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, 20192020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-38759
CF FINANCE ACQUISITION CORP. |
(Exact name of registrant as specified in its charter) |
Delaware | 47-3806343 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
110 East 59th Street, New York, New York 10022 |
(Address of Principal Executive Offices, including zip code) |
(212) 938-5000 |
(Registrant’s telephone number, including area code) |
N/A |
(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 three-quarters of one redeemable warrant | CFFAU | The Nasdaq Capital Market | ||
Class A common stock, par value $0.0001 per share | CFFA | The Nasdaq Capital Market | ||
Redeemable warrants, exercisable for Class A common stock at an exercise price of $11.50 per share | CFFAW | The Nasdaq Capital Market |
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 ☐
Securities registered pursuant to Section 12(b) of the Act:
As of August 14, 2019,10, 2020, there were 7,064,603 shares of Class B common stock and 28,858,41328,264,713 shares of Class A common stock of the registrant issued and outstanding.
CF FINANCE ACQUISITION CORP.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
Page | ||
Condensed Balance Sheets as of June 30, | F-1 | |
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 3 | |
7 | ||
7 | ||
9 | ||
9 | ||
9 | ||
9 | ||
9 | ||
9 | ||
9 | ||
10 | ||
11 | ||
i
2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
CF Finance Acquisition Corp.
Condensed Balance Sheets
June 30, 2019 | December 31, 2018 |
| June 30, 2020 |
|
| December 31, 2019 |
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(Unaudited) |
| (Unaudited) |
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Assets |
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Current assets |
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Cash | $ | 291,847 | $ | 560,027 |
| $ | 2,001,387 |
|
| $ | 14,304 |
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| ||||
Other assets | 37,500 | — |
|
| 38,500 |
|
|
| — |
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| ||||||
Total current assets | 329,347 | 560,027 |
|
| 2,039,887 |
|
|
| 14,304 |
|
| ||||||
Cash and investments held in Trust Account | 288,958,260 | 277,973,009 |
|
| 286,565,390 |
|
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| 291,761,159 |
|
| ||||||
Total assets | $ | 289,287,607 | $ | 278,533,036 |
| $ | 288,605,277 |
|
| $ | 291,775,463 |
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Liabilities and Stockholders’ Equity |
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Sponsor loan – promissory note | $ | 2,825,841 | $ | 2,750,000 |
| $ | 5,315,665 |
|
| $ | 2,825,841 |
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| ||||
Payables to related party | 124 | 100,000 |
|
| 466,537 |
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| 37,030 |
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| ||||||
Accrued liabilities | 1,224,029 | 28,169 |
|
| 1,431,418 |
|
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| 1,389,962 |
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| ||||||
Total liabilities | 4,049,994 | 2,878,169 |
|
| 7,213,620 |
|
|
| 4,252,833 |
|
| ||||||
Common stock subject to possible redemption, 27,746,298 and 26,797,511 shares, as of June 30, 2019 and December 31, 2018, respectively, actual and adjusted, at redemption value of $10.10 | 280,237,610 | 270,654,861 | |||||||||||||||
Common stock subject to possible redemption, 27,123,813 and 27,972,537 shares, as of June 30, 2020 and December 31, 2019, respectively, at redemption value of $10.19 and $10.10, respectively |
|
| 276,391,655 |
|
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| 282,522,624 |
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| ||||||||
Stockholders’ equity |
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding as of June 30, 2019 and December 31, 2018 | — | — | |||||||||||||||
Common stock, Class A $0.0001 par value; 100,000,000 shares authorized; 1,112,115 and 1,302,489 shares issued and outstanding (excluding 27,746,298 and 26,797,511 shares subject to possible redemption) as of June 30, 2019 and December 31, 2018, respectively | 111 | 130 | |||||||||||||||
Common stock, Class B $0.0001 par value; 10,000,000 shares authorized; 7,064,603 and 7,187,500 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 707 | 719 | (1) | ||||||||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued or outstanding as of June 30, 2020 and December 31, 2019 |
| — |
|
| — |
|
| ||||||||||
Common stock, Class A $0.0001 par value; 100,000,000 shares authorized; 1,140,900 and 885,876 shares issued and outstanding (excluding 27,123,813 and 27,972,537 shares subject to possible redemption) as of June 30, 2020 and December 31, 2019, respectively |
|
| 114 |
|
|
| 88 |
|
| ||||||||
