☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cayman Islands | 98-1574798 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one share of Class A ordinary shares, $0.0001 par value, and one-third of one redeemable warrant | DHCAU | The Nasdaq Stock Market LLC | ||
Class A ordinary shares included as part of the units | DHCA | The Nasdaq Stock Market LLC | ||
Redeemable warrants included as part of the units, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 | DHCAW | The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
DHC ACQUISITION CORP.
FORM
TABLE OF CONTENTS
Page | ||||
Condensed Consolidated Balance Sheets as of March 31, | 1 | |||
2 | ||||
3 | ||||
4 | ||||
5 | ||||
23 | ||||
23 | ||||
24 | ||||
24 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||||
24 | ||||
24 | ||||
24 | ||||
24 | ||||
26 | ||||
27 |
March 31, | December 31, | |||||||||||||||
March 31, | December 31, | 2023 | 2022 | |||||||||||||
2022 | 2021 | (Unaudited) | ||||||||||||||
ASSETS | (Unaudited) | |||||||||||||||
Current assets | ||||||||||||||||
Cash | $ | 668,679 | $ | 861,474 | $ | 153,346 | $ | 212,608 | ||||||||
Prepaid expenses | 373,872 | 388,666 | ||||||||||||||
Due from Sponsor | 1,500 | 1,500 | ||||||||||||||
Prepaid expenses and other assets | 52,500 | 61,530 | ||||||||||||||
Total Current Assets | 1,042,551 | 1,250,140 | 207,346 | 275,638 | ||||||||||||
Investment held in Trust Account | 309,480,929 | 309,450,720 | ||||||||||||||
Trust Account Receivable | 887,555 | — | ||||||||||||||
Cash and investments held in Trust Account | 47,215,722 | 313,913,217 | ||||||||||||||
TOTAL ASSETS | $ | 310,523,480 | $ | 310,700,860 | $ | 48,310,623 | $ | 314,188,855 | ||||||||
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable and accrued expenses | $ | 2,519,800 | $ | 1,024,627 | $ | 5,637,050 | $ | 5,440,933 | ||||||||
Related party advance | 50,000 | — | ||||||||||||||
Total Current Liabilities | 2,519,800 | 1,024,627 | 5,687,050 | 5,440,933 | ||||||||||||
Warrant liabilities | 3,796,235 | 8,299,434 | 547,486 | 164,410 | ||||||||||||
Deferred underwriting fee payable | 10,830,775 | 10,830,775 | 10,830,775 | 10,830,775 | ||||||||||||
Total Liabilities | 17,146,810 | 20,154,836 | 17,065,311 | 16,436,118 | ||||||||||||
Commitments and Contingencies | 0 | 0 | ||||||||||||||
Class A ordinary shares subject to possible redemption; 30,945,072 shares at a redemption value of $10.00 per share at March 31, 2022 and December 31, 2021 | 309,450,720 | 309,450,720 | ||||||||||||||
Class A ordinary shares subject to possible redemption; 4,646,574 and 30,945,072 shares at a redemption value of $10.35 and $10.14 per share at March 31, 2023 and December 31, 2022, respectively | 48,103,277 | 313,913,217 | ||||||||||||||
Shareholders’ Deficit | ||||||||||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; NaN issued or outstanding | 0— | 0— | ||||||||||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; NaN issued and outstanding (excluding 30,945,072 shares subject to possible redemption at March 31, 2022 and December 31, 2021) | 0 | 0 | ||||||||||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 7,736,268 shares issued and outstanding at March 31, 2022 and December 31, 2021 | 774 | 774 | ||||||||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding | — | — | ||||||||||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; none issued and outstanding (excluding 4,646,574 and 30,945,072 shares subject to possible redemption at March 31, 2023 and December 31, 2022) | — | — | ||||||||||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 7,736,268 shares issued and outstanding at March 31, 2023 and December 31, 2022 | 774 | 774 | ||||||||||||||
Additional paid-in capital | 0 | 0 | — | — | ||||||||||||
Accumulated deficit | (16,074,824 | ) | (18,905,470 | ) | (16,858,739 | ) | (16,161,254 | ) | ||||||||
Total Shareholders’ Deficit | (16,074,050 | ) | (18,904,696 | ) | (16,857,965 | ) | (16,160,480 | ) | ||||||||
