The Public Warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.liquidation of the Company. In addition, if (x) the Company issues additional Class A ordinary sharesOrdinary Shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A ordinary sharesOrdinary Shares (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the Business Combination (net of redemptions) and (z) the volume weighted-averageweighted average trading price of Class A ordinary sharesOrdinary Shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Public Warrantswarrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described in the Public Warrant Agreement, dated November 8, 2021 by and between the Company and Continental Stock Transfer & Trust Company, under “Redemption of warrants for Class A ordinary shares”Ordinary Shares” and “Redemption of warrants for cash” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
References in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to “we,” “us” or the “Company” refer to DP Cap Acquisition Corp I. References to our “management” or our “management team” refer to our officers and directors and references to the “Sponsor” refer to DP Investment Management Sponsor I LLC. The following discussion and analysis of the Company’s condensed financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report (the “Financial Statements”). Capitalized terms used but not otherwise defined herein have the meaning set forth in the Financial Statements. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors sectionsections of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 11, 2022.17, 2023 and this Quarterly Report. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on April 8, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”) that we have not yet identified. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies. We completed our Public Offering on November 12, 2021. As of June 30, 2022,2023, we had not identified any Business Combination target.
We presently have no operating revenuesrevenue and have had no operations other than the active solicitation of a target business with which to complete a Business Combination.
We expect to continue to incur significant costs in the pursuit of our Business Combination. We cannot assure you that our plans to complete a Business Combination will be successful.
Our registration statement for our Public Offering was declared effective on November 8, 2021. On November 12, 2021, we consummated our Public Offering of 23,000,000 units (the “Units”), which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments. Each Unit consists of one Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”), and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $230.0 million.
Simultaneously with the closing of the Public Offering, we consummated the private sale (the “Private Placement”) of 4,733,333 warrants (each, a “Private Placement Warrant” and collectively, the(the “Private Placement Warrants”) to DP Investment Management Sponsor I LLC (the “Sponsor”), each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating total gross proceeds of $7.1 million.
Simultaneously with the closing of the Public Offering, pursuant to the Sponsor’s promissory note (the “Sponsor Note”), the Sponsor loaned $4,600,000 to the Company (the “Sponsor Loan”). The Sponsor Loan is interest free. The Sponsor Loan shall be repaid or converted into warrants (the “Sponsor Loan Warrants”) at a purchase price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of our initial Business Combination. Any Sponsor Loan Warrants issued will be identical to the Private Placement Warrants.
Upon the closing of our Public Offering, a total of $234.6 million ($10.20 per unit), comprised of $225.4 million of the proceeds from the Public Offering (which amount includes $8.05 million of the underwriter’s deferred discount), $4.6 million of the proceeds of the sale of the Private Placement Warrants and $4.6 million of the proceeds from the Sponsor Loan, were placed in a U.S.-based trust account (“Trust Account”) maintained by Continental Stock Transfer & Trust Company acting as trustee. The funds held in the Trust Account may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by us meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of the net proceeds of our Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that we will be able to complete a Business Combination successfully.
We must complete one or more Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of deferred underwriting discounts held in trust) at the time of our signing a definitive agreement in connection with our Business Combination. However, we only intend to 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.
If we are unable to complete a Business Combination within 18 months from the closing of the Public Offering, or May 12, 2023, (the “Combination Period”), and our shareholders have not amended our amended and restated memorandum and articles of association to extend suchExtended Combination Period (as defined below), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes (if any) (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
We cannot assure you that our plans to complete a Business Combination will be successful.
On May 5, 2023, certain of our unaffiliated investors (the “Investors”) entered into non-redemption agreements (“Non-Redemption Agreements”) with the Sponsor, pursuant to which the Investors agreed to (i) not redeem an aggregate of up to 4,000,000 previously-held Class A ordinary shares (the “Investor Shares”) in connection with the Extension Proposal (as defined below) and (ii) vote the Investor Shares in favor of the Extension Proposal. In exchange for these commitments from the Investors, the Sponsor has agreed to transfer to the Investors (i) an aggregate of up to 1,000,000 Class B ordinary shares in connection with an extension until November 12, 2023 (the “Initial Extension Date”) and (ii) to the extent our board of directors agrees to further extend the date up to three times by an additional month each time until February 12, 2024 (the “Secondary Extension Date,” such proposal, the “Extension Proposal” and such combination period, the “Extended Combination Period”) to consummate its Business Combination, an aggregate of up to 1,500,000 Class B ordinary shares, which includes the Class B ordinary shares referred to in clause (i), in each case, on or promptly after the consummation of the Business Combination.