Common stock, Class B $0.0001 par value; 10,000,000 shares authorized; 7,064,603 shares issued and outstanding as of June 30, 2020 and December 31, 2019 |
|
| 707 |
|
|
| 707 |
|
| ||||||||
Additional paid-in-capital | 2,810,220 | 4,808,810 |
|
| 559,737 |
|
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| 525,231 |
|
| ||||||
Retained earnings | 2,188,965 | 190,347 |
|
| 4,439,444 |
|
|
| 4,473,980 |
|
| ||||||
Total stockholders’ equity | 5,000,003 | 5,000,006 |
|
| 5,000,002 |
|
|
| 5,000,006 |
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Total liabilities and stockholders’ equity | $ | 289,287,607 | $ | 278,533,036 |
| $ | 288,605,277 |
|
| $ | 291,775,463 |
|
|
See accompanying notes to unaudited condensed financial statements.
F-1
CF Finance Acquisition Corp.
Condensed Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, |
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
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| |||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 |
| 2020 |
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| 2019 |
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| 2020 |
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| 2019 |
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Revenue | $ | — | $ | — | $ | — | $ | — |
| $ | — |
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| $ | — |
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| $ | — |
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| $ | — |
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Expense |
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Other expenses | 111,093 | — | 215,432 | 385 |
|
| 421,490 |
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| 111,093 |
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| 657,418 |
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| 215,432 |
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| ||||||||||||||
Loss from operations | (111,093 | ) | — | (215,432 | ) | (385 | ) |
|
| (421,490 | ) |
|
| (111,093 | ) |
|
| (657,418 | ) |
|
| (215,432 | ) |
| |||||||||||
Other income – Interest income on Trust Account | 1,706,870 | — | 3,325,280 | — |
|
| 80,048 |
|
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| 1,706,870 |
|
|
| 708,215 |
|
|
| 3,325,280 |
|
| ||||||||||||||
Income (loss) before provision for income taxes | 1,595,777 | — | 3,109,848 | (385 | ) | ||||||||||||||||||||||||||||||
Provision for income taxes | 596,491 | — | 1,111,230 | — | |||||||||||||||||||||||||||||||
Net income (loss) attributable to common stock | $ | 999,286 | $ | — | $ | 1,998,618 | $ | (385 | ) | ||||||||||||||||||||||||||
(Loss) income before (benefit)/provision for income taxes |
|
| (341,442 | ) |
|
| 1,595,777 |
|
|
| 50,797 |
|
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| 3,109,848 |
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| ||||||||||||||||||
Income tax (benefit)/provision for income taxes |
|
| (76,678 | ) |
|
| 596,491 |
|
|
| 85,333 |
|
|
| 1,111,230 |
|
| ||||||||||||||||||
Net (loss) income attributable to common stock |
| $ | (264,764 | ) |
| $ | 999,286 |
|
| $ | (34,536 | ) |
| $ | 1,998,618 |
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Weighted average number of common stock outstanding: |
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Class A - Public shares | 28,258,413 | — | 28,140,438 | — |
|
| 28,160,550 |
|
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| 28,258,413 |
|
|
| 28,209,482 |
|
|
| 28,140,438 |
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| ||||||||||||||
Class A - Private placement | 600,000 | — | 600,000 | — |
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| 600,000 |
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| 600,000 |
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| 600,000 |
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| 600,000 |
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Class B - Common stock | 7,064,603 | (2) | 6,250,000 | (1) | 7,035,109 | (2) | 6,250,000 | (1) |
|
| 7,064,603 |
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|
|
| 7,064,603 |
| (1) |
| 7,064,603 |
|
|
|
| 7,035,109 |
| (1) | ||||||||
Basic and diluted net income (loss) per share: |
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Class A - Public shares | $ | 0.04 | $ | — | $ | 0.08 | $ | — |
| $ | 0.00 |
|
| $ | 0.04 |
|
| $ | 0.02 |
|
| $ | 0.08 |
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| ||||||||||
Class A - Private placement | $ | (0.01 | ) | $ | — | $ | (0.03 | ) | $ | — |
| $ | (0.05 | ) |
| $ | (0.01 | ) |
| $ | (0.07 | ) |
| $ | (0.03 | ) |
| ||||||||
Class B - Common stock | $ | (0.01 | ) | $ | — | $ | (0.03 | ) | $ | — |
| $ | (0.05 | ) |
| $ | (0.01 | ) |
| $ | (0.07 | ) |
| $ | (0.03 | ) |
|
(1) |
On January 29, 2019, an aggregate of 122,897 shares held by the Sponsor were forfeited (see Note 7). |
See accompanying notes to unaudited condensed financial statements.
