Item 1A. Risk Factors.
As a smaller reporting
company, we are not required to include risk factors in this Report. However, below is list of material risks, uncertainties and
other factors that could have a material effect on the Company and its operations:
For the complete list of
risks relating to our operations, see the section titled “Risk Factors” contained in our Registration Statement. For
risks relating to AEye and the AEye Business Combination, please see the AEye Registration Statement to be filed with the SEC.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
Our executive offices are
located at 110 East 59th Street, New York, NY 10022, and our telephone number is (212) 938-5000. The cost for our
use of this space is included in the $10,000 per month fee we pay to the sponsor for office space, administrative and shared personnel
support services. We consider our current office space adequate for our current operations.
Item 3. Legal Proceedings.
From time to time, the
Company may become involved in actions, claims, suits, and other legal proceedings arising in the ordinary course of its business.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
(a) Market Information
Our units, public shares
and public warrants are each traded on Nasdaq under the symbols “CFACU,” “CFAC” and “CFACW,”
respectively. Our units commenced public trading on November 13, 2020, and our public shares and public warrants commenced separate
public trading on January 4, 2021.
(b) Holders
On March 15, 2021, there
were two (2) holders of record of our units, one (1) holder of record of our Class A common stock, three (3) holders of record
of our Class B common stock and one (1) holder of record of our warrants.
(c) Dividends
We have not paid any cash
dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination.
The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and
general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent
to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board
of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further,
if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited
by restrictive covenants we may agree to in connection therewith.
(d) Securities Authorized for Issuance Under Equity Compensation Plans.
None.
(e) Recent Sales of Unregistered Securities
None.
(f) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
(g) Use of Proceeds from the Initial Public Offering
On November 17, 2020, the
Company consummated its initial public offering of 23,000,000 units, including 3,000,000 units issued pursuant to the exercise
of the underwriters’ over-allotment option in full. Each unit consists of one public share and one-third of one public warrant,
with each whole public warrant entitling the holder thereof to purchase one public share for $11.50 per share. The units were sold
at a price of $10.00 per unit, generating gross proceeds to the Company of $230,000,000.
A
total of $230,000,000of the proceeds from the initial public offering and the
sale of the private placement units (which amount includes $4,000,000 of business combination market fees payable to CF&Co.
for certain services to be provided in connection with our initial business combination), was placed in a U.S.-based trust account
at J.P. Morgan Chase Bank, N.A., maintained by Continental, acting as trustee. The proceeds held in the trust account may be invested
by the trustee only in U.S. government securities with a maturity of 185 days or less or in money market funds investing solely
in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act.
Item 6. Reserved.
References to “we”,
“us”, “our” or the “Company” are to CF Finance Acquisition Corp. III, except where the context
requires otherwise. The following discussion should be read in conjunction with our financial statements and related notes thereto
included elsewhere in this Report.
Cautionary Note Regarding Forward-Looking
Statements
This Report includes forward-looking statements
within the meaning of Section 27A of the Securities Act, and Section 21E of 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.
Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC
filings.
Overview
We
are a blank check company incorporated in Delaware on March 15, 2016 for the purpose of effecting an initial business combination.
Our sponsor is CF Finance Holdings III, LLC.
Although we are not limited
to a particular industry or sector for purpose of consummating an 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, subject to all of the risks associated with early stage and emerging growth companies.
Our registration statement
for our initial public offering became effective on November 12, 2020. On November 17, 2020, we consummated the initial public
offering of 23,000,000 units, including 3,000,000 units sold upon the exercise of the underwriters’ overallotment option
in full, at a purchase price of $10.00 per unit, generating gross proceeds of $230,000,000. 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 on the later of 30 days after the completion of the initial
business combination or until November 17, 2021 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 500,000 units at a price of $10.00 per private placement unit
to the sponsor in a private placement, generating gross proceeds of $5,000,000.
Following the closing of
the initial public offering and sale of private placement units on November 17, 2020, an amount of $230,000,000 ($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 located in the United States at J.P. Morgan Chase Bank, N.A., with Continental acting as trustee, which may
be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act,
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, until the earlier of: (i) the completion of an initial business combination and (ii) the distribution of the trust account,
as described below.
