28, 2023 to March 28, 2024 (or such shorter period of time as determined by the Company’s board
of directors) (the “Second Extension”, and together with the First Extension, the “Extensions”). In connection
with the Second Extension, the Sponsor agreed to loan the Company an aggregate amount of up to $1,350,000 (the “Second Extension
Loan”), with (i) $150,000 (the “Monthly Amount”) deposited into the Trust Account in connection with the first funding
of the Second Extension Loan on June 28, 2023, and (ii) the Monthly Amount being deposited into the Trust Account for each calendar month
(commencing on July 29, 2023 and ending on the 28th day of each subsequent month), or portion thereof, that is needed
by the Company to complete the Business Combination. In connection with the stockholder vote to approve the Second Extension, 2,701,743
Public Shares were redeemed at approximately $10.48 per share, resulting in a reduction of $28,321,769 in the amount held in the Trust
Account.
Each of the First Extension Loan and the Second
Extension Loan bears no interest and is due and payable on the date on which the Company consummates the Business Combination. The principal
balance of each loan may be prepaid at any time with funds outside of the Trust Account.
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 the Business Combination. There is no assurance that the Company will be able to complete the Business Combination
successfully. The Company must complete one or more 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 Business Combination. However, the Company will only complete the 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. IV
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 the 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 the 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. 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 the Business Combination with respect to the Company’s warrants. The Company will proceed with the Business Combination
only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of the 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 the 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 the Business Combination, the initial stockholders
(as defined below) have agreed to vote their Founder Shares (as defined in Note 4), their Private Placement Shares (as defined in Note
4) and any Public Shares purchased during or after the Initial Public Offering in favor of the 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 the 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 the
Business Combination or to redeem 100% of the Public Shares if the Company does not complete the 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 $15,000,000 to occur concurrently with the consummation of the Business Combination,
1,500,000 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 375,000 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 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 Business Combination.
Failure to Consummate a Business Combination
— The Company has until March 28, 2024 (which was originally December 28, 2022 but has been extended by the Extensions), or a later
date approved by the Company’s stockholders in accordance with the Amended and Restated Certificate of Incorporation, to consummate
the Business Combination (the “Combination Period”). If the Company is unable to complete the 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, other than excise tax (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 the Business
Combination within the Combination Period.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The initial stockholders have agreed to waive
their liquidation rights from the Trust Account with respect to the Founder Shares and the Private Placement Shares if the Company fails
to complete the 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 the 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
underwriters and independent registered public accounting firm.
Liquidity and Capital Resources
As of June 30, 2023 and December 31, 2022, the
Company had $25,000 and approximately $370,000 of cash in its operating account, respectively. As of June 30, 2023 and December 31, 2022,
the Company had a working capital deficit of approximately $7,168,000 and $5,096,000, respectively. As of June 30, 2023 and December 31,
2022, approximately $1,733,000 and $1,022,000, respectively, of interest income earned on funds held in the Trust Account was available
to pay taxes.
The Company’s liquidity needs through June
30, 2023 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 $158,000 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, the Sponsor Loan (as defined below), the 2022 Working Capital
Loan (as defined below) and the 2023 Working Capital 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
loaned the Company $1,750,000 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 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 September 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, which 2022 Working Capital Loan has been fully drawn.
On December 22, 2022, the Company entered into
the First Extension Loan with the Sponsor pursuant to which the Sponsor loaned the Company $2,767,883 in the aggregate.
On June 22, 2023, the Company entered into the
Second Extension Loan with the Sponsor in the amount of up to $1,350,000. The funding of the initial Monthly Amount was deposited into
the Trust Account on June 28, 2023, and additional fundings of the Monthly Amount will be deposited into the Trust Account for each calendar
month thereafter (commencing on July 29, 2023 and ending on the 28th day of each subsequent month through March 28, 2024),
or portion thereof, that is needed by the Company to complete the Business Combination.
On June 30, 2023, the Company entered into a Working
Capital Loan (the “2023 Working Capital Loan”) with the Sponsor in the amount of up to $750,000 in connection with advances
the Sponsor will make to the Company for working capital expenses.
Each of the 2022 Working Capital Loan, the First
Extension Loan, the Second Extension Loan and the 2023 Working Capital Loan bears no interest and is due and payable on the date on which
the Company consummates the Business Combination. The principal balance of each loan may be prepaid at any time with funds outside of
the Trust Account.
As of June 30, 2023 and December 31, 2022, approximately
$6,054,000 and approximately $3,009,000, respectively, was outstanding under the loans payable by the Company to the Sponsor. As of June
30, 2023 and December 31, 2022, these amounts included $1,750,000 outstanding under the Sponsor Loan for both periods, $1,000,000 and
approximately $798,000, respectively, outstanding under the 2022 Working Capital Loan, approximately $386,000 and $0, respectively, outstanding
under the 2023 Working Capital Loan, approximately $2,768,000 and approximately $461,000, respectively, outstanding under the First Extension
Loan, and $150,000 and $0, respectively, outstanding under the Second Extension Loan.
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 the Business Combination or one
year from this filing. Over this time period, the Company will use 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 a
target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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, 2023 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 Annual Report on Form 10-K and the final prospectus filed by the
Company with the SEC on March 31, 2023 and December 28, 2020, respectively.