F-2
CF Finance Acquisition Corp.
Condensed Statements of Changes in Stockholders’ Equity
For the three and six months ended June 30, 20192020 and 20182019
(Unaudited)
Common Stock | Additional Paid-In- | Retained Earnings | Total Stockholders’ |
| Common Stock |
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Class A | Class B | Capital | (Deficit) | Equity |
| Class A |
|
| Class B |
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| Additional Paid-In-Capital |
|
| Retained Earnings (Deficit) |
|
| Total Stockholders’ Equity |
| |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount |
| Shares |
|
| Amount |
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| Shares |
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| Amount |
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Balances, January 1, 2018 | — | $ | — | 7,187,500 | $ | 719 | (1) | $ | 49,664 | $ | (6,900 | ) | $ | 43,483 | |||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2020 |
|
| 885,876 |
|
| $ | 88 |
|
|
| 7,064,603 |
|
| $ | 707 |
|
|
| $ | 525,231 |
|
| $ | 4,473,980 |
|
| $ | 5,000,006 |
| ||||||||||||||||||||||||||||
Shares subject to possible redemption |
|
| (22,795 | ) |
|
| (2 | ) |
| — |
|
| — |
|
|
|
| (230,228 | ) |
| — |
|
|
| (230,230 | ) | |||||||||||||||||||||||||||||||
Net income |
| — |
|
| — |
|
| — |
|
| — |
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|
| — |
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| 230,228 |
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| 230,228 |
| |||||||||||||||||||||||||||||||||
Balances, March 31, 2020 |
|
| 863,081 |
|
| $ | 86 |
|
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| 7,064,603 |
|
| $ | 707 |
|
|
| $ | 295,003 |
|
| $ | 4,704,208 |
|
| $ | 5,000,004 |
| ||||||||||||||||||||||||||||
Shares subject to possible redemption |
|
| 277,819 |
|
|
| 28 |
|
| — |
|
| — |
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|
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| 264,734 |
|
| — |
|
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| 264,762 |
| |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (385 | ) | (385 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
|
| — |
|
|
| (264,764 | ) |
|
| (264,764 | ) | ||||||||||||||||||||||||
Balances, March 31, 2018 | — | $ | — | 7,187,500 | $ | 719 | $ | 49,664 | $ | (7,286 | ) | $ | 43,098 | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2018 | — | $ | — | 7,187,500 | $ | 719 | $ | 49,664 | $ | (7,286 | ) | $ | 43,098 | ||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2020 |
|
| 1,140,900 |
|
| $ | 114 |
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| 7,064,603 |
|
| $ | 707 |
|
|
| $ | 559,737 |
|
| $ | 4,439,444 |
|
| $ | 5,000,002 |