TOTAL LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | $ | 310,523,480 | $ | 310,700,860 | $ | 48,310,623 | $ | 314,188,855 | ||||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Operating and formation cos t s | $ | 1,702,762 | $ | 160,016 | ||||
Loss from operations | (1,702,762 | ) | (160,016 | ) | ||||
Other income (loss): | ||||||||
Change in fair value of warrant liabilities | 4,503,199 | (657,641 | ) | |||||
Transaction costs allocable to warrant liabilities | 0 | (586,339 | ) | |||||
Interest earned on investments held in the Trust Account | 30,209 | 0 | ||||||
Total other income (loss), net | 4,533,408 | (1,243,980 | ) | |||||
Net income (loss) | $ | 2,830,646 | $ | (1,403,996 | ) | |||
Weighted average shares outstanding of Class A ordinary shares | 30,945,072 | 9,283,522 | ||||||
Basic and diluted net income (loss) per share, Class A ordinary shares | $ | 0.07 | $ | (0.08 | ) | |||
Weighted average shares outstanding of Class B ordinary shares | 7,736,268 | 7,570,880 | ||||||
Basic and diluted net income (loss) per share, Class B ordinary shares | $ | 0.07 | $ | (0.08 | ) | |||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Operating and formation costs | $ | 314,409 | $ | 1,702,762 | ||||
Loss from operations | (314,409 | ) | (1,702,762 | ) | ||||
Other income (expense): | ||||||||
Change in fair value of warrant liabilities | (383,076 | ) | 4,503,199 | |||||
Interest earned on cash and investments held in the Trust Account | 2,775,554 | 30,209 | ||||||
Other income (expense), net | 2,392,478 | 4,533,408 | ||||||
Net income | $ | 2,078,069 | $ | 2,830,646 | ||||
Weighted average shares outstanding of Class A ordinary shares | 26,512,741 | 30,945,072 | ||||||
Basic and diluted net income per share, Class A ordinary shares | $ | 0.06 | $ | 0.07 | ||||
Weighted average shares outstanding of Class B ordinary shares | 7,736,268 | 7,736,268 | ||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.06 | $ | 0.07 | ||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance — January 1, 202 3 | 7,736,268 | $ | 774 | $ | — | $ | (16,161,254 | ) | $ | (16,160,480 | ) | |||||||||
Shareholder non redemption agreement | — | — | (744,274 | ) | — | (744,274 | ) | |||||||||||||
Contribution by Sponsor | — | — | 744,274 | — | 744,274 | |||||||||||||||
Accretion for Class A ordinary shares to redemption amount | — | — | — | (2,775,554 | ) | (2,775,554 | ) | |||||||||||||
Net income | — | — | — | 2,078,069 | 2,078,069 | |||||||||||||||
Balance — March 31, 2023 (unaudited) | 7,736,268 | $ | 774 | $ | — | $ | (16,858,739 | ) | $ | (16,857,965 | ) | |||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance — January 1, 2022 | 7,736,268 | $ | 774 | $ | 0 | $ | (18,905,470 | ) | $ | (18,904,696 | ) | |||||||||
Net income | — | — | — | 2,830,646 | 2,830,646 | |||||||||||||||
Balance – March 31, 2022 (unaudited) | 7,736,268 | $ | 774 | $ | 0— | $ | (16,074,824 | ) | $ | (16,074,050 | ) | |||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity (Deficit) | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance — January 1, 2021 | 8,625,000 | $ | 863 | $ | 24,137 | $ | (5,000 | ) | $ | 20,000 | ||||||||||
Cash p aid in excess of fair value for private warrants | — | — | 3,133,522 | — | 3,133,522 | |||||||||||||||
Forfeiture of Founder Shares | (888,732 | ) | (89 | ) | 89 | — | — | |||||||||||||
Accretion for Class A ordinary shares to redemption amount | — | — | (3,157,748 | ) | (23,978,390 | ) | (27,136,138 | ) | ||||||||||||
Net loss | — | — | — | (1,403,996 | ) | (1,403,996 | ) | |||||||||||||
Balance – March 31, 2021 (unaudited) | 7,736,268 | $ | 774 | $ | 0— | $ | (25,387,386 | ) | $ | (25,386,612 | ) | |||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance — January 1, 2022 | 7,736,268 | $ | 774 | $ | — | $ | (18,905,470 | ) | $ | (18,904,696 | ) | |||||||||
Net income | — | — | — | 2,830,646 | 2,830,646 | |||||||||||||||