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 March 28, 2024 to
consummate the Business Combination. The Company’s mandatory liquidation date, if the 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, other than excise tax (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.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act
of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise
tax on certain repurchases (including redemptions) of stock by publicly traded U.S. corporations and certain U.S. subsidiaries of publicly
traded foreign corporations that occur after December 31, 2022. The excise tax is imposed on the repurchasing corporation itself and not
its stockholders from which the shares are repurchased. In addition, certain exceptions apply to the excise tax. Any redemption or other
repurchase that occurs after December 31, 2022, in connection with the Business Combination, extension vote or otherwise, may be subject
to the excise tax depending on a number of factors. The U.S. Department of the Treasury (the “Treasury Department”) has
authority to promulgate regulations and provide other guidance regarding the excise tax. In December 2022, the Treasury Department
issued Notice 2023-2, Initial Guidance Regarding the Application of the Excise Tax on Repurchases of Corporate Stock under Section
4501 of the Internal Revenue Code, indicating its intention to propose such regulations and issuing certain interim rules on which
taxpayers may rely. Under the interim rules, liquidating distributions made by SPACs are exempt from the excise tax. In addition, any
redemptions that occur in the same taxable year as a liquidation is completed will also be exempt from such tax. Because the excise tax
would be payable by the Company and not by the redeeming stockholders, the mechanics of any required payment of the excise tax have not
yet been determined. The obligation of the Company to pay any excise tax could cause a reduction in the cash available on hand to complete
the Business Combination and in the Company’s ability to complete the Business Combination.
As of June 30, 2023, the Company recognized excise
tax payable of approximately $284,000 and presented in Accrued expenses on its unaudited condensed balance sheet in connection with the
Second Extension vote and the resulting Public Shares redemption. In addition, for the three and six months ended June 30, 2023, the Company
recognized approximately $284,000 of Interest expense on mandatorily redeemable Class A common stock on its unaudited condensed statements
of operations.
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.
Cash and Cash Equivalents
The Company considers all short-term investments
(if any) 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 or the Trust Account as of both June 30, 2023 and December 31, 2022. Bank overdrafts (if any) are presented as
Other current liability in the Company’s unaudited condensed balance sheets.
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. Any loss incurred or a lack of access to such funds could have a significant
adverse impact on the Company’s financial condition, results of operations and cash flows. For the three and six months ended June
30, 2023 and 2022, the Company has not experienced losses on these 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 unaudited condensed 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.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 unaudited condensed 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.
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its shares of 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. For shares of Class A common stock subject
to mandatory redemption (if any) with a fixed redemption amount and a fixed redemption date, the Company recognizes interest expense on
the unaudited condensed statements of operations to reflect accretion to the redemption amount. As a result, to reflect accretion to the
redemption amount, the Company recognized interest expense of approximately $575,000 in the unaudited condensed statements of operations
for each of the three and six months ended June 30, 2023. 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, 2023 and December 31, 2022, 7,549,677 and 10,251,420 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 unaudited condensed
balance sheets. The Company recognizes any subsequent changes in redemption value immediately as they occur and adjusts the carrying value
of redeemable shares of 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
shares of 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 shares of Class A common stock also resulted in charges against Additional paid-in
capital and Accumulated deficit.
Net Income Per Share of Common Stock
The Company complies with the accounting and disclosure
requirements of ASC 260, Earnings Per Share. Net income per share of common stock is computed by dividing net income 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 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 16,999,999 shares of Class A common stock sold in the Initial Public Offering and the 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.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following tables reflect the calculation of basic and diluted net
income per share of common stock:
| |
For the Three Months Ended June 30, 2023 | | |
For the Three Months Ended June 30, 2022 | |
| |
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 | |
$ | 76,277 | | |
$ | 27,447 | | |
$ | 75,998 | | |
$ | 5,577,678 | | |
$ | 111,554 | | |
$ | 1,394,419 | |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average number of shares of common stock outstanding | |
| 9,954,525 | | |
| 3,581,964 | | |
| 9,918,036 | | |
| 50,000,000 | | |
| 1,000,000 | | |
| 12,500,000 | |
Basic and diluted net income per share of common stock | |
$ | 0.01 | | |
$ | 0.01 | | |
$ | 0.01 | | |
$ | 0.11 | | |
$ | 0.11 | | |
$ | 0.11 | |
| |
For the Six Months Ended June 30, 2023 | | |
For the Six Months Ended June 30, 2022 | |
| |
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 | |
$ | 512,361 | | |
$ | 116,931 | | |
$ | 567,818 | | |
$ | 10,017,268 | | |
$ | 200,345 | | |
$ | 2,504,317 | |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average number of shares of common stock outstanding | |
| 10,101,323 | | |
| 2,305,326 | | |
| 11,194,674 | | |
| 50,000,000 | | |
| 1,000,000 | | |
| 12,500,000 | |
Basic and diluted net income per share of common stock | |
$ | 0.05 | | |
$ | 0.05 | | |
$ | 0.05 | | |
$ | 0.20 | | |
$ | 0.20 | | |
$ | 0.20 | |
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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022. 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’s current taxable income primarily
consists of interest income on cash and investments held in the Trust Account. The Company’s general and administrative costs are
generally considered start-up costs and are currently not deductible. During the three and six months ended June 30, 2023, the Company
recorded income tax expense of approximately $486,000 and $897,000, respectively. The Company’s effective tax rate for the three
and six months ended June 30, 2023 was 73.0% and 42.8% respectively. During both the three and six months ended June 30, 2022, the Company
recorded income tax expense of approximately $193,000. The Company’s effective tax rate for the three and six months ended June
30, 2022 was 2.6% and 1.5%, respectively. The Company’s effective tax rate differs from the federal statutory rate mainly due to
the increase in state tax liability, change in fair value of warrant and FPA liabilities, which is not taxable and not deductible, and
start-up costs, which are currently not deductible as they are deferred for tax purposes.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 earnings per share 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.