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| Common Stock |
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| Class A |
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| Class B |
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| Additional Paid-In-Capital |
|
| Retained Earnings (Deficit) |
|
| Total Stockholders’ Equity |
| |||||||||||||||||||||||||||||||||||||||||
| Shares |
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| Amount |
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| Shares |
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| Amount |
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Balances, January 1, 2019 | 1,302,489 | $ | 130 | 7,187,500 | $ | 719 | $ | 4,808,810 | $ | 190,347 | $ | 5,000,006 |
|
| 1,302,489 |
|
| $ | 130 |
|
|
| 7,187,500 |
|
| $ | 719 |
| (2) |
| $ | 4,808,810 |
|
| $ | 190,347 |
|
| $ | 5,000,006 |
| ||||||||||||||||
Sale of Class A common stock to the public | 758,413 | 76 | — | — | 7,584,054 | — | 7,584,130 |
|
| 758,413 |
|
|
| 76 |
|
| — |
|
| — |
|
|
|
| 7,584,054 |
|
| — |
|
|
| 7,584,130 |
| ||||||||||||||||||||||||
Forfeiture of common stock to sponsor at $0.0001 par value | — | — | (122,897 | ) | (12 | )(2) | 12 | — | — |
| — |
|
| — |
|
|
| (122,897 | ) |
|
| (12 | ) | (1) |
|
| 12 |
|
| — |
|
|
| - |
| ||||||||||||||||||||||
Shares subject to possible redemption | (849,848 | ) | (85 | ) | — | — | (8,583,380 | ) | — | (8,583,465 | ) |
|
| (849,848 | ) |
|
| (85 | ) |
| — |
|
| — |
|
|
|
| (8,583,380 | ) |
| — |
|
|
| (8,583,465 | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | 999,332 | 999,332 |
| — |
|
| — |
|
| — |
|
| — |
|
|
| — |
|
|
| 999,332 |
|
|
| 999,332 |
| ||||||||||||||||||||||||||
Balances, March 31, 2019 | 1,211,054 | $ | 121 | 7,064,603 | $ | 707 | $ | 3,809,496 | $ | 1,189,679 | $ | 5,000,003 |
|
| 1,211,054 |
|
| $ | 121 |
|
|
| 7,064,603 |
|
| $ | 707 |
|
|
| $ | 3,809,496 |
|
| $ | 1,189,679 |
|
| $ | 5,000,003 |
| ||||||||||||||||
Shares subject to possible redemption | (98,939 | ) | (10 | ) | — | — | (999,276 | ) | — | (999,286 | ) |
|
| (98,939 | ) |
|
| (10 | ) |
| — |
|
| — |
|
|
|
| (999,276 | ) |
| — |
|
|
| (999,286 | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | 999,286 | 999,286 |
| — |
|
| — |
|
| — |
|
| — |
|
|
| — |
|
|
| 999,286 |
|
|
| 999,286 |
| ||||||||||||||||||||||||||
Balances, June 30, 2019 | 1,112,115 | $ | 111 | 7,064,603 | $ | 707 | $ | 2,810,220 | $ | 2,188,965 | $ | 5,000,003 |
|
| 1,112,115 |
|
| $ | 111 |
|
|
| 7,064,603 |
|
| $ | 707 |
|
|
| $ | 2,810,220 |
|
| $ | 2,188,965 |
|
| $ | 5,000,003 |
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See accompanying notes to unaudited condensed financial statements. F-3 CF Finance Acquisition Corp.