We have until May 17, 2021
or prior to the expiration of the applicable four-month extension period, as described below, to consummate an initial business
combination (the “Combination Period”). If we are unable to complete an 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 the Company to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then
outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of 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 an initial business combination within the Combination Period.
If we anticipate that we
may not be able to consummate an initial business combination by May 17, 2021, and subject to the sponsor depositing additional
funds into the trust account as set out below, the time to consummate an initial business combination shall be extended for an
additional four months up to four times, for a total of up to 22 months to complete an initial business combination. The stockholders
will not be entitled to vote or redeem their shares in connection with any such extension. Pursuant to the terms of the Charter
and the trust agreement entered into between us and Continental, in order for the time available for us to consummate an initial
business combination to be extended, the sponsor or its affiliates or permitted designees, upon five days advance notice prior
to the applicable deadline, must deposit into the trust account $2,300,000 ($0.10 per public unit), on or prior to the date of
the applicable deadline, for each of the available four month extensions providing a total possible business combination period
of 22 months at a total payment value of $9,200,000 ($0.10 per public unit). Any such payments would be made in the form of a non-interest
bearing loan which would be due and payable on the consummation of the initial business combination out of the proceeds of the
trust account released to us. If we do not complete an initial business combination, we may repay such loans solely from assets
not held in the trust account, if any. The sponsor and its affiliates or designees intend, but are not obligated, to fund the trust
account to extend the time for us to complete our initial business combination.
Liquidity and Capital
Resources
As of December 31, 2020,
we had $1,250 of cash in our operating account, working capital deficit of approximately $45,900, and approximately $800 of interest
income in the trust account available to pay franchise and income taxes.
Our liquidity needs through
December 31, 2020 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 $140,000 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, and the Sponsor 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 an initial business combination, our sponsor has committed up to $1,750,000 to be provided to us 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 Company’s initial business combination (the “Sponsor Loan”). If the Sponsor
Loan is insufficient, the sponsor or an affiliate of the sponsor, or certain of our officers and directors intend, but are not
obligated to, provide us additional loans. As of December 31, 2020, there was approximately $428,000 outstanding under the Sponsor
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 an 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. It is the current intention of the sponsor
to exercise, at a minimum, two four month extensions should an initial business combination not occur, as noted above, such that
the life of the Company will be at least one year and one day from the issuance of the Report.
Results of Operations
Our
entire activity from inception through December 31, 2020 related to our formation, the preparation for the initial public offering, and
since the closing of the initial public offering, the search for a prospective
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 our initial business combination. We will generate non-operating income
in the form of interest income on investments held in 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 year ended December 31, 2020, we incurred a net loss of approximately $153,000, which consisted of approximately $116,000 in
general and administrative expenses, $14,000 in administrative expenses paid to the sponsor and approximately $24,000 of franchise
tax expense, which was partially offset by an approximately $800 interest income on investments held in the trust account.
For
the year ended December 31, 2019, we incurred a net loss of approximately $500, which consisted of approximately $100 in general
and administrative expenses and $400 of franchise tax expense.
Contractual Obligations
Business Combination Marketing Agreement
We engaged Cantor, an affiliate
of the sponsor, as an advisor in connection with the Company’s initial business combination to assist us in holding meetings
with our stockholders to discuss the initial business combination and the target business’ attributes, introduce us to potential
investors that are interested in purchasing the Company’s securities, assist us in obtaining stockholder approval for the
initial business combination and assist us with our press releases and public filings in connection with the initial business combination.
We will pay Cantor a cash fee (“Marketing Fee”) for such services upon the consummation of the initial business combination
in an amount 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 full 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 has committed up to $1,750,000 in the Sponsor Loan
to be provided to us 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 Company’s initial business combination. As of December 31, 2020, we had
borrowed approximately $428,000 under the Sponsor Loan.