Note 3—Initial Public Offering
Pursuant to the Initial Public Offering, the Company
sold 50,000,000 Units at a price of $10.00 per Unit, including 5,000,000 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-third of one redeemable warrant (each whole warrant,
a “Public Warrant”). Each 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 December 28, 2020, the Sponsor forfeited 437,500 shares of Class B common stock due to the underwriter 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 January 23, 2020, the Sponsor purchased 11,500,000
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 September 23, 2020, the Company effected a 1.25-for-1 stock split. On November 3, 2020, the Sponsor returned to the Company, at no
cost, an aggregate of 2,875,000 shares of Class B common stock, which the Company cancelled. On December 18, 2020, the Sponsor transferred
an aggregate of 30,000 shares of Class B common stock to two of the independent directors of the Company. On December 22, 2020, the Company
effected a 1.125-for-1 stock split. On December 28, 2020, the Sponsor forfeited 437,500 shares of Class B common stock due to the underwriter
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),
resulting in an aggregate of 12,500,000 shares of Class B common stock (including any shares of Class A common stock issued or issuable
upon conversion thereof, the “Founder Shares”) outstanding and held by the Sponsor and two of the independent directors of
the Company. The shares of Class B common stock 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.
On June 12, 2023, the Company issued 12,366,250
shares of Class A common stock to the Sponsor upon the conversion of 12,366,250 shares of Class B common stock held by the Sponsor (the
“Conversion”). The 12,366,250 shares of Class A common stock issued in connection with the Conversion are subject to the same
restrictions as applied to the Class B common stock prior to the Conversion, including, among other things, certain transfer restrictions,
waiver of redemption rights and the obligation to vote in favor of the Business Combination as described in the prospectus for the Initial
Public Offering.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 Business Combination or (B) subsequent to the 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 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 1,000,000 Private Placement Units at a price of $10.00 per Private Placement Unit
($10,000,000 in the aggregate). Each Private Placement Unit consists of one share of Class A common stock (the “Private Placement
Shares”) and one-third 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 December 28, 2021, the Sponsor entered into an
agreement pursuant to which it agreed to transfer 2,500 shares of Class A common stock to an independent director of the Company. 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 the 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 (including
the component securities thereof) until 30 days after the completion of the 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 any 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 $18,500,000, 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 $158,000. The Pre-IPO Note was non-interest bearing
and was repaid in full upon the completion of the Initial Public Offering.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
In order to finance transaction costs in connection
with an intended Business Combination, pursuant to the Sponsor Loan, the Sponsor loaned the Company $1,750,000 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 Business Combination. For each of the three
months ended June 30, 2023 and 2022, the Company paid $30,000 for office space and administrative fees, and $60,000 for office space and
administrative fees for each of the six months ended June 30, 2023 and 2022.
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 the 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
the 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 September 30, 2022, the Company entered into
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, which 2022 Working Capital Loan has been fully drawn.
On June 30, 2023, the Company entered into the
2023 Working Capital Loan with the Sponsor in the amount of up to $750,000 in connection with advances the Sponsor will make to the Company
for working capital expenses.
Each of the 2022 Working Capital Loan and the
2023 Working Capital Loan bears no interest and is due and payable on the date on which the Company consummates the Business Combination.
The principal balance of each loan may be prepaid at any time with funds outside of the Trust Account.
Except for the foregoing with respect to the 2022
Working Capital Loan and the 2023 Working Capital Loan, the terms of any other Working Capital Loans have not been determined and no written
agreements exist with respect to such loans.
On December 22, 2022, the Company entered into
the First Extension Loan pursuant to which the Sponsor loaned the Company $2,767,883 in the aggregate.
On June 22, 2023, the Company entered into the
Second Extension Loan with the Sponsor in the amount of up to $1,350,000. The funding of the initial Monthly Amount was deposited into
the Trust Account on June 28, 2023, and additional fundings of the Monthly Amount will be deposited into the Trust Account for each calendar
month thereafter (commencing on July 29, 2023 and ending on the 28th day of each subsequent month through March 28, 2024),
or portion thereof, that is needed by the Company to complete the Business Combination.
Each of the First Extension Loan and the Second
Extension Loan bears no interest and is due and payable on the date on which the Company consummates the Business Combination. The principal
balance of each loan may be prepaid at any time with funds outside of the Trust Account.
As of June 30, 2023 and December 31, 2022, approximately
$6,054,000 and approximately $3,009,000, respectively, was outstanding under the loans payable by the Company to the Sponsor. As of June
30, 2023 and December 31, 2022, these amounts included $1,750,000 outstanding under the Sponsor Loan for both periods, $1,000,000 and
approximately $798,000, respectively, outstanding under the 2022 Working Capital Loan, approximately $386,000 and $0, respectively, outstanding
under the 2023 Working Capital Loan, approximately $2,768,000 and approximately $461,000, respectively, outstanding under the First Extension
Loan, and $150,000 and $0, respectively, outstanding under the Second Extension Loan.
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 Payable to related
party on the accompanying unaudited condensed balance sheets. As of June 30, 2023 and December 31, 2022, the Company had accounts payable
outstanding to the Sponsor for such expenses paid on the Company’s behalf of $0 and approximately $39,000, respectively.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5—Commitments and Contingencies
Registration Rights
Pursuant to a registration rights agreement entered
into on December 22, 2020, the holders of Founder Shares and Private Placement Units (and any 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 6,750,000 additional Units to cover over-allotments at the Initial Public Offering price less the underwriting discounts
and commissions. On December 28, 2020, simultaneously with the closing of the Initial Public Offering, CF&Co. partially exercised
the over-allotment option for 5,000,000 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 $9,000,000 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 impact of
the military conflict in Ukraine on the financial markets and on the industry, and has concluded that while it is reasonably possible
that 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 impact is 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 this uncertainty.