Condensed Statements of Cash Flows (Unaudited)
See accompanying notes to unaudited condensed financial statements. F-4 CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements 1. Description of Business and Operations Description of Business -CF Finance Acquisition Corp. (the “Company”) was incorporated in Delaware on July 9, 2014. 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 to a particular industry or sector for the purpose of consummating a Business Combination, the Company intends to focus its search on companies operating in the financial services or real estate 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, The Company’s Sponsor is CF Finance Holdings, LLC (the “Sponsor”). The registration statement for the Public Offering (see Note 3) was declared effective by the United States Securities and Exchange Commission (the “SEC”) on December 12, 2018. The Company intends to finance a Business Combination with the proceeds of approximately $282,600,000 (approximately $276,503,600, as adjusted for the redemption described below) from the Public Offering, $6,000,000 from the Private Placement (see Note 4) and approximately $2,826,000 (approximately $5,315,700, as adjusted for the redemption described below) from the Sponsor loan (see Note 4). Offering costs for the Public Offering amounted to approximately $5,585,900, consisting of $5,100,000 of underwriting fees and approximately $485,900 of other costs. On June 15, 2020, the stockholders of the Company approved the extension of the termination of the Company from June 17, 2020 to September 17, 2020. In conjunction with the termination date extension vote, public stockholders exercised their right to elect to redeem their 593,700 shares of Common Stock. $6,096,437 was withdrawn from the Trust Account in connection with the redemption of such shares. In addition, in conjunction with the termination date extension, the Sponsor committed to contribute an additional $0.09 per remaining Public Share to the Trust Account in the form of a Sponsor Loan. On June 17, 2020, an additional $2,489,824 was contributed to the Trust Account. F-5 CF Finance Acquisition Corp. Notes to Unaudited Condensed Financial Statements (continued) 1. Description of Business and Operations (continued) Initial Business Combination - The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (as defined below) (excluding taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Upon the closing of the Public Offering and the underwriter’s partial exercises of the over-allotment option, an amount equal to $10.10 per Unit sold in the Public Offering, including the proceeds of the Private Placement Units and Sponsor Loan (see Note 4), was held in a Trust Account, with Continental Stock Transfer & Trust Company acting as trustee. The proceeds are invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended Investment Company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company will provide its holders of the outstanding shares of its Class A common stock, par value $0.0001 (“Class A common stock”), sold in the Public Offering (the “public stockholders”) with the opportunity to redeem all or a portion of their public shares (the “Public Shares”) upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares (see Note 3) for a pro rata portion of the amount then in the Trust Account (initially $10.10 per Public Share).These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 F-6 CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements (continued) 1. Description of Business and Operations (continued) 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 20% or more of the Class A common stock sold in the Public Offering, without the prior consent of the Company. The initial stockholders, officers and directors 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 redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. Forward Purchase Contract
Failure to Consummate a Business Combination - If the Company is unable to complete a Business Combination F-7 CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements (continued) 1. Description of Business and Operations (continued) The initial stockholders, officers and directors have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders, officers and directors acquire Public Shares in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.10 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. 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 underwriter of the 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, except for the Company’s independent registered public accounting firm, 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. The Trust Account - The proceeds in the Trust Account will be invested only in U.S. government treasury bills with a maturity of one hundred and eighty (180) days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Company’s initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence expenses for prospective acquisition targets and continuing general and administrative expenses. As of June 30, 2020 and December 31, 2019, investment securities in the Trust Account consisted of
During three and six months ended June 30, 2020, $136,882 and $336,882 of the proceeds from the Trust Account were used to pay taxes, respectively.
2. Summary of Significant Accounting Policies 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, F-8 CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements (continued) 2. Summary of Significant Accounting Policies (continued) In connection with the Company’s going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern” as of June 30, 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, 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 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. 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, which is neither an emerging growth company nor an emerging growth company, which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates -The preparation of unaudited condensed 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 unaudited condensed 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 unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. F-9
CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued) Cash and investments held in Trust Account - As of June 30, 2020 and December 31, 2019, the assets held in the Trust Account were held in money market funds. Deferred Offering Costs -Deferred offering costs consist of legal and accounting fees incurred through the balance sheet dates that are directly related to the Public Offering and that were charged to stockholders’ equity upon the completion of the Public Offering. Income Taxes As of June 30, 2020 and December 31, 2019, the Company had no material deferred tax assets or liabilities. ASC Topic 740 prescribes a recognition threshold that a tax position is required to meet before being recognized in the unaudited condensed financial statements. The Company provides for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties related to unrecognized tax benefits as provision for income taxes on the unaudited condensed statements of operations. There were 2019. The Company may be subject to examination by federal, state and city taxing authorities in the areas of income taxes. The Company is currently not under examination by tax authorities and is not aware of any issues that may result in significant payments or accruals. Accordingly, the Company does not believe that the amounts of unrecognized tax benefits will materially change over the next twelve months. Net Income (Loss) per Common Share -The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, As of June 30, Net income per share, for Class A – public shares common stock is calculated by dividing the interest income earned on the Trust Account of approximately $80,000 and $708,000 for the three and six months ended June 30, 2020, and $1,707,000 and $3,325,000 for the three and six months ended June 30, 2019, respectively, less interest to pay taxes permitted to be withdrawn from the Trust Account by the weighted average number of Class A – public shares common stock outstanding for the period. Net income per share, Class A excludes the shares sold in the private placement because those shares do not have the same redemption rights as the Class A shares sold in the Public Offering. Net income (loss) per share, Class A – private placement and Class B common stock is calculated by dividing the net income, excluding interest income earned on the Trust Account and interest to pay taxes permitted to be withdrawn from the Trust Account, by the weighted average number of Class A – private placement and Class B common stock outstanding for the period.