The sponsor pays expenses
on our behalf. We reimburse the sponsor for such expenses paid on our behalf. As of December 31, 2020, we had accounts payable
outstanding to the sponsor for such expenses paid on our behalf of approximately $4,300.
Critical Accounting Policies and Estimates
The Company has identified
the following as its critical accounting polices:
Use of Estimates
The preparation of financial
statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements,
and income and expenses during the periods reported. Actual results could materially differ from those estimates.
Emerging Growth Company
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.
Class A Common Stock Subject to
Possible Redemption
We account for our Class A
common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are measured at fair value. Shares of conditionally redeemable Class A
common stock (including 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. Our Class A common stock
features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain
future events. Accordingly, as of December 31, 2020, 22,531,950 shares of Class A common stock subject to possible redemption
are presented as temporary equity, outside of the stockholders’ equity section of our balance sheet.
Net Income (Loss) Per Common Share
We
comply with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net income per common share
is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common
stock outstanding for the period. We have not considered the effect of the warrants
sold in the initial public offering and the concurrent private placement to purchase an aggregate of 7,833,333 shares
of Class A common stock in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under
the treasury stock method. As a result, diluted earnings per common share is the same as basic earnings per common
share for the period.
Our statement of operations
includes a presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of
income per share. Net income per share, basic and diluted for shares of Class A common stock are calculated by dividing the interest
income (loss) earned on cash equivalents and investments and held in the trust account, net of applicable taxes available to be
withdrawn from the trust account, by the weighted average number of shares of Class A common stock outstanding for the applicable
period, excluding 500,000 shares of Class A common stock held by the sponsor, which is not subject to redemption. Net loss per
share, basic and diluted for shares of Class B common stock is calculated by dividing the net income, less income attributable
to the shares of redeemable Class A common stock by the weighted average number of shares of Class B common stock and 500,000 shares
of Class A common stock held by the sponsor outstanding for the applicable period.
Off-Balance Sheet Arrangements and Contractual Obligations
As of December 31,
2020, 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.
Recent Accounting
Pronouncements
Our
management does not believe there are any other recently issued, but not yet effective, accounting pronouncements, if currently
adopted, that would have a material effect on our financial statements.
Item 7A. 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 8. Financial Statements and Supplementary Data.
Reference is made to pages
F-1 through F-18 comprising a portion of this Report, which are incorporated herein by reference.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision
and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (together,
the “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.
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 Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions
regarding required disclosure.
Management’s Report on Internal Controls
over Financial Reporting
This Report does not include
a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered
public accounting firm due to a transition period established by the rules of the SEC for newly public companies.
Changes in Internal Control over Financial
Reporting
There were no changes in
our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during
the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
As of the date of this
report, our directors and officers are as follows:
Name Age Position
Howard W. Lutnick 59 Chairman and Chief Executive Officer
Anshu Jain 58 President and Director
Alice Chan 40 Chief Financial Officer and Director
Robert Sharp 55 Director
Robert Hochberg 58 Director
The experience of our directors
and executive officers is as follows:
Howard W. Lutnick has
been our Chairman and Chief Executive Officer since March 2016. Mr. Lutnick is also the Chairman, President and Chief Executive
Officer of Cantor. Mr. Lutnick joined Cantor in 1983 and has served as President and Chief Executive Officer of Cantor since 1992
and as Chairman since 1996. Mr. Lutnick’s company, CF Group Management, Inc. (“CFGM”), is the managing general
partner of Cantor. Mr. Lutnick is also the Chairman of the Board of Directors of BGC Partners, Inc. and its Chief Executive Officer,
positions in which he has served from June 1999 to the present. In addition, Mr. Lutnick has served as Chairman of Newmark Group,
Inc. since 2016. Mr. Lutnick also served as the Chairman and Chief Executive Officer of Cantor SPAC I, from October 2015 until
consummation of its business combination with GCM Grosvenor, Inc. (“GCM Grosvenor”) in November 2020, and Cantor SPAC
II, from September 2019 until consummation of its business combination with View, Inc. (“View”) in March 2021. Mr.