Note 6—Stockholders’ Deficit
Class A Common Stock - The Company
is authorized to issue 240,000,000 shares of Class A common stock, par value $0.0001 per share. As of June 30, 2023 and December 31, 2022,
there were 13,366,250 and 1,000,000 shares of Class A common stock issued and outstanding, excluding 7,549,677 and 10,251,420 shares (following
the redemptions of 39,748,580 and 2,701,743 shares of Class A common stock in connection with the First Extension and Second Extension,
respectively) subject to possible redemption, respectively. On June 12, 2023, pursuant to the Conversion, the Company issued 12,366,250
shares of Class A common stock to the Sponsor. As a result, as of June 30, 2023, the outstanding shares of Class A common stock comprised
of 12,366,250 Founder Shares and 1,000,000 Private Placement Shares. As of December 31, 2022, the outstanding shares of Class A common
stock comprised of the 1,000,000 Private Placement Shares. The Founder Shares and the Private Placement Shares do not contain the same
redemption features contained in the Public Shares.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 a result of the Conversion, as of June 30, 2023, there were 133,750 shares of Class B common stock issued
and outstanding. As of December 31, 2022, there were 12,500,000 shares of Class B common stock issued and outstanding.
Prior to the consummation of the Business Combination,
only holders of shares of Class B common stock have the right to vote on the election of directors and holders of shares of Class A common
stock are not entitled to vote on the election of directors during such time. Holders of shares 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
(not including the Private Placement Shares) 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 September 23, 2020, the Company effected a
1.25-for-1 stock split. On November 3, 2020, the Sponsor returned to the Company, at no cost, an aggregate of 2,875,000 shares of Class
B common stock, which the Company cancelled. On December 18, 2020, the Sponsor transferred an aggregate of 30,000 shares of Class B common
stock to two of the independent directors of the Company. On December 22, 2020, the Company effected a 1.125-for-1 stock split. On December
28, 2020, the Sponsor forfeited 437,500 shares of Class B common stock, resulting in an aggregate of 12,500,000 shares of Class B common
stock outstanding and held by the Sponsor and two of the independent directors of the Company as of such date.
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, 2023 and December
31, 2022, 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 the 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 the 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 the 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 the Business Combination or earlier upon redemption or liquidation.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 the 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.
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 any shares 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 the 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. IV
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 liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, and indicate
the fair value hierarchy of the inputs that the Company utilized to determine such fair value:
June 30, 2023
Description | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | | |
Total | |
Liabilities: | |
| | |
| | |
| | |
| |
Warrant liability | |
$ | 1,056,667 | | |
$ | 21,133 | | |
$ | — | | |
$ | 1,077,800 | |
FPS liability | |
| — | | |
| — | | |
| 985,827 | | |
| 985,827 | |
Total Liabilities | |
$ | 1,056,667 | | |
$ | 21,133 | | |
$ | 985,827 | | |
$ | 2,063,627 | |
December 31, 2022
Description | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | | |
Total | |
Liabilities: | |
| | |
| | |
| | |
| |
Warrant liability | |
$ | 1,283,333 | | |
$ | 25,667 | | |
$ | — | | |
$ | 1,309,000 | |
FPS liability | |
| — | | |
| — | | |
| 1,037,644 | | |
| 1,037,644 | |
Total Liabilities | |
$ | 1,283,333 | | |
$ | 25,667 | | |
$ | 1,037,644 | | |
$ | 2,346,644 | |
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 unaudited condensed balance sheets. The
warrant liability is measured at fair value at inception and on a recurring basis, with any subsequent changes in fair value presented
within Changes in fair value of warrant liability in the Company’s unaudited condensed statements of operations.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
As of both June 30, 2023 and December 31, 2022,
the fair value measurements of the Public Warrants fall within Level 1 fair value measurement inputs due to the use of an observable quoted
price in an active 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 fair value of Private Placement Warrants is classified
as Level 2 fair value measurements as of both June 30, 2023 and December 31, 2022. There were no transfers into or out of Level 3 fair
value measurements during the three and six months ended June 30, 2023 or 2022.
The following tables present the changes in the
fair value of warrant liability for the three and six months ended June 30, 2023 and 2022:
| |
Private Placement Warrants | | |
Public Warrants | | |
Warrant Liability | |
Fair value as of December 31, 2022 | |
$ | 25,667 | | |
$ | 1,283,333 | | |
$ | 1,309,000 | |
Change in valuation inputs or other assumptions(1) | |
| 7,666 | | |
| 383,334 | | |
| 391,000 | |
Fair value as of March 31, 2023 | |
$ | 33,333 | | |
$ | 1,666,667 | | |
$ | 1,700,000 | |
Change in valuation inputs or other assumptions(1) | |
| (12,200 | ) | |
| (610,000 | ) | |
| (622,200 | ) |
Fair value as of June 30, 2023 | |
$ | 21,133 | | |
$ | 1,056,667 | | |
$ | 1,077,800 | |
| |
Private Placement Warrants | | |
Public Warrants | | |
Warrant Liability | |
Fair value as of December 31, 2021 | |
$ | 246,699 | | |
$ | 12,335,000 | | |
$ | 12,581,699 | |
Change in valuation inputs or other assumptions(1) | |
| (113,400 | ) | |
| (5,670,000 | ) | |
| (5,783,400 | ) |
Fair value as of March 31, 2022 | |
$ | 133,299 | | |
$ | 6,665,000 | | |
$ | 6,798,299 | |
Change in valuation inputs or other assumptions(1) | |
| (101,799 | ) | |
| (5,090,000 | ) | |
| (5,191,799 | ) |
Fair value as of June 30, 2022 | |
$ | 31,500 | | |
$ | 1,575,000 | | |
$ | 1,606,500 | |
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 $15.0 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 $15.0 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, 2023 and December 31, 2022, the
probability assigned to the consummation of the Business Combination was 19% and 25%, respectively. The probability was determined based
on observed success rates of business combinations for special purpose acquisition companies.