F-10 CF Finance Acquisition Corp. Notes to Unaudited Condensed Financial Statements (continued) 2. Summary of Significant Accounting Policies (continued) 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 depository insurance coverage of $250,000. As of June 30,
Financial Instruments -The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, Recently Issued Accounting Pronouncements - The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements. 3. Public Offering The Company closed the Public Offering for the sale of approximately 28,260,000 (approximately 27,670,000 after the redemption on June 15, 2020) Units at a price of $10.00 per Unit, yielding gross proceeds of approximately On June 15, 2020, public shareholders exercised their right to redeem 593,700 Units at combined value of $6,096,437. Each Unit consists of one share of Class A common stock, and three-quarters of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7). Simultaneous with the closing of the Public Offering on December 17, 2018, the Sponsor purchased an aggregate of 600,000 Private Placement Units at a price of $10.00 per Unit ($6,000,000 in the aggregate) in a private placement. Each Unit consists of one share of Class A common stock and three-quarters of one warrant. Each whole 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). The Private Placement Units are not redeemable from funds deposited in the Trust Account. Upon the December 2018 and January 2019 closings of the Public Offering, and June 2020 termination extension vote (see Note 1), the Sponsor funded loans in the amount of $2,750,000, $75,841 and Upon the closing of the Public Offering and the sale of the Private Placement Units, and taking into consideration the offering costs, an aggregate of approximately $286,000,000 (approximately $279,900,000 after the redemption on June 15, 2020) was deposited in the Trust Account. F-11 CF Finance Acquisition Corp. Notes to Unaudited Condensed Financial Statements (continued) 4. Related Party Transactions Founder shares In July 2014, the Sponsor purchased 2,875,000 Founder Shares of the Company’s Class B common stock, par value $0.0001 (“Class B common stock”) for an aggregate price of $383. During 2015, the Sponsor contributed an additional $50,000 to the Company’s paid-in capital for no additional shares. The Founder Shares will automatically convert into shares of Class A common stock at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions (see Note 7).
OnJanuary 17, 2018, the Sponsor effectuated a recapitalization of the Company, which included a 2.5-for-1 stock split resulting in an aggregate of 7,187,500 Founder Shares outstanding and held by the Sponsor. Information contained in the unaudited condensed financial statements has been adjusted for this split. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment, at any time. In January 2019, 122,897 shares were forfeited by the Sponsor so that the Founder Shares represent 20% of the Company’s issued and outstanding shares after the Public Offering (not including the placement shares).
The initial stockholders, officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20-trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Private Placement Units Upon the December 17, 2018 closing of the Public Offering, the Sponsor paid the Company $6,000,000 for the purchase of the 600,000 Private Placement Units at a price of $10.00 per Private Placement Unit. Each Unit consists of one share of Class A common stock and three-quarters of one warrant. Each whole warrant sold as part of each Private Placement Unit is exercisable for one share of Class A common stock at a price of $11.50 per share. The proceeds from the Private Placement Units were added to the proceeds from the Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units held in the trust account will be used to fund the redemption of the Company’s Public Shares (subject to the requirements of applicable law). The warrants included in the Private Placement Units will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees. The warrants will expire five years after the completion of the Company’s Business Combination or earlier upon redemption or liquidation. The Sponsor and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Units until 30 days after the completion of the initial Business Combination. Underwriter The underwriter is an affiliate of the Sponsor (see Note 5). F-12 CF Finance Acquisition Corp. Notes to Unaudited Condensed Financial Statements (continued) 4. Related Party Transactions (continued) Related Party Loans In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the warrants included in the Private Placement Units. In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor has committed, in the form of a loan, up to $750,000 to be provided to the Company to fund the Company’s expenses relating to investigating and selecting a target business and other working capital requirements prior to the Company’s initial Business Combination. Such loan may be convertible into warrants, at a price of $1.00 per warrant at the option of the Sponsor.