On May 10, 2023, we held an Extraordinary General Meeting of shareholders (the “Extraordinary General Meeting”) at which our shareholders voted to approve an amendment to our amended and restated memorandum and articles of association to extend the date by which we must (1) consummate our Business Combination, (2) cease our operations except for the purpose of winding up if we fail to complete such Business Combination, and (3) redeem all of the Class A ordinary shares included as part of the Units sold in the Public Offering, from May 12, 2023 to November 12, 2023, with optional additional extensions of up to three times by an additional month each time, at the option of our board of directors, until February 12, 2024.
In connection with the Extraordinary General Meeting, shareholders holding 18,940,598 Class A ordinary shares issued in our Public Offering exercised their right to redeem such shares at a per share redemption price of $10.51. As a result, approximately $199.0 million was removed from our Trust Account to pay such holders. Following the redemptions, we have 4,059,402 Class A ordinary shares with redemption rights outstanding.
Results of Operations
For the three and six months ended June 30, 2023, we had net income of $1,074,593 and $3,242,422, respectively, which consisted of earnings on investments held in Trust Account of $1,690,637 and $4,215,754, respectively, partially offset by general and administrative expenses of $616,044 and $973,332 (including formation expenses), respectively.
For the three and six months ended June 30, 2022, we had a net loss of $5,259 and $133,844, respectively, which consisted of formationearnings on investments held in Trust Account of $316,788 and $339,459, respectively, offset by general and administrative expenses of $322,047 and $473,303 respectively and earnings on investments held in the Trust Account of $316,788 and $339,459,(including formation expenses), respectively.
All activity from April 8, 2021 (inception) through June 30, 2022,2023, relates to our formation and our Public Offering and subsequent to our Public Offering, the search for a target for our Business Combination. We will not generate any operating revenues until after the completion of our Business Combination, at the earliest.
Liquidity and Capital Resources
The registration statement for our Public Offering was declared effective by the SEC on November 8, 2021. On November 12, 2021, we consummated our Public Offering of 23,000,000 Units, inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Public Offering, we consummated the sale of 4,733,333 Private Placement Warrants to our Sponsor at a price of $1.50 per warrant, generating gross proceeds of $7,100,000. Simultaneously with the closing of the Public Offering and Private Placement, our Sponsor loaned us $4,600,000 under the Sponsor Loan.
Following the Public Offering, the sale of the Private Placement Warrants and the issuance of the proceeds under the Sponsor Loan, a total of $234,600,000 was placed in the Trust Account, which consisted of $225,400,000 from the proceeds from the Public Offering, $4,600,000 from the proceeds of the sale of the Private Placement Warrants and $4,600,000 from the proceeds from the Sponsor Loan. We incurred $13,148,152 in transaction costs, including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $498,152 of other costs.
Our liquidity needs up to June 30, 2023 had been satisfied through (i) a payment from the Sponsor along with certain funds controlled by Data Point Capital of $25,000 to cover certain offering and formation costs in exchange for the issuance of the Founder Shares to the Sponsor and (ii) the receipt of loans to us of up to $300,000 by the Sponsor under an unsecured promissory note. The unsecured promissory note was non-interest bearing and was due at the earlier of December 31, 2021 and the closing of the Public Offering. As of June 30, 2023, no amounts were outstanding under the unsecured promissory note. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us working capital loans. As of June 30, 2023, there were no amounts outstanding under any working capital loans.
For the six months ended June 30, 2023, net cash used in operating activities was $252,121, consisting of net income of $3,242,422, earnings on investments held in Trust Account of $4,215,754 and changes in operating assets and liabilities of $721,211.
For the six months ended June 30, 2022, net cash used in operating activities was $248,471, consisting of net loss of $133,844 and earnings on investments held in Trust Account of $339,459 and changes in operating assets and liabilities of $224,832.
For the six months ended June 30, 2023, net cash provided by investing activities was approximately $199 million due to redemptions of Class A ordinary shares.
For the six months ended June 30, 2023, net cash used in financing activities was approximately $199 million for payment of redeemed Class A ordinary shares.
As of June 30, 2023 and December 31, 2022, we had cash and investments held in the Trust Account of $234,939,459.$43,206,763 and $237,982,862, respectively. We may withdraw interest earned to pay our income taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our Business Combination. To the extent that our share capital is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of June 30, 2023 and December 31, 2022, we had $1,191,828cash of cash$694,178 and $946,299 held outside of the Trust Account, and a working capital of $1,211,167.