Balance — March 31, 2022 (unaudited) | 7,736,268 | $ | 774 | $ | — | $ | (16,074,824 | ) | $ | (16,074,050 | ) | |||||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 2,830,646 | $ | (1,403,996 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Interest earned on investments held in Trust Account | (30,209 | ) | 0 | |||||
Change in fair value of warrant liabilities | (4,503,199 | ) | 657,641 | |||||
Transaction costs allocated to warrant liabilities | 0 | 586,339 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 14,794 | (845,578 | ) | |||||
Accounts payable and accrued expenses | 1,495,173 | 50,738 | ||||||
Net cash used in operating activities | (192,795) | (954,856) | ||||||
Cash Flows from Investing Activities: | ||||||||
Investment of cash in Trust Account | 0 | (309,450,720 | ) | |||||
Net cash used in investing activities | 0 | (309,450,720) | ||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from sale of Units, net of underwriting discounts paid | 0 | 303,261,706 | ||||||
Proceeds from sale of Private Placement Warrants | 0 | 9,189,015 | ||||||
Repayment of promissory note – related party | 0 | (171,357 | ) | |||||
Payment of offering costs | 0 | (300,000 | ) | |||||
Net cash provided by financing activities | 0 | 311,979,364 | ||||||
Net Change in Cash | (192,795 | ) | 1,573,788 | |||||
Cash – Beginning of period | 861,474 | 0 | ||||||
Cash – End of period | $ | 668,679 | $ | 1,573,788 | ||||
Non- investing and financing activities:c ash | ||||||||
Offering costs included in accrued offering costs | $ | 0 | $ | 17,000 | ||||
Offering costs paid through promissory note | $ | 0 | $ | 130,916 | ||||
Payment of prepaid expenses through promissory note | $ | 0 | $ | 26,800 | ||||
Deferred underwriting fee payable | $ | 0 | $ | 10,830,775 | ||||
Forfeiture of Founder Shares | $ | 0 | $ | (89 | ) | |||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 2,078,069 | $ | 2,830,646 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Interest earned on cash and investments held in Trust Account | (2,775,554 | ) | (30,209 | ) | ||||
Change in fair value of warrant liabilities | 383,076 | (4,503,199 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 9,030 | 14,794 | ||||||
Accounts payable and accrued expenses | 196,117 | 1,495,173 | ||||||
Net cash used in operating activities | (109,262 | ) | (192,795 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Trust receivable | (887,555 | ) | — | |||||
Cash withdrawn from Trust Account in connection with redemption | 269,473,049 | — | ||||||
Net cash provided by investing activities | 268,585,494 | — | ||||||
Cash Flows from Financing Activities: | ||||||||
Related party advance | 50,000 | — | ||||||
Redemption of ordinary shares | (268,585,494 | ) | — | |||||
Net cash used in financing activities | (268,585,494 | ) | — | |||||
Net Change in Cash | (59,262 | ) | (192,795 | ) | ||||
Cash – Beginning of period | 212,608 | 861,474 | ||||||
Cash – End of period | $ | 153,346 | $ | 668,679 | ||||
Gross proceeds | $ | 309,450,720 | ||
Less: | ||||
Proceeds allocated to Public Warrants | (10,211,874 | ) | ||
Class A ordinary shares issuance costs | (16,924,264 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 27,136,138 | |||
Class A ordinary shares subject to possible redemption | $ | 309,450,720 | ||
Gross proceeds | $ | 309,450,720 | ||
Less: | ||||
Proceeds allocated to Public Warrants | (10,211,874 | ) | ||
Class A ordinary shares issuance costs | (16,924,264 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 27,136,138 | |||
Class A ordinary shares subject to possible redemption as of December 31, 2021 | 309,450,720 | |||
Plus: | ||||
Accretion of carrying value to redemption value | 4,462,497 | |||
Class A ordinary shares subject to possible redemption as of December 31, 2022 | 313,913,217 | |||
Less: | ||||
Redemption | (268,585,494 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 2,775,554 | |||