CF ACQUISITION CORP. IV
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following tables present the changes in the
fair value of the FPS liability for the three and six months ended June 30, 2023 and 2022:
| |
FPS Liability | |
Fair value as of December 31, 2022 | |
$ | 1,037,644 | |
Change in valuation inputs or other assumptions(1) | |
| (183,851 | ) |
Fair value as of March 31, 2023 | |
$ | 853,793 | |
Change in valuation inputs or other assumptions(1) | |
| 132,034 | |
Fair value as of June 30, 2023 | |
$ | 985,827 | |
| |
FPS Liability | |
Fair value as of December 31, 2021 | |
$ | 2,774,932 | |
Change in valuation inputs or other assumptions(1) | |
| (194,008 | ) |
Fair value as of March 31, 2022 | |
$ | 2,580,924 | |
Change in valuation inputs or other assumptions(1) | |
| (1,012,176 | ) |
Fair value as of June 30, 2022 | |
$ | 1,568,748 | |
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.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
References to the “Company,” “our,”
“us” or “we” refer to CF Acquisition Corp. IV. The following discussion and analysis of the Company’s financial
condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto
contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”)
includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on
our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible
business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described
in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated in Delaware
on January 23, 2020 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 “Initial Business Combination”). Our sponsor is CFAC Holdings
IV, LLC (the “Sponsor”).
Although we are not limited in our search for
target businesses to a particular industry or sector for the purpose of consummating the Initial Business Combination, we are focusing
our search on companies operating in the financial services, healthcare, real estate services, technology and software industries. We
are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and emerging
growth companies.
Our registration statements for our initial public
offering (the “Initial Public Offering”) became effective on December 22, 2020. On December 28, 2020, we consummated the Initial
Public Offering of 50,000,000 units (each, a “Unit” and with respect to the shares of Class A common stock included in the
Units sold, the “Public Shares”), including 5,000,000 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 $500,000,000. Each Unit consists of one share of Class A
common stock and one-third 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 Initial Business Combination and will expire
5 years after the completion of the Initial Business Combination, or earlier upon redemption or liquidation.
Simultaneously with the closing of the Initial
Public Offering, we consummated the sale of 1,000,000 Units (the “Private Placement Units”) at a price of $10.00 per Private
Placement Unit to the Sponsor in a private placement (the “Private Placement”), generating gross proceeds of $10,000,000.
Following the closing of the Initial Public Offering
and sale of the Private Placement Units on December 28, 2020, an amount of $500,000,000 ($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 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 (“Continental”)
acting as trustee, which were initially 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 us meeting the conditions of paragraphs (d)(2),
(d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by us. To mitigate the risk of us being deemed to be an unregistered
investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus be subject to regulation
under the Investment Company Act, upon the 24-month anniversary of the effective date of the registration statement for the Initial Public
Offering, we instructed Continental, the trustee with respect to the Trust Account, to liquidate any U.S. government treasury obligations
or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in an interest bearing demand deposit
account at a U.S. bank until the earlier of the consummation of the Initial Business Combination or the distribution of the Trust Account.
On June 12, 2023, we issued 12,366,250 shares
of Class A common stock to the Sponsor upon the conversion of 12,366,250 shares of Class B common stock held by the Sponsor (the “Conversion”).
The 12,366,250 shares of Class A common stock issued in connection with the Conversion are subject to the same restrictions as applied
to the Class B common stock prior to the Conversion, including, among other things, certain transfer restrictions, waiver of redemption
rights and the obligation to vote in favor of the Initial Business Combination as described in the prospectus for the Initial Public Offering.
On December 22, 2022, at a special meeting of
our stockholders, our stockholders approved an extension of time for us to consummate the Initial Business Combination from December 28,
2022 to June 28, 2023 (or such shorter period of time as determined by our board of directors) (the “First Extension”). In
connection with the First Extension, the Sponsor loaned us an aggregate amount of $2,767,883 (the “First Extension Loan”).
In connection with the stockholder vote to approve the First Extension, 39,748,580 Public Shares were redeemed at $10.11 per share, resulting
in a reduction of $402,003,579 in the amount held in the Trust Account.
On June 22, 2023, at a special meeting of our
stockholders, our stockholders approved an additional extension of time for us to consummate the Initial Business Combination from June
28, 2023 to March 28, 2024 (or such shorter period of time as determined by our board of directors) (the “Second Extension”,
and together with the First Extension, the “Extensions”). In connection with the Second Extension, the Sponsor agreed to loan
us an aggregate amount of up to $1,350,000 (the “Second Extension Loan”), with (i) $150,000 (the “Monthly Amount”)
deposited into the Trust Account in connection with the first funding of the Second Extension Loan on June 28, 2023, and (ii) the Monthly
Amount being deposited into the Trust Account for each calendar month thereafter (commencing on July 29, 2023 and ending on the 28th day
of each subsequent month through March 28, 2024), or portion thereof, that is needed by us to complete the Initial Business Combination.
In connection with the stockholder vote to approve the Second Extension, 2,701,743 Public Shares were redeemed at approximately $10.48
per share, resulting in a reduction of $28,321,769 in the amount held in the Trust Account.
Each of the First Extension Loan and the Second
Extension Loan bears no interest and is due and payable on the date on which we consummate the Initial Business Combination. The principal
balance of each loan may be prepaid at any time with funds outside of the Trust Account.
We have until March 28, 2024 (which was originally
December 28, 2022, but has been extended following the stockholder approval of the Extensions), or a later date approved by our stockholders
in accordance with the Amended and Restated Certificate of Incorporation, to consummate the Initial Business Combination (the “Combination
Period”). If we are unable to complete the Initial Business Combination by the end of the Combination Period, we 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 us 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 our remaining stockholders and
our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to our 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 our warrants, which will expire worthless if we fail to complete the Initial Business Combination within the Combination
Period.