The registration statement for our Public Offering was declared effective byrespectively. We intend to use the SEC on November 8, 2021. On November 12, 2021, we consummated our Public Offering of 23,000,000 Units, inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Public Offering, we consummated the sale of 4,733,333 Private Placement Warrants to our Sponsor at a price of $1.50 per Private Placement Warrant, generating gross proceeds of $7,100,000. On the Close Date, our Sponsor loaned us $4,600,000 under the Sponsor Loan.
Following the Public Offering, the sale of the Private Placement Warrants and the issuance of the proceeds under the Sponsor Loan, a total of $234,600,000 was placed infunds held outside the Trust Account comprisedprimarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from offices, plants or similar locations of $225,400,000 from the proceedsprospective target businesses or their representatives or owners, review corporate documents and material agreements of the Public Offering, $4,600,000 from the proceeds of the sale of the Private Placement Warrantsprospective target businesses, structure, negotiate and $4,600,000 from the proceeds of the Sponsor Loan. We incurred $13,148,152 in transaction costs, including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $498,152 of other costs.complete a Business Combination.
Our liquidity needs upIn order to June 30, 2022 had been satisfied through (i) a payment from the Sponsor along with certain funds controlled by Data Point Capital of $25,000 to cover certain offering and formation costs in exchange for the issuance of the Founder Shares to the Sponsor and (ii) the receipt of loans to us of up to $300,000 by the Sponsor under an unsecured promissory note. The unsecured promissory note was non-interest bearing and was due at the earlier of December 31, 2021 and the closing of the Public Offering. As of June 30, 2022, no amounts were outstanding under the unsecured promissory note. We borrowed an aggregate of $159,025 under the unsecured promissory note and the loan was subsequently paid in full in connection with the consummation of the Public Offering and the unsecured promissory note is no longer available to us. In addition, in order tofund working capital deficiencies or finance transaction costs in connection with a Business Combination, theour Sponsor or an affiliate of theour Sponsor or certain of our officers and directors may, but are not obligated to, provideloan us working capital loans. Asfunds as may be required. If we complete a Business Combination, we would repay such loaned amounts or, in the case of Working Capital Loans, such loans may be converted into warrants of the Company at the option of the lender. In the event that a Business Combination does not close, we may use a portion of the cash held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment.
At June 30, 2023 and at December 31, 2022, there were no amounts outstanding under any workingother than the $4,600,000 Sponsor Loan, we did not have other long-term debt, capital loans.lease obligations, operating lease obligations or long-term liabilities.
Going Concern Considerations
In connection with the assessment of going concern considerations in accordance with the FASB ASC Subtopic 205-40, “Presentation of Financial Statements - Going Concern,” we have until November 12, 2023, with the option to extend three times, for an additional month each time, upon approval of our board of directors, up until February 12, 2024 to consummate a Business Combination. It is currently uncertain that we will be able to consummate a Business Combination by this time. If our Business Combination cannot be completed prior to November 12, 2023, or upon the approval of our board of directors, February 12, 2024, we will cease operations except for the purpose of winding-up, redeem our outstanding public shares, and liquidate and dissolve unless, prior to such date, we receive an extension approval from our shareholders electing to further extend the date on which a Business Combination must be consummated.
We may need to raise additional funds from our Sponsor and/or third parties in order to meet the expenditures required for operating our business. If our estimateestimates of the costs of undertaking in-depth due diligence and negotiating the initial Business Combination is less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to a Business Combination. The Sponsor is not under any obligation to advance funds to, or to invest in, us. If we are unable to raise additional funds, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.
Management continues its search for a target and will continue pursuing all options to complete a Business Combination. It is uncertain whether the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by May 12, 2023 this date and ouran extension is not approved by the shareholders, have not amended our amended and restated memorandum and articles of association to extend such Combination Period, there will be a mandatory liquidation and subsequent dissolution of us. These conditions raisethe Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur and an extension is not approved by the shareholders, and potential subsequent dissolution raises substantial doubt about ourthe Company’s ability to continue as a going concern through one year from the date of Financial Statements if a Business Combination is not consummated. The Financial Statementsconcern.The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.
Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of working capital loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the working capital loans) will beare entitled to registration rights pursuant to a registration rights agreement. The holders of these securities will beare entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial Business Combination. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder Shares, until the earliest of (A) one year after the completion of our initial business combinationBusiness Combination and (B) subsequent to our initial business combination,Business Combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub‑divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after our initial business combination,Business Combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of our initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriter a 45-day option from the date of the Public Offering to purchase on a pro rata basis up to 3,000,000 additional Units to cover over-allotments, if any, at the Public Offering price, less the underwriting discounts and commissions. The over-allotment option was exercised in full on November 12, 2021.
The underwriter was entitled to an underwriting discount of $0.20 per unit,Unit, or $4.6 million in the aggregate, paid upon the closing of the Public Offering. An additional fee of $0.35 per Unit, or $8.05 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements,Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statementsFinancial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements.Financial Statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identifiedRefer to our Annual Report on Form 10-K for the following asyear ended December 31, 2022 filed on April 17, 2023 for our critical accounting policies:
Investments Heldpolicies. There have been no changes in these policies since the Trust Accountfiling of this Form 10-K, except as follows:
Our investments consistOn May 10, 2023, we held an Extraordinary General Meeting of a portfolioshareholders (the “Extraordinary General Meeting”) at which our shareholders voted to approve, by special resolution, the proposal to amend and restate our amended and restated memorandum and articles of U.S. government securities, withinassociation (the “Second A&R M&A”), to extend the meaning set forth in Section 2(a)(16)date by which we must (1) consummate the Business Combination, (2) cease its operations except for the purpose of winding up if it fails to complete such Business Combination, and (3) redeem all of the Investment Company Act, each with a maturityClass A Ordinary Shares included as part of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When our investments heldthe Units sold in the Trust Account are comprisedPublic Offering, from May 12, 2023 to November 12, 2023, with the option to extend an additional three times by an additional month each time, at the option of U.S. government securities,our board of directors, until February 12, 2024. We estimated the investments are classified as trading securities and are recognized at fair value. When our investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Gains and losses resulting from the change inaggregate fair value of these securities are includedthe 1,000,000 Class B Ordinary Shares attributable to the Investors to be $1,671,160 or $1.67 per share. The excess of the fair value of the Class B Ordinary Shares was determined to be an offering cost in interest earned on investments heldaccordance with Staff Accounting Bulletin Topic 5A.
Accordingly, in substance, we recognized the Trust Account inoffering cost as a capital contribution by the condensed statementsSponsor to induce the Investors not to redeem their Class A Ordinary Shares, with a corresponding charge to additional paid-in capital to recognize the fair value of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.shares transferred as an offering cost.
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Warrant Classification
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), “Distinguishing Liabilities from Equity (“ASC 480”), and Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period date while the warrants are outstanding. The warrants are recorded as a component of equity.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. There have been no changes in classification of the warrants from the IPO through June 30, 2022.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC 480. Class A ordinary shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to possible redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity in the commitments and contingencies section of the condensed balance sheet. At all other times, Class A ordinary shares are classified as shareholders’(deficit) equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.
Net Loss Per Ordinary Share
We follow the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of Class A ordinary shares outstanding during the period. We have not considered the effect of the warrants sold as part of the Units in the Public Offering or the private placement to purchase an aggregate of 16,233,333 shares in the calculation of diluted loss per share, since the inclusion of such warrants would be anti-dilutive. The Sponsor Loan Warrants to be granted upon conversion of the Sponsor Loan, if any, would also be anti-dilutive and would therefore also be excluded from the calculation.
The Company’s statements of operations include a presentation of income per share for ordinary shares subject to possible redemption in a manner similar to the two-class method of income per share. Net income per ordinary share, basic and diluted, for ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income on earnings, by the weighted average number of ordinary shares subject to possible redemption outstanding over the period. Net loss is allocated evenly on a pro rata basis between Class A Ordinary Shares and Class B Ordinary Shares based on weighted average number of ordinary shares outstanding over the period.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update No. ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”)”, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. We early adopted ASU 2020-06 on our inception date. Adoption of ASU 2020-06 did not impact our financial position, results of operations or cash flows.
Our management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the accompanying condensed Financial Statements.
Inflation
We do not believe that inflation had a material impact on our business or operating results during the period presented.
JOBS Act
The Jumpstart Our Business StartupsJOBS Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the Financial Statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years from the completion of our Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKRISK. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
| ITEM 4. | CONTROLS AND PROCEDURE.PROCEDURES. |
Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2022,2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon their evaluation,Due solely to the material weakness in our internal control over financial reporting described below, our principal executive officer and principal financial and accounting officer concluded that during the period covered by this report, our disclosure controls and procedures (as definedwere not effective as of June 30, 2023.