Class A ordinary shares subject to possible redemption as of March 31, 2023 (unaudited) | $ | 48,103,277 | ||
Three Months Ended March 31, 2022 Class A | Three Months Ended March 31, 2021 Class A | |||||||
Basic and diluted net income (loss) per ordinary share | ||||||||
Numerator: | ||||||||
Allocation of net income (loss), as adjusted | $ | 2,264,517 | $ | (773,331 | ) | |||
Denominator: | ||||||||
Basic and diluted weighted average ordinary shares outstanding | 30,945,072 | 9,283,522 | ||||||
Basic and diluted net income (loss) per ordinary share | $ | 0.07 | $ | (0.08 | ) |
Three Months Ended March 31, 2022 Class B | Three Months Ended March 31, 2021 Class B | |||||||
Basic and diluted net income (loss) per ordinary share | ||||||||
Numerator: | ||||||||
Allocation of net income (loss), as adjusted | $ | 566,129 | $ | (630,665 | ) | |||
Denominator: | ||||||||
Basic and diluted weighted average ordinary shares outstanding | 7,736,268 | 7,570,880 | ||||||
Basic and diluted net income (loss) per ordinary share | $ | 0.07 | $ | (0.08 | ) |
For the Three Months Ended March 31, 2023 | For the Three Months Ended March 31, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income, as adjusted | $ | 1,608,669 | $ | 469,400 | $ | 2,264,517 | $ | 566,129 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 26,512,741 | 7,736,268 | 30,945,072 | 7,736,268 | ||||||||||||
Basic and diluted net income per ordinary share | $ | 0.06 | $ | 0.06 | $ | 0.07 | $ | 0.07 |
February 28, 2023 | ||||
Risk-free interest rate | 4.72 | % | ||
Remaining life of SPAC | 0.68 | |||
Value in no De-SPAC scenario | $ | 0.00 | ||
Probability of transaction | 50.00 | % |
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |||
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |||
Level 3: | Unobservable inputs based on an assessment of the assumptions that market participants would use in pricing the asset or liability. |
March 31, 2022 | December 31, 2021 | |||||||||||||||
Level | Amount | Level | Amount | |||||||||||||
Liabilities: | ||||||||||||||||
Warrant Liabilities – Public Warrants | 1 | $ | 2,381,739 | 1 | $ | 5,207,024 | ||||||||||
Warrant Liabilities – Private Placement Warrants | 2 | $ | 1,414,496 | 2 | $ | 3,092,410 |
March 31, 2023 | December 31, 2022 | |||||||||||||||
Level | Amount | Level | Amount | |||||||||||||
Assets: | ||||||||||||||||
Investments held in Trust Account | 1 | $ | 47,215,722 | — | $ | 313,913,217 | ||||||||||
Liabilities: | ||||||||||||||||
Warrant Liabilities – Public Warrants | 2 | $ | 343,490 | 1 | $ | 103,150 | ||||||||||
Warrant Liabilities – Private Placement Warrants | 2 | $ | 203,996 | 2 | $ | 61,260 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to DHC Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to DHC Sponsor, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. 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 and Section 21E of 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 completion of the Proposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Such statements include, but are not limited to, possible business combinations, and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Quarterly Report. 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, including that the conditions of the Proposed Business Combination are not satisfied.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 section of the Company’s Annual Report on Form
Overview
We are a blank check company incorporated in the Cayman Islands on December 22, 2020 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. We intend to effectuate our Business Combinationbusiness combination using cash derived from the proceeds of the Initial Public Offeringinitial public offering and the sale of the Private Placement Warrants,private placement warrants, our shares, debt or a combination of cash, shares and debt.
On March 3, 2023, we held an extraordinary general meeting (the “Extension Meeting”) to vote on a number of proposals, including a proposal to approve an amendment to our amended and restated memorandum and articles of association to (i) extend the date by which we have to consummate a business combination from March 4, 2023 to December 4, 2023 (the “Combination Period”). The proposal was approved by our shareholders. In connection with the Extension Meeting, the holders of 26,298,498 Class A ordinary shares of the Company (the “Redeeming Shareholders”) properly exercised their right to redeem their Class A ordinary shares for cash at a redemption price of approximately $10.21 per share, for an aggregate redemption amount of approximately $269,585,000. This could adversely impact our ability to consummate a business combination within the Combination Period.
20
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities through March 31, 20222023 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate
For the three months ended March 31, 2023, we had a net income of $2,078,069, which consists of interest earned on investments held in the Trust Account of $2,775,554, offset by the operating and formation costs of $314,409 and change in fair value of warrant liabilities of $383,076.
For the three months ended March 31, 2022, we had a net income of $2,830,646, which consists of the change in fair value of warrant liabilities of $4,503,199 and interest earned on investments held in the Trust Account of $30,209, offset by operating and formation costs of $1,702,762.
Liquidity and Capital Resources
On March 4, 2021, we consummated the Initial Public Offering of 30,000,000 Units at $10.00 per Unit, generating gross proceeds of $300,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 6,000,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $9,000,000.
On March 5, 2021, the underwriters of our initial public offering partially exercised their over-allotment option, and we consummated the sale of an additional 945,072 Units at a price of $10.00 per Unit, generating total gross proceeds of $9,450,720. In addition, we also consummated the sale of an additional 126,010 private placement warrants at $1.50 per private warrant, generating total gross proceeds of $189,015.
Following the Initial Public Offering, the partial exercise of the over-allotment option, and the sale of the private placement warrants, a total of $309,450,720 was placed in the Trust Account. We incurred $17,501,346 in Initial Public Offering related costs, including $6,189,014 of underwriting fees, net of reimbursement, $10,830,775 of deferred underwriting fees and $481,557 of other costs.
For the three months ended March 31, 2023, cash used in operating activities was $109,262. Net income of $2,078,069 was affected by change in fair value of warrant liabilities of $383,076 and interest earned on investments held in the Trust Account of $2,775,554. Changes in operating assets and liabilities provided $205,147 of cash for operating activities.
For the three months ended March 31, 2022, cash used in operating activities was $192,795. Net income of $2,830,646 was affected by change in fair value of warrant liabilities of $4,503,199 and interest earned on investments held in the Trust Account of $30,209. Changes in operating assets and liabilities provided $1,509,967 of cash for operating activities.
As of March 31, 2022,2023, we had marketable securitiesinvestments held in the Trust Account of $309,480,929.$47,215,722. We may withdraw interest from the Trust Account to pay 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 (less income taxes payable), to complete our Business Combination.business combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination,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. On March 3, 2023, we held the Extension Meeting to, in part, amend our amended and restated memorandum and articles of association to extend the date by which we have to consummate a business combination. In connection with that vote, the Redeeming Shareholders properly exercised their right to redeem their shares for an aggregate redemption amount of approximately $268,585,000.
In connection with the Extension Meeting, due to a clerical error by the trustee of the Trust Account, the Redeeming Shareholders were overpaid approximately $0.03 per Class A ordinary share that was redeemed, for an aggregate total overpayment amount of approximately $887,555 (the “Overpayment Amount”). The Company is in process of collecting the Overpayment Amount and currently expects to fully recover the total Overpayment Amount.
21
As of March 31, 2022,2023, we had cash of $668,679.$153,346. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we will repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASU
Based on the foregoing, management has determined that we do not have sufficient liquidity to meet our anticipated obligations for at least twelve months after the financial statements are available to be issued, as such, the events and circumstances raise substantial doubt about our ability to continue as a going concern, as discussed further below. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might arise as a result of uncertainties about our ability to continue as a going concern.
Off-Balance
We have no obligations, assets or liabilities, which would be considered
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of one of our Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative services. We began incurring these fees on March 4, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriters of our initial public offer are entitled to a deferred fee of $0.35 per unit, or $10,830,775 in the aggregate. The deferred fee will become payable to the underwriters of our initial public offering 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
The preparation of unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. We have identified the following critical accounting policies:
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stockshare purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815. We account for the Warrants in accordance with the guidance contained in ASC
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Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption, if any, are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares 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, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of our condensed consolidated balance sheets.
Net (Loss) Income (Loss) Per Ordinary Share
Net loss(loss) income per ordinary share is computed by dividing net loss(loss) income by the weighted average number of ordinary shares outstanding during the period. We apply the
Recent Accounting Pronouncements
In August 2020, the FinancialFASB issued Accounting Standards BoardUpdate (“FASB”ASU”) issued ASU
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports filed or submitted under the Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms,forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officerChief Executive Officer and principal financial officer or persons performing similar functions, as appropriateChief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules
Management intends to implement remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we intend to expand and improveenhance our review processand approval procedures for complex securitiesthe quartely financial statements, including through enhanced analyses by our personnel and related accounting standards. Wethird-party professionals. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have improved this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On March 4, 2021, we consummated the Initial Public Offering of 30,000,000 Units. The Units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $300,000,000. Citigroup Global Markets Inc. acted as sole book-running manager and Drexel Hamilton, LLC and Roberts & Ryan Investments, Inc. acted as
Simultaneous with the consummation of the Initial Public Offering, the Sponsor consummated the private placement of an aggregate of 6,000,000 Warrants at a price of $1.50 per Private Placement Warrant, generating total proceeds of $9,000,000. Each whole Private Warrant is exercisable to purchase one ordinary share at an exercise price of $11.50 per share. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
On March 5, 2021, the underwriters partially exercised their over-allotment option, resulting in the sale of an additional 945,072 Units for gross proceeds of $9,450,720, less the underwriters’ discount of $189,014. In connection with the underwriters’ exercise of their over-allotment option, the Company also consummated the sale of an additional 126,010 Private Placement Warrants at $1.50 per Private Placement Warrant, generating total proceeds of $189,015. A total of $9,450,720 was deposited into the Trust Account.
Of the gross proceeds received from the Initial Public Offering, the exercise of the over-allotment option and the Private Placement Warrants, an aggregate of $309,450,720 was placed in the Trust Account.
We paid a total of $6,189,014 in underwriting discounts and commissions and $481,557 for other costs and expenses related to the Initial Public Offering.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form
32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101.INS* | Inline XBRL Instance Document | ||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | ||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DHC ACQUISITION CORP. | ||||||
Date: May | By: | /s/ Christopher Gaertner | ||||
Name: | Christopher Gaertner | |||||
Title: | Co-Chief Executive Officer | |||||
(Principal Executive Officer) | ||||||
Date: May | By: | /s/ Christopher Gaertner | ||||
Name: | Christopher Gaertner | |||||
Title: | Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
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