Liquidity and Capital Resources
As of June 30, 2023 and December 31, 2022, we
had $25,000 and approximately $370,000 of cash in our operating account, respectively. As of June 30, 2023 and December 31, 2022, we had
a working capital deficit of approximately $7,168,000 and $5,096,000, respectively. As of June 30, 2023 and December 31, 2022, approximately
$1,733,000 and $1,022,000, respectively, of interest income earned on funds held in the Trust Account was available to pay taxes.
Our liquidity needs through June 30, 2023 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
$158,000 from the Sponsor pursuant to a promissory note (the “Pre-IPO Note”), the proceeds from the consummation of the Private
Placement with the Sponsor not held in the Trust Account, the Sponsor Loan (as defined below), the 2022 Working Capital Loan (as defined
below) and the 2023 Working Capital Loan (as defined below). We fully repaid the Pre-IPO Note upon completion of the Initial Public Offering.
In addition, in order to finance transaction costs in connection with the Initial Business Combination, the Sponsor loaned us $1,750,000
to fund our expenses relating to investigating and selecting a target business and other working capital requirements after the Initial
Public Offering and prior to the Initial Business Combination (the “Sponsor Loan”). If the Sponsor Loan is insufficient, the
Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us additional
loans (“Working Capital Loans”).
On September 30, 2022, we 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 us for working capital expenses, which 2022 Working Capital Loan has been fully drawn.
On June 30, 2023, we entered into a Working Capital
Loan (the “2023 Working Capital Loan”) with the Sponsor in the amount of up to $750,000 in connection with advances the Sponsor
will make to us for working capital expenses.
On December 22, 2022, we entered into the First
Extension Loan pursuant to which the Sponsor loaned us $2,767,883 in the aggregate.
On June 22, 2023, we entered into the Second Extension
Loan with the Sponsor in the amount of up to $1,350,000. The funding of the initial Monthly Amount was deposited into the Trust Account
on June 28, 2023, and additional fundings of the Monthly Amount will be deposited into the Trust Account for each calendar month thereafter
(commencing on July 29, 2023 and ending on the 28th day of each subsequent month through March 28, 2024), or portion thereof,
that is needed by us to complete the Initial Business Combination.
Each of the 2022 Working Capital Loan, the 2023
Working Capital Loan, the First Extension Loan and the Second Extension Loan bears no interest and is due and payable on the date on which
we consummate the initial Business Combination. The principal balance of each loan may be prepaid at any time with funds outside of the
Trust Account.
As of June 30, 2023 and December 31, 2022, approximately
$6,054,000 and approximately $3,009,000, respectively, was outstanding under the loans payable by us to the Sponsor. As of June 30, 2023
and December 31, 2022, these amounts included $1,750,000 outstanding under the Sponsor Loan for both periods, $1,000,000 and approximately
$798,000, respectively, outstanding under the 2022 Working Capital Loan, approximately $386,000 and $0, respectively, outstanding under
the 2023 Working Capital Loan, approximately $2,768,000 and approximately $461,000, respectively, outstanding under the First Extension
Loan, and $150,000 and $0, respectively, outstanding under the Second Extension Loan.
Based on the foregoing, management believes that
we will have sufficient working capital and borrowing capacity from the Sponsor to meet our needs through the earlier of the consummation
of the Initial Business Combination or one year from the date of this Report. Over this time period, we 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 Initial Business Combination.
Results of Operations
Our entire activity from inception through June
30, 2023 related to our formation, the Initial Public Offering, and to our efforts toward locating and completing a suitable Initial Business
Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues
until after completion of the Initial Business Combination. We will generate non-operating income in the form of interest income on investments
held in the Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2023, we had
net income of approximately $180,000, which consisted of approximately $1,392,000 of interest income from cash held in the Trust Account,
$622,000 of gain from the change in fair value of warrant liability, partially offset by approximately $859,000 of interest expense, approximately
$486,000 of income tax expense, approximately $247,000 of general and administrative expenses, approximately $132,000 of loss from the
change in fair value of FPS liability, $80,000 of franchise tax expense, and $30,000 of administrative expenses paid to the Sponsor.
For the six months ended June 30, 2023, we had
net income of approximately $1,197,000, which consisted of approximately $3,396,000 of interest income from cash and investments held
in the Trust Account, approximately $231,000 of gain from the change in fair value of warrant liability, approximately $52,000 of gain
from the change in fair value of FPS liability, partially offset by approximately $897,000 of income tax expense, approximately $859,000
of interest expense, approximately $536,000 of general and administrative expenses, $130,000 of franchise tax expense, and $60,000 of
administrative expenses paid to the Sponsor.
For the three months ended June 30, 2022, we had
net income of approximately $7,084,000, which consisted of approximately $5,192,000 of gain from the change in fair value of warrant liability,
approximately $1,213,000 of interest income on investments held in the Trust Account, and approximately $1,012,000 of gain from the change
in fair value of FPS liability, partially offset by approximately $193,000 of income tax expense, approximately $44,000 of general and
administrative expenses, approximately $66,000 of franchise tax expense, and $30,000 of administrative expenses paid to the Sponsor.
For the six months ended June 30, 2022, we had
net income of approximately $12,722,000, which consisted of approximately $10,975,000 of gain from the change in fair value of warrant
liability, approximately $1,225,000 of interest income on investments held in the Trust Account, and approximately $1,206,000 of gain
from the change in fair value of FPS liability, partially offset by approximately $315,000 of general and administrative expenses, approximately
$193,000 of income tax expense, approximately $116,000 of franchise tax expense, and $60,000 of administrative expenses paid to the Sponsor.
Contractual Obligations
Business Combination Marketing Agreement
We engaged Cantor Fitzgerald & Co. (“CF&Co.”),
an affiliate of the Sponsor, as an advisor in connection with any Initial Business Combination to assist us in holding meetings with our
stockholders to discuss any potential Initial Business Combination and the target business’ attributes, introduce us to potential
investors that are interested in purchasing our securities and assist us with our press releases and public filings in connection with
any Initial Business Combination. We will pay CF&Co. a cash fee for such services upon the consummation of the Initial Business Combination
in an amount of $18,500,000, which is equal to, in the aggregate, 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 underwriters’ over-allotment option.