Notwithstanding the conclusion by our principal executive officer and principal financial officer that our disclosure controls and procedures as of June 30, 2023 were not effective, and notwithstanding the material weakness in Rules 13a-15 (e)our internal control over financial reporting described below, management believes that the unaudited condensed financial statements and 15d-15 (e) underrelated financial information included in this Quarterly Report fairly present in all material respects our financial condition, results of operations and cash flows as of the Exchange Act) were effective atdates presented, and for the periods ended on such dates, in conformity with GAAP.
Material Weakness
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable assurance levelpossibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management concluded that a deficiency in internal control over financial reporting was identified during the fiscal quarter ended June 30, 2023 relating to the accounting for complex financial instruments and accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.such deficiency constituted a material weakness.
Changes in Internal Control Over Financial Reporting
ThereOther than as described herein, there was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2022 covered by this Quarterly Report on Form 10-Q2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS. |
None.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the “Risk Factors” sections of our Annual Report on Form 10-K filed with the SEC on April 11, 2022.17, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year-ended December 31, 2021, other than as set forth below:
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations.
On March 30, 2022, the SEC issued proposed rules that would, among other items, impose additional disclosure requirements in initial public offerings by SPACs and business combination transactions involving SPACs and private operating companies; amend the financial statement requirements applicable to business combination transactions involving such companies; update and expand guidance regarding the general use of projections in SEC filings, as well as when projections are disclosed in connection with proposed business combination transactions; increase the potential liability of certain participants in proposed business combination transactions; and impact the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our business, including our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES, AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Unregistered Sales
None.
Use of Proceeds
On November 8, 2021, our registration statement on Form S-1 (File No. 333-260456) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 23,000,000 Units, inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at an offering price to the public of $10.00 per Unit for an aggregate offering price of $230,000,000, with each Unit consisting of one Class A ordinary share of the Company at $0.0001 par value and one-half of one warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share.
Net proceeds of $230,000,000 from the Public Offering and the sale of the Private Placement Warrants, including deferred underwriting discounts of $8,050,000, were deposited into the Trust Account on the Close Date and $4,600,000 of the proceeds from the sale of the Private Placement Warrants was deposited in our operating account for future working capital expenditures. We paid $4,600,000 in underwriting discounts and incurred offering costs of $498,152 related to the Public Offering. In addition, the Underwriters agreed to defer $8,050,000 in underwriting discounts, which amount will be payable when and if a business combination is consummated. No payments were made by us to directors, officers or persons owning ten percent or more of our Class A ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Public Offering as described in our final Prospectus, dated November 8, 2021, which was filed with the SEC on November 10, 2021, though the amount available has decreased as a result of redemptions.
In connection with the shareholder vote to approve the Extension Proposal in the Extraordinary General Meeting on May 10, 2023, the holders of 18,940,598 Class A ordinary shares exercised their right to redeem such shares at a per share redemption price of approximately $10.51 for an aggregate redemption amount of approximately $199.0 million.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
| ITEM 5. | OTHER INFORMATION. |
| No. | | Description of Exhibit |
| | Second Amended and Restated Memorandum and Articles of Association (incorporated herein by reference to Exhibit 3.1 filed with the Company’s Current Report on Form 8-K filed bywith the CompanySEC on November 16, 2021May 15, 2023 (File No. 001-41041)). |
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| 10.1 | | Form of Non-Redemption Agreement (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed with the SEC on May 5, 2023 (File No. 001-41041)) |
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| | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| | Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| | Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| 101.INS* | | Inline XBRL Instance Document |
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| 101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.SCH* | | Inline XBRL Taxonomy Extension Schema Document |
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| 101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.LAB* | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
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| 101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104* | | Cover Page Interactive Data File |
* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | DP CAP ACQUISITION CORP I |
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Date: August 15, 202214, 2023 | Name:By: | /s/ Scott Savitz |
| | Title:Name: | ChairmanScott Savitz |
| | Title: | (PrincipalChief Executive Officer)Officer and Chairman |
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| | By: | /s/ Martin ZinnyBruce Revzin |
Date: August 15, 202214, 2023 | Name: | Martin ZinnyBruce Revzin |
| | Title: | Chief Executive Officer and Chief Financial Officer |
| | | (Principal Accounting and Financial Officer) |
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