Lutnick also serves as the Chairman and Chief Executive Officer of CF Acquisition Corp. IV (“Cantor SPAC IV”) since
January 2020, CF Acquisition Corp. V (“Cantor SPAC V”) since April 2020, CF Acquisition Corp. VI (“Cantor SPAC
VI”) since April 2020, CF Acquisition Corp. VII (“Cantor SPAC VII”) since July 2020 and CF Acquisition Corp.
VIII (“Cantor SPAC VIII”) since July 2020. Mr. Lutnick is a member of the Board of Directors of the Fisher Center for
Alzheimer’s Research Foundation at Rockefeller University, the Board of Directors of the Horace Mann School, the Board of
Directors of the National September 11th Memorial & Museum, the Board of Directors of the Partnership for New York City, and
the Board of Overseers of The Hoover Institution. In addition, Mr. Lutnick has served as Chairman and Chief Executive Officer of
each of Cantor Fitzgerald Income Trust, Inc. (formerly known as Rodin Global Property Trust, Inc.) and Rodin Income Trust, Inc.
since February 2017 and as President of Rodin Income Trust, Inc. since January 2018. We believe that Mr. Lutnick is qualified
to serve as a member of our board of directors due to his extensive investment, management and public company experience.
Anshu Jain has
been our President since March 2020 and our director since November 2020. Mr. Jain is also the President of Cantor, a position
he has held since January 2017. Mr. Jain directs strategy, vision and operational foundation across Cantor’s businesses.
Mr. Jain also served as the President of Cantor SPAC I, from January 2018, and a director of Cantor SPAC I from December 2018,
until in each case consummation of its business combination with GCM Grosvenor in November 2020, and as the President of Cantor
SPAC II, from September 2019, and a director of Cantor SPAC II, from August 2020, until in each case consummation of its business
combination with View in March 2021. Mr. Jain also serves as the President of Cantor SPAC IV since September 2020 and a director
of Cantor SPAC IV since December 2020, as the President of Cantor SPAC V since September 2020 and a director of Cantor SPAC V since
January 2021, as the President of Cantor SPAC VI since October 2020 and a director of Cantor SPAC VI since February 2021, and as
the President of Cantor SPAC VII and Cantor SPAC VIII since January 2021. Mr. Jain was Co-CEO of Deutsche Bank from June 2012 to
June 2015. Between February 2016 and March 2017, Mr. Jain was an advisor to Social Finance Inc. and consultant to Deutsche Bank
from July 2015 to January 2016. He was also a member of Deutsche Bank’s Management Board from 2009 to 2015 and Deutsche Bank’s
Group Executive Committee from 2002 to 2015 and previously led Deutsche Bank’s team advising the UK Treasury on financial
stability. Mr. Jain joined Deutsche Bank from Merrill Lynch in 1995. Mr. Jain sat on the Board of Directors of the Institute of
International Finance from 2012 to 2015 and previously was a member of the Financial Services Forum and served on the International
Advisory Panel of the Monetary Authority of Singapore. Mr. Jain is a trustee of Chance to Shine, a leading UK based sports charity
whose mission is to spread the power of cricket throughout schools and communities. Mr. Jain also serves on the MIT Sloan Finance
Group Advisory Board. Mr. Jain received his Bachelor’s degree in Economics, with honors, from the University of Delhi and
his MBA in Finance, Beta Gamma Sigma, from the University of Massachusetts Amherst. We believe that Mr. Jain is qualified to serve
as a member of our board of directors due to his extensive investment and management experience.
Alice Chan has
been our Chief Financial Officer and director since January 2021. Ms. Chan joined Cantor in March 2015 and has served as the Global
Controller and Managing Director since March 2019. In this position, Ms. Chan oversees a range of financial functions for Cantor
and its affiliates, most notably financial reporting, consolidations, new accounting standard implementations, corporate accounting,
and process enhancements. Ms. Chan served as the Chief Financial Officer and a director of Cantor SPAC II from January 2021 until
consummation of its business combination with View in March 2021. Ms. Chan has also served as the Chief Financial Officer and a
director of Cantor SPAC IV and Cantor SPAC V since January 2021, as the Chief Financial Officer of Cantor SPAC VI, Cantor SPAC
VII and Cantor SPAC VIII since January 2021 and a director of Cantor SPAC VI since February 2021. In addition, Ms. Chan has been
the Chief Financial Officer of Fintan Master Fund Ltd. and the Chief Financial Officer of Fintan Investments Ltd since January
2019. Prior to joining Cantor, Ms. Chan worked at Goldman Sachs for approximately 10 years, focusing on broker dealers’ financial
and regulatory reporting, and bank financial reporting. Ms. Chan holds Series 27 and 99 licenses. She received a B.S. in Finance
from Pace University and a M.S. in Accounting from St. John’s University. We believe that Ms. Chan is qualified to serve
as a member of our board due to her extensive accounting and management experience.
Robert G. Sharp has
served as a member of our board of directors since November 2020. Mr. Sharp has over 25 years of experience in corporate acquisitions
and strategically building equity value, combining financial and operational expertise. Since January 2014, Mr. Sharp has
been Co-CEO of Ramy Brook, a leading contemporary fashion brand. Mr. Sharp was a founding partner and member of the Executive
Committee of MidOcean Partners, a leading private equity firm, from February 2003 to December 2013. From September 1999 to February
2003, Mr. Sharp was a Managing Director at DB Capital Partners, the private equity division of Deutsche Bank, which was acquired
out of Deutsche Bank to form MidOcean Partners. Mr. Sharp joined DB Capital Partners from Investcorp International, a global
private equity firm. Mr. Sharp has served on numerous corporate boards throughout his career, and is currently Chairman of
Thomas Scientific, one of the largest suppliers of laboratory products and services. Mr. Sharp also served as a director of
CF Finance Acquisition Corp. from March 2019 until consummation of its business combination with GCM Grosvenor in November 2020.
Mr. Sharp is a member of the Advisory Board of Mount Sinai Hospital, and a member of the Steering Committee of Duke University’s
Financial Economics Center. Mr. Sharp received his B.A. in Economics, Phi Beta Kappa, Summa Cum Laude, from Union College,
and his M.B.A in Finance from Columbia University, where he was a Samuel Bronfman Fellow. We believe that Mr. Sharp is qualified
to serve as a member of our board of directors due to his extensive investment, public company and management experience.
Robert J. Hochberg has
served as a member of our board of directors since November 2020. Mr. Hochberg is currently President and Chief Executive
Officer of Numeric Computer Systems, Inc. Mr. Hochberg has served as President since June 1984 and as Chief Executive Officer
since November 1994. Numeric Computer Systems is a global software company with offices in New York, San Juan, Auckland, Jakarta
and Sydney. Additionally, Mr. Hochberg currently serves on the Board of Directors of Rodin Income Trust, Inc. Mr. Hochberg
also served as a director of Cantor SPAC I from January 2020 until consummation of its business combination with GCM Grosvenor
in November 2020 and a director of Cantor SPAC II from August 2020 until consummation of its business combination with View in
March 2021. Mr. Hochberg is a graduate of Vassar College, where he received a Bachelor of Arts in Economics. We believe that
Mr. Hochberg is qualified to serve as a member of our board of directors due to his extensive experience in business management.
Number and Terms of Office of Officers and
Directors
Our board of directors
consists of five directors. Holders of our founder shares will have the right to elect all of our directors prior to consummation
of our initial business combination and holders of our public shares will not have the right to vote on the election of directors
during such time. These provisions of the Charter may only be amended if approved by at least 90% of our common stock voting at
a stockholder meeting. Approval of our initial business combination will require the affirmative vote of a majority of our board
directors, including Mr. Lutnick. Our board of directors is divided into two classes with only one class of directors being elected
in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a
two-year term. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting
until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors,
consisting of Mr. Jain and Ms. Chan, will expire at our first annual meeting of stockholders. The term of office of the second
class of directors, consisting of Messrs. Lutnick, Hochberg and Sharp, will expire at the second annual meeting of stockholders.
We may not hold an annual meeting of stockholders until after we consummate our initial business combination.
Subject to the terms of
any preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative
vote of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally
in the election of directors, voting together as a single class; provided, however, that prior to the consummation of our initial
business combination, any or all of the directors may be removed from office, for cause or not for cause, only by the affirmative
vote of holders of a majority of the voting power of all then outstanding founder shares. Subject to any other special rights applicable
to the stockholders, including holders of preferred stock, whenever any director shall have been elected by the holders of any
class of stock voting separately as a class, such director may be removed and the vacancy filled only by the holders of that class
of stock voting separately as a class. Vacancies caused by any such removal and not filled by the stockholders at the meeting at
which such removal shall have been made, or any vacancy caused by the death or resignation of any director or for any other reason,
and any newly created directorship resulting from any increase in the authorized number of directors, may be filled by the affirmative
vote of a majority of the directors then in office, although less than a quorum, and in any case, prior to the consummation of
our initial business combination, by a majority of the holders of our founder shares, and any director so elected to fill any such
vacancy or newly created directorship shall hold office until his or her successor is elected and qualified or until his or her
earlier resignation or removal.
Our officers are appointed
by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our
board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws
provide that our officers may consist of a Chairman of the board, Chief Executive Officer, Chief Financial Officer, Senior Managing
Directors, Managing Directors, President, Vice Presidents, Secretary, Treasurer, Assistant Secretaries and such other offices as
may be determined by the board of directors.
Committees of the Board of Directors
Our board of directors
has two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and certain limited
exceptions, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised
solely of independent directors. In addition, Nasdaq rules generally require that the compensation committee of a listed company
be comprised solely of independent directors, subject to certain limited exceptions set forth thereunder. We intend to rely on
the “controlled company” exemption. Each committee operates under a charter that has been approved by our board and
has the composition and responsibilities described below.
Audit Committee
We have established an
audit committee of the board of directors. Messrs. Sharp and Hochberg and Ms. Chan serve as members of our audit committee, and
Mr. Sharp chairs the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have
at least three members of the audit committee, all of whom must be independent, subject to certain phase-in provisions. We
rely on the phase-in exceptions to such requirement of Nasdaq. Messrs. Sharp and Hochberg meet the independent director standard
under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit
committee is financially literate and our board of directors has determined that Mr. Sharp qualifies as an “audit committee
financial expert” as defined in applicable SEC rules.
We have adopted an audit
committee charter, which details the principal functions of the audit committee, including:
Compensation Committee
We have established a compensation
committee of the board of directors. Messrs. Sharp and Hochberg serve as members of our compensation committee. Under the Nasdaq
listing standards and applicable SEC rules, we generally would be required to have at least two members of the compensation committee,
all of whom must be independent, subject to certain limited exceptions set forth under the rules of Nasdaq. Mr. Sharp and
Mr. Hochberg are each independent and Mr. Sharp chairs the compensation committee.
We have adopted a compensation
committee charter, which details the principal functions of the compensation committee, including:
● reviewing on an annual basis our executive compensation policies and plans;
The charter also provides
that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel
or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser.
However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation
committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Director Nominations
We do not have a standing
nominating committee though we intend to form a corporate governance and nominating committee as and when required to do so by
law or Nasdaq rules. In accordance with Rule 5605 of the Nasdaq rules, a majority of the independent directors may recommend a
director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily
carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating
committee. The directors who will participate in the consideration and recommendation of director nominees are Messrs. Sharp
and Hochberg. In accordance with Rule 5605 of the Nasdaq rules, Messrs. Sharp and Hochberg are independent. As there is no
standing nominating committee, we do not have a nominating committee charter in place.
The board of directors
will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed
nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).
Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth
in our bylaws. However, prior to our initial business combination, holders of our public shares will not have the right to recommend
director candidates for nomination to our board of directors.
We have not formally established
any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying
and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience,
knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests
of our stockholders.
Code of Ethics
We have adopted a Code
of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our audit and compensation
committee charters as exhibits to the Registration Statement. You are able to review these documents by accessing our public filings
at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge
upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current
Report on Form 8-K.
Item 11. Executive Compensation
Compensation Discussion and Analysis
None of our officers or
directors has received any cash compensation for services rendered to us. Except as described below, to date, no compensation of
any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be
paid by us to our officers and directors, or, other than as described herein, to the sponsor or any affiliate of the sponsor or
officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business
combination (regardless of the type of transaction that it is). In October and November 2020, the sponsor transferred 20,000 founder
shares to each of Mr. Sharp and Mr. Hochberg, respectively, our independent directors. In addition, on November 13, 2020,
we began paying an amount equal to $10,000 per month to the sponsor for office space, administrative and shared personnel support
services. In addition, our officers and directors will be reimbursed for any out-of-pocket expenses incurred in connection
with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business
combinations. Our audit committee will review on a quarterly basis all payments that were made to the sponsor and officers or directors,
or our or their affiliates. Any such payments prior to an initial business combination will be made using funds held outside the
trust account. Other than quarterly audit committee review of such payments, we do not expect to have any additional controls in
place governing our reimbursement payments to our directors and officers for their out-of-pocket expenses incurred in connection
with identifying and consummating an initial business combination. We have engaged CF&Co. as a financial advisor and placement
agent in connection with the AEye Business Combination and have agreed to pay CF&Co. a customary financial advisory fee in
an amount that constitutes a market standard financial advisory fee for comparable transactions. In the event the AEye Business
Combination is not consummated, we may engage CF&Co., or another affiliate of the sponsor, as a financial advisor in connection
with any other initial business combination and pay such affiliate a customary financial advisory fee in an amount that constitutes
a market standard financial advisory fee for comparable transactions. Furthermore, we may acquire a target company that has engaged
CF&Co., or another affiliate of the sponsor, as a financial advisor, and such target company may pay such affiliate a financial
advisory fee in connection with our initial business combination.
After the completion of
our initial business combination, directors or members of our management team who remain with us may be paid consulting or management
fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender
offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed initial business combination.
We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members
of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination,
because the directors of the post-combination business will be responsible for determining officer and director compensation.
Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either
by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board
of directors.
We do not intend to take
any action to ensure that members of our management team maintain their positions with us after the consummation of our initial
business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting
arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting
arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target
business but we do not believe that the ability of our management to remain with us after the consummation of our initial business
combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to
any agreements with our officers and directors that provide for benefits upon termination of employment.
The following table sets
forth information regarding the beneficial ownership of our common stock as of March 15, 2021 based on information obtained from
the persons named below, with respect to the beneficial ownership of common stock, by:
● all our executive officers and directors as a group.
In the table below, percentage
ownership is based on 29,250,000 shares of our common stock, consisting of (i) 23,500,000 shares of our Class A common stock and
(ii) 5,750,000 shares of our Class B common stock, issued and outstanding as
of March 15, 2021. On all matters to be voted upon, except for the election of directors of the board, holders of the shares of
Class A common stock and shares of Class B common stock vote together as a single class. Currently, all of the shares of Class
B common stock are convertible into Class A common stock on a one-for-one basis.
Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock
beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants
as these warrants are not exercisable within 60 days of the date of this Report.
Class A Common Stock Class B Common Stock Approximate
Anshu Jain — — — — —
Alice Chan — — — — —
Robert G. Sharp — — 20,000 * *
Robert J. Hochberg — — 20,000 * *
Polar Asset Management Partners Inc.(6) 1,500,000 6.4 % — — 5.3 %
BlueCrest Capital Management Limited (7) 1,500,000 6.4 % — — 5.3 %
Highbridge Capital Management, LLC(8) 1,300,000 5.5 % — — 4.4 %
* less than 1%
The sponsor and our officers
and directors are deemed to be our “promoters” as such term is defined under the federal securities laws.
Securities Authorized for Issuance under
Equity Compensation Table
None
Changes in Control
For more information on
the AEye Business Combination, see “Item 1. Business”.
In March 2016, the
sponsor purchased an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000. On September 24, 2020,
we effectuated a 2.5-for-1 stock split. On October 5, 2020, the sponsor returned to us, at no cost, an aggregate of 8,625,000
founder shares, which we cancelled, split resulting in an aggregate of 5,750,000 founder shares outstanding and held by the sponsor.
In addition, in October and November 2020, the sponsor transferred 20,000 founder shares to each of Mr. Sharp and Mr. Hochberg,
respectively, our independent directors. The number of founder shares issued was determined based on the expectation that such
founder shares would represent 20% of the outstanding shares upon completion of the initial public offering (not including the
shares of Class A common stock underlying the private placement units). The founder shares (including the Class A common
stock issuable upon conversion thereof in connection with our initial business combination) may not, subject to certain limited
exceptions, be transferred, assigned or sold by the holder for a period of time as set forth in the Insider Letter.
The sponsor, pursuant to
a written agreement, purchased an aggregate of 500,000 private placement units for a purchase price of $10.00 per unit in a private
placement simultaneously with the closing of the initial public offering. As such, the sponsor’s interest in this transaction
was valued at $5,000,000.
The private placement units
are identical to the units sold in the initial public offering except that the private placement warrants included therein, so
long as they are held by the sponsor or its permitted transferees, (i) will not be redeemable by us, (ii) may not (including
the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred,
assigned or sold by the sponsor until 30 days after the completion of our initial business combination, (iii) may be
exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they
are held by the sponsor, will not be exercisable more than five years from the effective date of the Registration Statement in
accordance with FINRA Rule 5110(g)(8)(A). The private placement units (including the private placement shares, the private placement
warrants and the shares of Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the holder until 30 days after the completion of our initial business combination.
If we anticipate that we
may not be able to consummate our initial business combination by May 17, 2021, and subject to the sponsor depositing additional
funds into the trust account as set out below, our time to consummate a business combination shall be extended for an additional
four months up to four times, until September 17, 2022, to complete a business combination. Pursuant to the terms of the Charter
and the trust agreement we entered into with Continental, in order for the time available for us to consummate our initial business
combination to be extended, the sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline,
must deposit into the trust account $2,300,000 ($0.10 per unit), on or prior to the date of the applicable deadline, for each of
the available four month extensions providing a total possible business combination period of 22 months at a total payment
value of $9,200,000 ($0.10 per unit). Any such payments would be made in the form of a non-interest bearing loan which would
be due and payable on the consummation of our initial business combination out of the proceeds of the trust account released to
us. If we do not complete a business combination, we may repay such loans solely from assets not held in the trust account, if
any. Furthermore, the letter agreement with our initial stockholders contains a provision pursuant to which the sponsor has agreed
to waive its right to be repaid for such loans in the event that we do not complete a business combination. The sponsor and its
affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business
combination.
If any of our officers
or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she
has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business
combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she
determines to present the opportunity to us. These conflicts may not be resolved in our favor and a potential target business may
be presented to another entity prior to its presentation to us. The Charter provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his
or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the
opportunity to us without violating another legal obligation.
We are not prohibited from
pursuing an initial business combination with a business that is affiliated with the sponsor, its affiliates, or our officers or
directors, including an Affiliated Joint Acquisition. In the event we seek to complete our initial business combination with a
business that is affiliated with the sponsor, its affiliates or our officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation
opinions that our initial business combination is fair to our stockholders from a financial point of view.
Other than as described
below, no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any
payment of a loan, will be paid by us to the sponsor, officers and directors, or any affiliate of the sponsor or officers, prior
to, or in connection with any services rendered in order to effectuate, the consummation of an initial business combination (regardless
of the type of transaction that it is). In October and November 2020, the sponsor transferred 20,000 founder shares to each of
Mr. Sharp and Mr. Hochberg, respectively, our independent directors. In addition, the sponsor, officers and directors,
or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our