Related Party Loans
In order to finance transaction costs in connection
with an intended Initial Business Combination, the Sponsor loaned us $1,750,000 in the Sponsor Loan to fund 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, after the Initial Public Offering and prior to the Initial Business
Combination.
On September 30, 2022, we entered into the 2022
Working Capital Loan in the amount of up to $1,000,000.
On December 22, 2022, we entered into the First
Extension Loan with the Sponsor in the amount of up to $2,767,883.
On June 22, 2023, we entered into the Second Extension
Loan with the Sponsor in the amount of up to $1,350,000.
On June 30, 2023, we entered into the 2023 Working
Capital Loan in the amount of up to $750,000.
Each of the 2022 Working Capital Loan, the First
Extension Loan, the Second Extension Loan and the 2023 Working Capital Loan bears no interest and is due and payable on the date on which
we consummate the initial Business Combination. The principal balance of each loan may be prepaid at any time with funds outside of the
Trust Account.
As of June 30, 2023 and December 31, 2022, approximately
$6,054,000 and approximately $3,009,000, respectively, was outstanding under the loans payable by us to the Sponsor. As of June 30, 2023
and December 31, 2022, these amounts included $1,750,000 outstanding under the Sponsor Loan for both periods, $1,000,000 and approximately
$798,000, respectively, outstanding under the 2022 Working Capital Loan, approximately $386,000 and $0, respectively, outstanding under
the 2023 Working Capital Loan, approximately $2,768,000 and approximately $461,000, respectively, outstanding under the First Extension
Loan, and $150,000 and $0, respectively, outstanding under the Second Extension Loan.
The Sponsor pays expenses on our behalf. We reimburse
the Sponsor for such expenses paid on our behalf. The unpaid balance is included in Payable to related party on the accompanying unaudited
condensed balance sheets. As of June 30, 2023 and December 31, 2022, we had accounts payable outstanding to the Sponsor for such expenses
paid on our behalf of $0 and approximately $39,000, respectively.
Critical Accounting Policies and Estimates
The preparation of our unaudited condensed financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and the
disclosure of contingent assets and liabilities in our unaudited condensed financial statements. These accounting estimates require the
use of assumptions about matters, some of which are highly uncertain at the time of estimation. Management bases its estimates on historical
experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis
for making judgments, and we evaluate these estimates on an ongoing basis. To the extent actual experience differs from the assumptions
used, our unaudited condensed balance sheets, unaudited condensed statements of operations, unaudited condensed statements of stockholders’
deficit and unaudited condensed statements of cash flows could be materially affected. We believe that the following accounting policies
involve a higher degree of judgment and complexity.
Going Concern
In connection with our going concern considerations
in accordance with guidance in the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 205-40,
Presentation of Financial Statements – Going Concern, we have until March 28, 2024 to consummate the Initial Business Combination.
Our mandatory liquidation date, if the Initial Business Combination is not consummated, raises substantial doubt about our ability to
continue as a going concern. Our financial statements included in this Report do not include any adjustments related to the recovery of
the recorded assets or the classification of the liabilities should we be unable to continue as a going concern. In the event of a mandatory
liquidation, within ten business days, we 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 us to pay taxes, other than excise tax (less up to $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding Public Shares.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business
Startups Act of 2012 (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 registration statement under the Securities
Act of 1933, as amended (the “Securities Act”) 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 a 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 election to opt out is irrevocable. We have 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, we, as an emerging growth company, can adopt
the new or revised standard at the time private companies adopt the new or revised standard.
Warrant and FPS Liability
We account for our outstanding public warrants
and private placement warrants and the securities underlying the forward purchase agreement with the Sponsor (the “FPA” and
such securities, the “FPS”) in accordance with guidance in ASC 815-40, Derivatives and Hedging - Contracts in Entity’s
Own Equity, under which the warrants and the FPS do not meet the criteria for equity classification and must be recorded as liabilities.
As both the public and private placement warrants and the FPS meet the definition of a derivative under ASC 815, Derivatives and Hedging,
they are measured at fair value at inception and at each reporting date in accordance with the guidance in ASC 820, Fair Value Measurement,
with any subsequent changes in fair value recognized in the statements of operations in the period of change.
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock
subject to possible redemption in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity. Shares of Class
A common stock subject to mandatory redemption (if any) are classified as liability instruments and measured at fair value. For shares
of Class A common stock subject to mandatory redemption (if any) with a fixed redemption amount and a fixed redemption date, we recognize
interest expense on the accompanying unaudited condensed statements of operations to reflect accretion to the redemption amount. As a
result, to reflect accretion to the redemption amount, we recognized interest expense of approximately $575,000 in the accompanying unaudited
condensed statements of operations for each of the three and six months ended June 30, 2023. 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 our 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 our control and subject to the occurrence of uncertain future events. Accordingly,
as of June 30, 2023 and December 31, 2022, 7,549,677 and 10,251,420 shares of Class A common stock subject to possible redemption, respectively,
are presented as temporary equity outside of the stockholders’ deficit section of our balance sheets. We recognize any subsequent
changes in redemption value immediately as they occur and adjust the carrying value of redeemable shares of Class A common stock to the
redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, we recognized the accretion
from initial book value to redemption amount value of redeemable shares of 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 shares of Class
A common stock also resulted in charges against Additional paid-in capital and Accumulated deficit.
Net Income Per Share of Common Stock
We comply with the accounting and disclosure requirements
of ASC 260, Earnings Per Share. Net income per share of common stock is computed by dividing net income applicable to stockholders
by the weighted average number of shares of common stock outstanding for the applicable periods. We apply the two-class method in calculating
earnings per share and allocate net income 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.