As of June 30, 2020, the Company had $350,000 outstanding under the loan. As of December 31, 2019, the Company didn’t have any outstanding balance under the loan. The Sponsor previously made available to the Company, under a promissory note, up to $300,000 to be used for a portion of the expenses of the Public Offering. The promissory note is non-interest Sponsor Loan Upon the closings of the Public Offering, the Sponsor funded loans in the amount of $2,750,000 in December 2018 and $75,841 in January F-13
Notes to Unaudited Condensed Financial Statements (continued) 5. Commitments and Contingencies Registration Rights The holders of Founder Shares, Private Placement Units (and component securities) and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock). The registration rights agreement was signed on December 12, 2018. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements. In connection with the Business Combination, the registration rights agreement is being amended to provide that GCM Pubco will register for resale certain shares of common stock and other equity securities that are held by the parties thereto from time to time. Underwriting Agreement Cantor Fitzgerald & The underwriter was entitled to an underwriting discount of $0.20 per Unit, or $5,000,000 in the aggregate, even if the underwriter’s over-allotment was exercised in full. The underwriter has paid approximately $32,600,000 for 3,260,000 Units. 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 Public Offering in consideration for its services and expenses as the qualified independent underwriter. The independent underwriter will receive no other compensation. The fee was charged directly to Business Combination Marketing Agreement and Additional Fees Payable to Affiliates The Company has engaged Cantor Fitzgerald & Co. as an advisor in connection with the Company’s initial Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay Cantor Fitzgerald & Co. a cash fee for such services upon the consummation of the Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Public Offering, including any proceeds from the partial exercise of the underwriters’ over-allotment option. In addition, upon completion of the Business Combination, and assuming no change in the amount of the PIPE Transaction (as defined in Note 8), an aggregate amount of approximately $7.8 million in advisory fees and placement agent fees will be payable to Cantor Fitzgerald & Co., an affiliate of ours and the Sponsor. F-14 CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements (continued)
6.
The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure 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). The three levels of the fair value hierarchy are as
As required by U.S. GAAP guidance, financial assets and liabilities are classified in The following
F-15 CF Finance Acquisition Corp. Notes to Unaudited Condensed Financial Statements (continued) 7. Stockholders’ Equity Class A Common Stock -The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of June 30, Class B Common Stock -The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of June 30,
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the initial 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 sold in the Public Offering and related to the closing of the initial 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 Public Offering, not including the Private Placement Units, plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time. Preferred stock -The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $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 June 30, F-16 CF Finance Acquisition Corp. Notes to Unaudited Condensed Financial Statements (continued) 7. Stockholders’ Equity (continued) 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 on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its commercially reasonable best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its commercially reasonable best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The warrants included in the Private Placement Units are identical to the Public Warrants underlying the Units being sold in the Public Offering, except that the warrants included in the Private Placement Units and the Class A common stock issuable upon the exercise of the warrants included in the Private Placement Units are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the warrants included in the Private Placement Units 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 warrants included in the Private Placement Units are held by someone other than the initial purchasers or their permitted transferees, the warrants included in the Private Placement Units will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The warrants will expire five years after the completion of the Company’s Business Combination or earlier upon redemption or liquidation. F-17 CF Finance Acquisition Corp.
Notes to Unaudited Condensed Financial Statements (continued)
7. Stockholders’ Equity (continued) The Company may redeem the Public Warrants (except with respect to the warrants included in the Private Placement Units):
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