We have not considered the effect of the warrants
to purchase an aggregate of 16,999,999 shares of Class A common stock sold in the Initial Public Offering and the 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.
See Note 2—”Summary of Significant
Accounting Policies” to our unaudited condensed financial statements in Part I, Item 1 of this Report for additional information
regarding these critical accounting policies and other significant accounting policies.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete
the Initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in
the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial
markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines
in consumer confidence and spending, and geopolitical instability, such as the military conflict in Ukraine. We cannot at this time fully
predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact
our business and our ability to complete the Initial Business Combination.
Recent Developments
We have instructed Continental to liquidate the investments held
in the Trust Account and instead to hold the funds in the Trust Account in an interest bearing demand deposit account at Citibank, N.A.,
with Continental continuing to act as trustee, until the earlier of the consummation of the Initial Business Combination or our liquidation.
As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering
and the Private Placement are no longer invested in U.S. government debt securities or money market funds that invest in U.S. government
debt securities.
Off-Balance Sheet Arrangements and Contractual Obligations
As of June 30, 2023, we did not have any off-balance sheet arrangements
as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
Item 3. Quantitative and Qualitative Disclosures
about Market Risk.
We are a smaller reporting company as defined
by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls
and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer
and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate,
to allow timely decisions regarding required disclosure.
Under the supervision and with the participation
of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our
Certifying Officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
We do not expect that our disclosure controls
and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.
Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits
must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation
of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances
of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial
Reporting
There have been no changes to our internal control
over financial reporting during the quarterly period ended June 30, 2023 that materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
To the knowledge of our management team, there
is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any
of our property.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required
to include risk factors in this Report. However, as of the date of this Report, there have been no material changes with respect
to those risk factors previously disclosed in (i) our Registration Statement on Form S-1 with respect to the Initial Public Offering,
initially filed with the SEC on December 7, 2020, as amended and declared effective on December 22, 2020 (File No. 333-251184), (ii) our
Annual Reports on Forms 10-K/A and 10-K for the years ended December 31, 2020, 2021 and 2022, as filed with the SEC on December 23, 2021,
March 31, 2022 and March 31, 2023, respectively, (iii) our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June
30, 2022 and September 30, 2022, as filed with the SEC on May 13, 2022, August 12, 2022 and November 14, 2022, respectively, and (iv)
the Definitive Proxy Statements on Schedule 14A as filed with the SEC on December 2, 2022 and May 22, 2023, respectively. Any of the previously
disclosed risk factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional
risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We
may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds
(a) Sales of Unregistered Securities
On June 12, 2023, we issued an aggregate of 12,366,250
shares of Class A common stock to the Sponsor upon the conversion of 12,366,250 shares of Class B common stock held by the Sponsor in
the Conversion. The 12,366,250 shares of Class A common stock issued in connection with the Conversion are subject to the same restrictions
as applied to the Class B common stock prior to the Conversion, including, among other things, certain transfer restrictions, waiver of
redemption rights and the obligation to vote in favor of the Initial Business Combination as described in the prospectus for the Initial
Public Offering.
(b) Use of Proceeds - Not Applicable.
(c) Issuer Purchases of Securities
On June 22, 2023, at a special meeting of our
stockholders, our stockholders approved the Second Extension. In connection with the stockholder vote to approve the Second Extension,
2,701,743 Public Shares were redeemed at approximately $10.48 per share, resulting in a reduction of $28,321,769 in the amount held in
the Trust Account.
The following table contains monthly information
about the repurchases of our equity securities for the three months ended June 30, 2023:
Period | |
(a) Total number of shares
(or units) purchased | | |
(b) Average price paid per share
(or unit) | | |
(c) Total number of shares
(or units) purchased as part of publicly announced plans or programs | | |
(d) Maximum number
(or approximate dollar value) of shares
(or units)
that may yet be purchased under the plans or programs | |
April 1 – April 30, 2023 | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
May 1 – May 31, 2023 | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
June 1 – June 30, 2023 | |
| 2,701,743 | | |
$ | 10.48 | | |
| — | | |
| — | |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
(1) |
Incorporated by reference to the Company’s Form 8-K, filed with the SEC on June 27, 2023. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
CF ACQUISITION CORP. IV |
|
|
|
Date: August 14, 2023 |
By: |
/s/ Howard W. Lutnick |
|
Name: |
Howard W. Lutnick |
|
Title: |
Chairman and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
Date: August 14, 2023 |
By: |
/s/ Jane Novak |
|
Name: |
Jane Novak |
|
Title: |
Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
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CF Acquisition Corp. IV, a
Delaware corporation (the “Maker”), promises to pay to the order of CFAC
Holdings IV, LLC or its registered assigns or successors in interest (the “Payee”),
the principal sum of up to Seven Hundred Fifty Thousand Dollars ($750,000) in lawful money of the United States of America, on the terms
and conditions described below. All payments on this Note shall be made by check or wire transfer of immediately available
funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance
with the provisions of this Note.
[Signature Page to the Promissory Note by CF Acquisition
Corp. IV in favor of CFAC Holdings IV, LLC for up to $750,000 for Working Capital – Effective as of June 30, 2023]
I, Howard W. Lutnick, certify that:
In connection with the Quarterly
Report on Form 10-Q of CF Acquisition Corp. IV (the “Company”) for the quarter ended June 30, 2023, as filed with the
Securities and Exchange Commission (the “Report”), I, Howard W. Lutnick, Chairman and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
In connection with the Quarterly
Report on Form 10-Q of CF Acquisition Corp. IV (the “Company”) for the quarter ended June 30, 2023, as filed with the
Securities and Exchange Commission (the “Report”), I, Jane Novak, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: