Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2023 | |
Document and Entity Information [Abstract] | |
Document Type | S-1/A |
Entity Registrant Name | United Homes Group, Inc. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001830188 |
Amendment Flag | true |
Amendment Description | Amendment No. 1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | |
ASSETS | |||
Cash and cash equivalents | $ 110,911,416 | $ 12,238,835 | |
Accounts receivable, net | 1,693,064 | 1,976,334 | |
Homes under construction and finished homes | 128,950,892 | 163,997,487 | |
Developed lots | 21,189,983 | 16,205,448 | |
Due from related party | 125,987 | 1,437,235 | |
Related party note receivable | 665,020 | ||
Lot purchase agreement deposits | 8,113,303 | 3,804,436 | |
Investment in Joint Venture | 431,894 | 186,086 | |
Property and equipment, net | 676,408 | 1,385,698 | |
Operating right-of-use assets | 768,282 | 1,001,277 | |
Deferred tax asset | 3,891,575 | ||
Prepaid expenses and other assets | 6,350,037 | 6,112,044 | |
Total Assets | 283,767,861 | 208,344,880 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accounts payable | 13,414,465 | 22,077,240 | |
Homebuilding debt and other affiliate debt | 109,172,986 | 120,797,006 | |
Operating lease liabilities | 768,282 | 1,001,277 | |
Other accrued expenses and liabilities | 5,150,413 | 5,465,321 | |
Income tax payable | 701,871 | ||
Derivative liabilities | 451,106,576 | ||
Convertible note payable | 66,714,276 | ||
Total Liabilities | 647,028,869 | 149,340,844 | |
Commitments and contingencies | |||
Preferred Stock, $0.0001 par value; 40,000,000 shares authorized; none issued or outstanding. | |||
Additional paid-in capital | [1] | 1,422,630 | |
Retained Earnings/(accumulated deficit) | [1] | (363,265,766) | 57,577,672 |
Total Stockholders' equity | [1] | (363,261,008) | 59,004,036 |
Total Liabilities and Stockholders' equity | 283,767,861 | 208,344,880 | |
Class A common stock | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Common stock value | [1] | 1,061 | 37 |
Class B common stock | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Common stock value | [1] | $ 3,697 | $ 3,697 |
[1] Retroactively restated as of December 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 40,000,000 | 40,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A common stock | ||
Statement | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 10,621,073 | 10,621,073 |
Common stock, shares outstanding | 10,621,073 | 10,621,073 |
Class B common stock | ||
Statement | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 36,973,877 | 36,973,877 |
Common stock, shares outstanding | 36,973,877 | 36,973,877 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenue, net of sales discounts | $ 94,826,702 | $ 108,436,860 | |
Cost of sales | 78,048,929 | 81,164,960 | |
Gross Profit | 16,777,773 | 27,271,900 | |
Selling, general and administrative expense | 16,687,401 | 10,425,050 | |
Net income from operations | 90,372 | 16,846,850 | |
Other income, net | 202,715 | 171,078 | |
Equity in net earnings from investment in joint venture | 245,808 | ||
Change In Fair Value Of Derivative Liabilities | 207,064,488 | 0 | |
(Loss) income before taxes | (206,525,593) | 17,017,928 | |
Income tax benefit | 2,021,265 | ||
Net Income | $ (204,504,328) | $ 17,017,928 | |
Basic and diluted (loss)/earnings per share | |||
Basic | $ (5.44) | $ 0.46 | |
Diluted | $ (5.44) | $ 0.46 | |
Basic and diluted weighted-average number of shares | |||
Basic | [1] | 37,575,074 | 37,347,350 |
Diluted | [1] | 37,575,074 | 37,347,350 |
[1] Retroactively restated for the three months ending March 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |||
Class A common stock | Common stock | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Retroactive application of recapitalization | $ 37 | |||||
Retroactive application of recapitalization (in shares) | 373,473 | |||||
Adjusted balance as of December 31, 2021 | $ 37 | |||||
Beginning balance | $ 37 | |||||
Beginning balance (in shares) | 373,473 | 373,473 | 373,473 | |||
Issuance of common stock upon the reverse recapitalization, net of transaction costs | $ 849 | |||||
Issuance of common stock upon the reverse recapitalization, net of transaction costs (in shares) | 8,492,537 | |||||
Issuance of common stock related to PIPE Investment | $ 133 | |||||
Issuance of common stock related to PIPE Investment (in shares) | 1,333,963 | |||||
Issuance of common stock related to lock-up agreement | $ 42 | |||||
Issuance of common stock related to lock-up agreement (in shares) | 421,100 | |||||
Ending balance | $ 1,061 | $ 37 | $ 37 | |||
Ending balance (in shares) | 10,621,073 | 373,473 | 373,473 | 373,473 | ||
Class B common stock | Common stock | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Retroactive application of recapitalization | $ 3,697 | |||||
Retroactive application of recapitalization (in shares) | 36,973,877 | |||||
Adjusted balance as of December 31, 2021 | $ 3,697 | |||||
Beginning balance | $ 3,697 | |||||
Beginning balance (in shares) | 36,973,877 | 36,973,877 | 36,973,877 | |||
Ending balance | $ 3,697 | $ 3,697 | $ 3,697 | |||
Ending balance (in shares) | 36,973,877 | 36,973,877 | 36,973,877 | 36,973,877 | ||
Additional paid-in capital | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Beginning balance | $ 1,422,630 | |||||
Stock-based compensation expense | 51,079 | $ 1,268,222 | ||||
Forfeiture of private placement warrants | 890,001 | |||||
Issuance of common stock upon the reverse recapitalization, net of transaction costs | 17,869,735 | |||||
Issuance of common stock related to PIPE Investment | 9,501,782 | |||||
Issuance of common stock related to lock-up agreement | 4,194 | |||||
Recognition of derivative liability related to earnout | (242,211,404) | |||||
Recognition of derivative liability related equity incentive plan | (1,189,685) | |||||
Earnout stock-based compensation expense for UHG employee options | 4,448,077 | |||||
Transaction costs related to reverse recapitalization | (2,932,426) | |||||
Reclassification of negative APIC | 212,146,017 | |||||
Ending balance | 1,268,222 | $ 1,422,630 | ||||
Retained Earnings | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Retroactive application of recapitalization | $ 66,554,678 | |||||
Adjusted balance as of December 31, 2021 | 66,554,678 | |||||
Beginning balance | 57,577,672 | |||||
Distributions and net transfer to shareholders and other affiliates | (4,193,093) | (20,766,162) | ||||
Net Income (Loss) | (204,504,328) | 17,017,928 | ||||
Reclassification of negative APIC | (212,146,017) | |||||
Ending balance | (363,265,766) | 62,806,444 | 57,577,672 | |||
Shareholders and Other Affiliates Net Investment [Member] | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Balance as of December 31, 2021 as originally reported | 83,586,722 | |||||
Retroactive application of recapitalization | (83,586,722) | |||||
Beginning balance | 100,322,957 | 83,586,722 | 83,586,722 | 54,697,321 | ||
Distributions and net transfer to shareholders and other affiliates | (54,175,689) | (33,523,610) | ||||
Net Income (Loss) | 69,489,294 | 62,413,011 | ||||
Ending balance | 100,322,957 | 83,586,722 | ||||
Net Due to and Due from Shareholders and Other Affiliates [Member] | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Balance as of December 31, 2021 as originally reported | (17,028,310) | |||||
Retroactive application of recapitalization | 17,028,310 | |||||
Beginning balance | (41,318,921) | (17,028,310) | (17,028,310) | (20,528,780) | ||
Distributions and net transfer to shareholders and other affiliates | (24,290,611) | 3,500,470 | ||||
Ending balance | (41,318,921) | (17,028,310) | ||||
Balance as of December 31, 2021 as originally reported | 66,558,412 | |||||
Adjusted balance as of December 31, 2021 | (363,261,008) | [1] | 59,004,036 | [1] | 66,558,412 | |
Beginning balance | 59,004,036 | 66,558,412 | 66,558,412 | 34,168,541 | ||
Distributions and net transfer to shareholders and other affiliates | (4,193,093) | (20,766,162) | (78,466,300) | (30,023,140) | ||
Stock-based compensation expense | 51,079 | 1,268,222 | ||||
Forfeiture of private placement warrants | 890,001 | |||||
Issuance of common stock upon the reverse recapitalization, net of transaction costs | 17,870,584 | |||||
Issuance of common stock related to PIPE Investment | 9,501,915 | |||||
Issuance of common stock related to lock-up agreement | 4,236 | |||||
Recognition of derivative liability related to earnout | (242,211,404) | |||||
Recognition of derivative liability related equity incentive plan | (1,189,685) | |||||
Earnout stock-based compensation expense for UHG employee options | 4,448,077 | |||||
Transaction costs related to reverse recapitalization | (2,932,426) | |||||
Net Income (Loss) | (204,504,328) | 17,017,928 | 69,489,294 | 62,413,011 | ||
Ending balance | $ (363,261,008) | $ 64,078,400 | $ 59,004,036 | $ 66,558,412 | ||
[1] Retroactively restated as of December 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (parenthetical) | 3 Months Ended |
Mar. 31, 2023 | |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |
Exchange ratio of business combination | 373.47 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (204,504,328) | $ 17,017,928 |
Adjustments to reconcile net (loss) income to net cash flows from operating activities: | ||
Bad debt expense | 85,502 | |
Investment earnings in joint venture | (245,808) | |
Depreciation | 93,942 | 86,829 |
Gain on sale of property and equipment | (56,543) | |
Amortization of deferred financing costs | 120,988 | 85,782 |
Stock compensation expense | 4,499,156 | 1,268,222 |
Amortization of operating lease right-of-use assets | 204,138 | 133,064 |
Change in fair value of contingent earnout liability | 203,418,892 | |
Change in fair value of warrant liabilities | 2,723,333 | |
Change in fair value of equity incentive plan | 922,263 | |
Net change in operating assets and liabilities: | ||
Accounts receivable | 197,768 | (1,392,182) |
Related party receivable | 1,251,423 | |
Inventories | 30,062,060 | (8,418,953) |
Lot purchase agreement deposits | (1,787,241) | (121,691) |
Prepaid expenses and other assets | (10,027) | 850,943 |
Deferred tax asset | (2,021,265) | |
Accounts payable | (11,443,196) | 2,209,396 |
Operating lease liabilities | (204,138) | (133,064) |
Due to related parties | 59,825 | |
Other accrued expenses and liabilities | (314,908) | (1,078,591) |
Net cash flows provided by operating activities | 23,051,836 | 10,507,683 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (59,229) | (19,295) |
Proceeds from the sale of property and equipment | 66,100 | |
Capital contribution in joint venture | (49,000) | |
Net cash flows provided by (used in) investing activities | 6,871 | (68,295) |
Cash flows from financing activities: | ||
Proceeds from homebuilding debt | 40,000,000 | 20,000,000 |
Repayments of homebuilding debt | (40,579,214) | (22,226,052) |
Proceeds from other affiliate debt | 136,773 | 2,154,624 |
Repayments on equipment financing | (5,877) | |
Payment of deferred financing costs | (469,585) | |
Distributions and net transfer to shareholders and other affiliates | (17,896,302) | (25,390,972) |
Proceeds from convertible note, net of transaction costs | 71,500,000 | |
Proceeds from PIPE investment and lock up | 4,720,427 | |
Proceeds from Business Combination, net of SPAC transaction costs | 30,336,068 | |
Payment of transaction costs | (12,134,293) | |
Net cash flows provided by (used in) financing activities | 75,613,874 | (25,468,277) |
Net change in cash and cash equivalents | 98,672,581 | (15,028,889) |
Cash and cash equivalents, beginning of year | 12,238,835 | 51,504,887 |
Cash and cash equivalents, end of year | 110,911,416 | 36,475,998 |
Supplemental cash flow information: | ||
Cash paid for interest | 2,315,023 | 846,181 |
Non-cash investing and financing activities: | ||
Additions of right-of-use lease assets and liabilities | 1,149,832 | |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 4,624,810 | |
Promissory note issued in exchange for sale of fixed assets | 665,020 | |
Settlement of co-obligor debt to other affiliates | 8,340,545 | |
Release of guarantor from GSH to shareholder | 2,841,034 | |
Noncash distribution to owner's of Other Affiliates | 12,671,122 | |
Earnest money receivable from Other Affiliates | 2,521,626 | |
Recognition of previously capitalized deferred transaction costs | 2,932,426 | |
Modification to existing lease | 40,078 | |
Recognition of derivative liability related to earnout | 242,211,404 | |
Recognition of derivative liability related to equity incentive plan | 1,189,685 | |
Recognition of warrant liability upon Business Combination | 1,531,000 | |
Forfeiture of private placement warrants upon Business Combination | (890,001) | |
Issuance of common stock upon the reverse recapitalization | 39,933,707 | |
Recognition of deferred tax asset upon Business Combination | 1,870,310 | |
Recognition of income tax payable upon Business Combination | 701,871 | |
Recognition of assumed assets and liabilities upon Business Combination, net | 3,588,110 | |
Total non-cash activities | $ 320,147,937 | $ 5,774,642 |
Nature of operations and basis
Nature of operations and basis of presentation | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Nature of operations and basis of presentation | ||
Nature of operations and basis of presentation | Note 1 — Nature of operations and basis of presentation The Company and Nature of Business United Homes Group, Inc. (“UHG”, the “Company”), a Delaware corporation, is a homebuilding business which operates with an asset-light strategy. The Company is a former blank check company incorporated on October 7, 2020 under the name DiamondHead Holdings Corp. (“DHHC”) as a Delaware corporation formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. UHG constructs single-family residential homes and has active operations in South Carolina and Georgia offering a range of residential products including entry-level attached and detached homes, first-time move up attached and detached homes and second move-up detached homes. The constructed homes appeal to a wide range of buyer profiles, from first-time to lifestyle buyers. The Company’s primary objective is to provide customers with homes of exceptional quality and value while maximizing its return on investment. The Company has grown by expanding its market share in existing markets and by expanding into markets contiguous to the current active markets. Business Combination On September 10, 2022, DHHC entered into a Business Combination Agreement (the “Business Combination Agreement”) with Hestia Merger Sub, Inc., a South Carolina corporation and wholly owned subsidiary of DHHC (“Merger Sub”), and Great Southern Homes, Inc., a South Carolina corporation (“GSH”). Upon the consummation of the transaction on March 30, 2023 (“Closing Date”), Merger Sub merged with and into GSH with GSH surviving the merger as a wholly owned subsidiary of the Company (“Business Combination”). As a result of the Business Combination, GSH is now a wholly owned subsidiary of DHHC, which has changed its name to United Homes Group, Inc. GSH’s business historically consisted of both homebuilding operations and land development operations. In anticipation of the Business Combination, GSH separated its land development operations and its homebuilding operations across separate entities in an effort to adopt best practices in the homebuilding industry associated with ownership and control of land and lots and production efficiency. For accounting treatment of the Business Combination, see Note 2 - Merger and Reverse Recapitalization . Unless otherwise indicated or the context otherwise requires, references in this quarterly report on Form 10-Q to “Legacy UHG” refer to the homebuilding operations of GSH prior to the consummation of the Business Combination. Basis of Presentation The Condensed Consolidated Financial Statements included in this report reflect (i) the historical operating results of Legacy UHG prior to the Business Combination; (ii) the combined results of UHG and DHHC following the Closing; (iii) the assets and liabilities of UHG and DHHC, and Legacy UHG at their historical cost; and (iv) the Company’s equity structure for all periods presented. The accompanying Condensed Consolidated Balance Sheet as of December 31, 2022 and the Condensed Consolidated Statement of Operations, Statement of Changes in Stockholders’ Equity, and Statement of Cash Flows for the three months ended March 31, 2022 (“Legacy UHG financial statements”) have been prepared from Legacy UHG’s historical financial records and reflect the historical financial position, results of operations and cash flows of the Legacy UHG for the periods presented on a carve-out basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Statement of Changes in Stockholders’ Equity is adjusted for the retroactive application of the reverse recapitalization using the Exchange Ratio. The Legacy UHG financial statements present historical information and results attributable to the homebuilding operations of GSH. The Legacy UHG financial statements exclude GSH’s operations related to land development operations as Legacy UHG historically did not operate as a standalone company. The carve-out methodology was used since Legacy UHG’s inception until the Closing Date. Thus, after March 30, 2023, no carve-out amounts were included in UHG’s financial statements. Periods prior to the Business Combination Prior to the Business Combination until the Closing Date, Legacy UHG has historically transacted with affiliates that were owned by the shareholders of GSH. Legacy UHG has categorized the various affiliates based on the nature of the transactions with Legacy UHG and their primary operations. The categories are as follows: Land Development Affiliates - Land development affiliates’ primary operations consist of acquiring and developing raw parcels of land for vertical home construction. Upon completion, the land development affiliates transfer the developed lots to Legacy UHG in a non-cash transaction. Other Operating Affiliates - Other operating affiliates’ operations consist of acquiring and developing land, purchasing constructed houses for rental properties, leasing activities, and purchasing model homes to be maintained during the sell down period of a community. Collectively, these are referred to as “Other Affiliates” in these financial statements and represented as related parties (see Note 8 - Related party transactions ). All assets, liabilities, revenues, and expenses directly associated with the activity of Legacy UHG are included in these financial statements. Cash and cash equivalents is included in these financial statements, as Legacy UHG provided the cash management/treasury function for the Other Affiliates until January 1, 2023. In addition, a portion of Legacy UHG’s corporate expenses including share-based compensation were allocated to Legacy UHG based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional cost of sales or employee headcount, as applicable. The corporate expense allocations include the cost of corporate functions and resources provided by or administered by GSH including, predominately, costs associated with executive management, finance, accounting, legal, human resources, and costs associated with operating GSH’s office buildings. The corporate expense allocation requires significant judgment and management believes the basis on which the corporate expenses have been allocated reasonably reflects the utilization of services provided to Legacy UHG during the periods presented. Balance Sheet accounts were reviewed to determine what was attributable to Legacy UHG. There were no Balance Sheet accounts that required allocation procedures for assets and liabilities. In addition, all significant transactions between Legacy UHG and GSH have been included in these financial statements. The aggregated net effect of transactions between Legacy UHG and GSH are settled within Retained Earnings/ (Accumulated Deficit) on the Balance Sheets as they were not expected to be settled in cash. These amounts were reflected in the Statements of Cash Flows within Distributions and net transfer to shareholders and other affiliates and, when transactions were historically not settled in cash, in Non-cash financing activities. GSH’s third-party long-term debt and related interest expense have all been allocated to Legacy UHG. Legacy UHG was considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. Certain portions of that long-term debt and the related interest consist of construction revolving lines of credit and are reflected as Homebuilding debt. The remaining portions of long-term debt and the related interest have been used to finance operations that were not related to Legacy UHG, primarily land development activities, and were presented as Other Affiliate debt. The results reported in these financial statements would not be indicative of Legacy UHG’s future performance, primarily because prior to the Business Combination, the lots developed by affiliates were not transferred to the homebuilding operations of GSH at a market rate. As such, these results do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. | Note 1 — Nature of operations and basis of presentation Nature of Business — GSH develops land and constructs single—family residential homes. GSH has active operations in South Carolina and Georgia offering a range of residential products including entry-level attached and detached homes, first-time move up attached and detached homes and second move-up detached homes. The constructed homes appeal to a wide range of buyer profiles, from first-time to lifestyle buyers. Basis of Presentation The Company’s primary objective is to provide customers with homes of exceptional quality and value while maximizing its return on investment. Generally, the Company grows by expanding its market share in existing markets and by expanding into markets contiguous to the current active markets. Throughout the periods covered by the financial statements, the Company operated as part of GSH. The accompanying financial statements have been prepared from GSH’s historical financial records and reflect the historical financial position, results of operations and cash flows of the Company for the periods presented on a carve-out basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company has historically transacted with affiliates that are owned by the shareholders of the Company. The Company has categorized the various affiliates based on the nature of the transactions with the Company and their primary operations. The categories are as follows: Land Development Affiliates Other Operating Affiliates Collectively, these are referred to as “Other Affiliates” in these financial statements and represented as related parties (see Note 6 — Related party transactions All assets, liabilities, revenues, and expenses directly associated with the activity of the Company are included in these financial statements. Cash and cash equivalents is included in these financial statements, as the Company provided the cash management/treasury function for the Other Affiliates. In addition, a portion of GSH’s corporate expenses including share-based compensation were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional cost of sales or employee headcount, as applicable. The corporate expense allocations include the cost of corporate functions and resources provided by or administered by GSH including, predominately, costs associated with executive management, finance, accounting, legal, human resources, and costs associated with operating GSH’s office buildings. The corporate expense allocation requires significant judgment and management believes the basis on which the corporate expenses have been allocated reasonably reflects the utilization of services provided to the Company during the periods presented. Balance sheet accounts were reviewed to determine what was attributable to the Company. There were no Balance Sheet accounts that required allocation procedures for assets and liabilities. In addition, all significant transactions between the Company and GSH have been included in these financial statements. The aggregated net effect of transactions between the Company and GSH are reflected in the Balance Sheets within Total shareholders’ and other affiliates’ net investment and in the Statements of Cash Flows within Distributions and net transfer to shareholders and other affiliates, changes in net due from and net due to shareholders and other affiliates and, when transactions were historically not settled in cash, in Non-cash financing activities. Net due to and due from shareholders and other affiliates balances are generally presented as a contra-account in the Balance Sheets within Total shareholders’ and other affiliates’ net investment due to the expectation they will not be settled in cash in the future. Certain related party amounts that are expected to be settled in cash are presented as Due from related party in the Balance Sheet. GSH’s third-party long-term debt and related interest expense have all been allocated to the Company. The Company is considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. Certain portions of that long-term debt and the related interest consist of construction revolving lines of credit and are reflected as Homebuilding debt. The remaining portions of long-term debt and the related interest have been used to finance operations that are not related to the Company, primarily land development activities, and are presented as Other Affiliate debt. The Other Affiliate debt balances related to these operations have an associated Due from shareholders and other affiliates recorded to the Balance Sheets as of December 31, 2022 and 2021. The results reported in these financial statements would not be indicative of the Company’s future performance, primarily because the lots developed by affiliates were not transferred to the Homebuilding Operations at a market rate. As such, these results do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Emerging Growth Company Status Proposed Business Combination — |
Merger and Reverse Recapitaliza
Merger and Reverse Recapitalization | 3 Months Ended |
Mar. 31, 2023 | |
Merger and Reverse Recapitalization | |
Merger and Reverse Recapitalization | Note 2 — Merger and Reverse Recapitalization On the Closing Date, the following transactions were completed: ● Merger Sub merged with and into GSH, with GSH surviving the merger as a wholly owned subsidiary of the Company; ● All 1,000 shares of Class A common stock of GSH (“GSH Class A Common Shares”) issued and outstanding prior to the Closing Date were exchanged for 373,473 shares of Class A common stock of UHG (“UHG Class A Common Shares”); ● All 99,000 shares of Class B common stock of GSH (“GSH Class B Common Shares”) issued and outstanding prior to the Closing Date were exchanged for 36,973,877 shares of Class B common stock of UHG (“UHG Class B Common Shares”); ● All 2,426 outstanding options of GSH to acquire GSH Class A Common Shares were assumed by the Company and converted into options to acquire an aggregate of approximately 905,930 UHG Class A Common Shares (the “Rollover Options”); ● All 5,000 outstanding warrants to purchase GSH Class A Common Shares were assumed by the Company and converted into warrants to purchase 1,867,368 UHG Class A Common Shares (the “Assumed Warrants”); ● 8,625,000 outstanding shares of DHHC Class B common stock held by DHP SPAC II Sponsor LLC (the “Sponsor”) converted into 4,160,931 UHG Class A Common Shares, all of which are subject to resale or transfer restrictions; ● The Company issued an aggregate of 1,755,063 UHG Class A Common Shares to the PIPE Investors, Lock-Up Investors and the Convertible Note Investors, pursuant to the terms of the PIPE Subscription Agreements, Share Lock-up Agreements and the PIPE Investment, (together the “PIPE Financings”), as described below. As of the Closing Date and following the completion of the Business Combination, UHG had the following outstanding securities: ● 10,621,073 UHG Class A Common Shares; ● 36,973,877 UHG Class B Common Shares; ● 2,966,664 warrants to purchase 2,966,664 UHG Class A Common Shares, each exercisable at a price of $11.50 per share, issued in connection with the DHHC initial public offering and held by the Sponsor and BlackRock Inc. and Millennium Management LLC (the “Anchor Investors”); ● 8,625,000 warrants to purchase 8,625,000 UHG Class A Common Shares, each exercisable at a price of $11.50 per share, issued in connection with the DHHC initial public offering; ● 1,867,368 Assumed Warrants to purchase 1,867,368 UHG Class A Common Shares, each exercisable at a price of $4.05 per share; ● 905,930 Rollover Options to purchase 905,930 UHG Class A Common Shares, each exercisable at a price of $2.81 per share. Earnout In connection with the Business Combination, holders of GSH common shares, certain holders of stock options, and holders of GSH warrants (together, “GSH Equity Holders”), options held by employees and directors (Employee Option Holders”) and the sponsor shareholders (“Sponsors”, and together, the “Earnout Holders”) are entitled to receive consideration in the form of common shares (Earnout Shares”). 21,886,378 Earnout Shares, comprised of 20,000,000 shares in consideration to GSH Equity Holders and 1,886,378 additional earnout shares awarded to the Sponsors (as defined below), were reserved for the future issuance upon achievement of certain earnout conditions. Refer to Note 14 - Earnout Shares. In connection with the Closing, and under the terms of the Sponsor Support Agreement entered into in connection with the execution of the Business Combination Agreement, 1,886,378 shares of the 8,625,000 shares of DHHC Class B common stock held by the Sponsor were converted to Earnout Shares and became subject to vesting conditions based on the achievement of certain market-based share price thresholds. Refer to Note 14 - Earnout Shares for additional information regarding the terms and conditions of the Earnout Triggering Events. Of the remaining 6,738,622 shares of DHHC Class B common stock, 2,577,691 shares were forfeited and 4,160,931 shares were converted into UHG Class A Common Shares. Convertible Note In connection with the closing of the Business Combination, DHHC entered into a Convertible Note Purchase Agreement (the “Note Purchase Agreement”), by and among itself, GSH, and a group of investors (the “Convertible Note Investors”). Pursuant to and at the closing of the transactions contemplated by the Note Purchase Agreement, the Convertible Note Investors agreed to purchase $ 80.0 million in original principal amount of Convertible Promissory Notes (the “Notes,” or “Note PIPE Financing”) and, pursuant to the terms of share subscription agreements entered into between each Convertible Note Investor and UHG, an additional 744,588 UHG Class A Common Shares (the “PIPE Shares”) in a private placement PIPE investment (the “PIPE Investment”). Refer to Note 12 - Convertible Note for additional information on the accounting treatment for the Notes, including issuance costs. Subscription Agreement In connection with the execution of the Business Combination Agreement, UHG entered into separate subscription agreements (each a “Subscription Agreement,” or “Subscription Agreement PIPE Financing,” and together with the “Note PIPE Financing,” the “PIPE Financings”) with a number of investors (each a “PIPE Investor”), pursuant to which the PIPE Investors agreed to purchase, and UHG agreed to sell to the PIPE Investors, an aggregate of 471,500 shares of common stock for a purchase price of $10.00 per share and 117,875 shares for a purchase price of $0.01 per share for an aggregate purchase price of $4.7 million, in a private placement offering. The PIPE Financings closed simultaneously with the consummation of the Business Combination. Lock-Up Agreement s In connection with the execution of the Business Combination Agreement, DHHC entered into separate Share Issuance and Lock-Up Agreements (each a “Lock-Up Agreement”) with a number of investors (each a “Lock-up Investor”), pursuant to which UHG agreed to issue each Lock-Up Investor 0.25 UHG Class A Common Shares (up to 421,100 UHG Class A Common Shares in the aggregate) for a purchase price of $0.01 per share, for each UHG Class A Common Share held by such Lock-Up Investor at the Closing. Following the Closing of the Business Combination, UHG notified each Lock-Up Investor that UHG waived the lock-up restriction contained in the Lock-Up Agreements. The number of shares of UHG common stock issued immediately following the consummation of the Business Combination was as follows: Shares Ownership % DHHC public shareholders - UHG Class A Common Shares (1) 4,331,606 9.1 % DHHC sponsor shareholders - UHG Class A Common Shares 4,160,931 8.7 % GSH existing shareholders - UHG Class B Common Shares 36,973,877 77.7 % GSH existing shareholders - UHG Class A Common Shares 373,473 0.8 % Convertible Note Investors - UHG Class A Common Shares 744,588 1.6 % PIPE Investors - UHG Class A Common Shares 589,375 1.2 % Lock-up Investors - UHG Class A Common Shares 421,100 0.9 % Total Closing Shares 47,594,950 100 % (1) Represents remaining DHHC Class A shares following share redemptions prior to the Business Combination. Treatment of Merger The Business Combination is accounted for as a reverse recapitalization under accounting principles generally accepted in the United States (“GAAP”). This determination is primarily based on Legacy UHG retaining the largest portion of the voting rights, the post-transaction management team is primarily comprised of the pre-transaction management team of GSH and the relative size of GSH’s operations is larger than DHHC’s. Under this method of accounting, DHHC is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Condensed Consolidated Financial Statements of UHG represent a continuation of the financial statements of Legacy UHG with the Business Combination being treated as the equivalent of Legacy UHG issuing stock for the net assets of DHHC, accompanied by a recapitalization. The net assets of DHHC are stated at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are presented as those of Legacy UHG. All periods prior to the Business Combination have been retrospectively adjusted using the exchange ratio of 373.47 (“Exchange Ratio”) for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization. Accordingly, certain amounts have been reclassified and retroactively adjusted to reflect the reverse recapitalization pursuant to the Business Combination for all periods presented within the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Stockholders’ Equity. In connection with the Business Combination, the Company received approximately $128.6 million of gross proceeds including the contribution of $43.9 million of cash held in DHHC’s trust account from its initial public offering, $4.7 million of cash in connection with the Subscription Agreement PIPE Financing, and $80.0 million in connection with the Notes PIPE Financing. As part of the PIPE Financings, the Company entered into the Note Purchase Agreement for an original principal amount of $80.0 million. The Company incurred debt issuance costs of $5.0 million of original issuance discount and an additional $3.5 million of transaction costs that were allocated to the Notes, resulting in net cash proceeds of $71.5 million. The Company incurred $25.7 million of transaction costs, consisting of advisory, banking, legal, and other professional fees, of which $13.6 million were incurred by DHHC and $12.1 million were incurred by Legacy UHG. All costs were capitalized and recorded as a reduction to additional paid-in capital. |
Summary of significant accounti
Summary of significant accounting policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Summary of significant accounting policies | ||
Summary of significant accounting policies | Note 3 — Summary of significant accounting policies The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s fiscal year end is December 31 and, unless otherwise stated, all years and dates refer to the fiscal year. Unaudited Interim Condensed Consolidated Financial Statements - The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with GAAP for interim financial information and the rules and regulations of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, certain information, footnotes, and disclosures normally included in the annual financial statements prepared under GAAP have been condensed or omitted in accordance with SEC rules and regulations. Therefore, these Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes included in the audited financial statements of Legacy UHG for the year ended December 31, 2022 included in the Form S-1 filed with the SEC on April 28, 2023. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying Condensed Consolidated Financial Statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of March 31, 2023 and results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The Condensed Consolidated Balance Sheet at December 31, 2022, was derived from audited annual financial statements and adjusted for the retrospective recapitalization as described in Note 1 - Nature of operations and basis of presentation and Note 2 - Merger and Reverse Recapitalization but does not contain all of the footnote disclosures from the annual financial statements. Other than policies noted below, there have been no significant changes to the significant accounting policies disclosed in Note 2 of audited Legacy UHG financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022. The results for the three months ended March 31, 2023 and 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. Emerging Growth Company - The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is not an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Principles of consolidation — The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates — The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates made by the Company include corporate expense allocation, useful lives of depreciable assets, revenue recognition associated with contracts recognized over time, capitalized interest, warranty reserves, share-based compensation, valuation of earnout liability, valuation of convertible note and valuation of stock warrants. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. Segment Information — The Company determines its chief operating decision maker (“CODM”) based on the person responsible for making resource allocation decisions. Operating segments are components of the business for which the CODM regularly reviews discrete financial information. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. Inventories and Cost of Sales — The carrying value of inventory is stated at cost unless events and circumstances indicate the carrying value may not be recoverable. Inventory consists of developed lots, homes under construction, and finished homes. — Developed lots - This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. As of March 31, 2023 and December 31, 2022, the amount of developed lots included in inventory was $21,189,983 and $16,205,448 , respectively. Developed lots purchased at fair value from third parties was $15,815,143 and $10,052,179 as of March 31, 2023 and December 31, 2022, respectively, which is included in Developed Lots on the Condensed Consolidated Balance Sheets. — Homes under construction - At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. As of March 31, 2023 and December 31, 2022, the amount of inventory related to homes under construction included in homes under construction and finished homes was $88,872,575 and $141,863,561 , respectively. — Finished homes - This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. As of March 31, 2023 and December 31, 2022, the amount of inventory related to finished homes included in homes under construction and finished homes was $40,078,317 and $22,133,926 , respectively. Revenue Recognition - The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers . For the three months ended March 31, 2023 and 2022, revenue recognized at a point in time from speculative homes totaled $92,389,410 , and $104,450,041 respectively. For the three months ended March 31, 2023 and 2022, revenue recognized over time from land owned by customers totaled $2,437,292 , and $3,986,819 , respectively. Advertising — The Company expenses advertising and marketing costs as incurred and includes such costs within Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2023 and 2022, the Company incurred $490,980 , and $452,765 , respectively, in advertising and marketing costs. Income Taxes — Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than not” that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positive and negative, is evaluated. The Company recognizes interest and penalties related to the underpayment of income taxes, including those resulting from the late filing of tax returns within the provision for income taxes in the Condensed Consolidated Statements of Operations. The Company analyzes its tax filing positions in the U.S. federal, state, and local tax jurisdictions where the Company is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is enacted or new information becomes available. Prior to the Business Combination, Legacy UHG was included in the tax filing of the shareholders of GSH, which was taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code. Individual shareholders were liable for income taxes on their respective shares of GSH’s taxable income. No income tax liability nor income tax was allocated to Legacy UHG as of December 31, 2022 or for the three months ended March 31, 2023, nor was there any recorded liability for uncertain tax positions. Derivative liabilities — The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The 8,625,000 warrants issued in connection with DHHC’s Initial Public Offering (the “Public Warrants”), the 2,966,664 Private Placement Warrants, 21,491,695 Earnout Shares and certain stock options (as discussed in Note 13 - Share-based compensation ) are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments, earnout shares and stock options as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised or issued, respectively. The Public Warrant quoted market price was used as the fair value for the Public Warrants as of March 30, 2023 and March 31, 2023. The Private Placement Warrants and the Earnout shares were valued using a Monte Carlo analysis. See the Earnout Shares and Warrant Liabilities sections below for further detail on each instrument and their classification. Stock options were valued using Black ‑ Scholes valuation model. See Note 13 - Share-based compensation for further detail. Earnout - In connection with the Business Combination, Earnout Holders are entitled to receive consideration in the form of Earnout Shares upon the Company achieving certain Triggering Events, as described in Note 14 - Earnout Shares. The contingent obligations to issue Earnout Shares to the Earnout Holders, excluding Employee Option Holders, are recognized on the Closing Date as derivative liabilities in accordance with ASC 815. The liabilities were recognized at fair value on the Closing Date and are subsequently remeasured at each reporting date with changes in fair value recorded in the Condensed Consolidated Statements of Operations. Earnout Shares issuable to Employee Option Holders at the Closing Date are considered a separate unit of account from the Earnout Shares issuable to GSH Equity Holders, and the Sponsors, and are accounted for as equity classified stock compensation. The Earnout Shares issuable to Employee Option Holders are fully vested upon issuance, thus there is no requisite service period, and the value of these shares is recognized as a one-time stock compensation expense for the grant date fair value. The estimated fair values of the Earnout Shares were determined by using a Monte Carlo simulation valuation model using a distribution of potential outcomes on a daily basis over the Earnout Period as defined in Note 14 - Earnout Shares . The preliminary estimated fair values of the Earnout Shares were determined using the most reliable information available, including the current trading price of the UHG Class A Common Shares, expected volatility, risk-free rate, expected term and dividend rate. The earnout liability is categorized as a Level 3 fair value measurement because the Company estimated projections during the Earnout Period utilizing unobservable inputs. See Note 4 — Fair Value Measurement for further detail on UHG’s accounting policy related to the fair value of financial instruments. Warrant Liabilities — The Company assumed 8,625,000 publicly-traded warrants (“Public Warrants”) from DHHC’s initial public offering and 2,966,664 private placement warrants originally issued by DHHC (“Private Placement Warrants” and, together with the Public Warrants, the “Common Stock Warrants” or “Warrants”). Upon consummation of the Business Combination, each Common Stock Warrant issued entitled the holder to purchase one UHG Class A Common Share at an exercise price of $11.50 per share. The Common Stock Warrants are exercisable as of April 29, 2023. The Private Placement Warrants are identical to the Public Warrants, except that of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain exceptions. During the three months ended March 31, 2023, no Common Stock Warrants were exercised. The Public Warrants are publicly traded and are exercisable unless certain conditions occur which would permit a cashless exercise. The Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees, subject to certain exceptions. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company evaluated the Public Warrants and Private Placement Warrants and concluded that both meet the definition of a derivative and will be accounted for in accordance with ASC Topic 815-40, as the Public Warrants and Private Placement Warrants are not considered indexed to UHG’s stock. PIPE Investment — In connection with the closing of the Business Combination, GSH entered into the Note Purchase Agreement, dated March 21, 2023, and effective March 30, 2023, with DHHC and the Convertible Note Investors. As part of the PIPE Investment, the Convertible Note Investors agreed to purchase $80.0 million in original principal amount of Notes at a 6.25% original issue discount and were issued an additional 744,588 UHG Class A Common Shares. The aggregate proceeds received from the Convertible Note Investors is $75.0 million. Additionally, in connection with the Business Combination, (i) the PIPE Investors purchased from the Company an aggregate of (A) 471,500 UHG Class A Common Shares at a purchase price of $10.00 per share, and (B) 117,875 UHG Class A Common Shares at a purchase price of $0.01 per share for gross proceeds to the Company of approximately $4.7 million, pursuant to the PIPE Subscription Agreements, and (ii) the Lock-Up Investors purchased from the Company an aggregate of 421,100 UHG Class A Common Shares at a purchase price of $0.01 per share pursuant to the Share Lock-Up Agreements. Following the closing of the Business Combination, UHG notified each Lock-Up Investor that UHG waived the lock-up restriction contained in the Share Lock-Up Agreements. The Company accounts for the Notes and PIPE Shares as two freestanding financial instruments. The Company accounts for the Notes at amortized cost and amortizes the debt discount to interest expense using the effective interest method over the expected term of the Notes pursuant to ASC 835 Interest (“ASC 835”). The Company accounts for the PIPE Shares as equity, as they are not in the scope of ASC 480. The Company applied the relative fair value method to allocate the $75.0 million in aggregate proceeds received among the freestanding instruments issued. Specifically, $70.2 million was allocated to the Notes, and $4.8 million was allocated to the PIPE Shares. The amount allocated to the PIPE Shares is presented as an increase in additional paid-in capital. The Notes are considered a hybrid financial instrument consisting of a debt “host” and embedded features. The Company evaluated the Notes at issuance for embedded derivative features and the potential need for bifurcation under ASC 815, and determined that the Notes contained embedded derivatives, including conversion features and redemption rights. Although the Company determined that a group of these embedded features which are contingent on certain events occurring, as further discussed in Note 12 - Convertible Note , would need to be bifurcated, the contingencies themselves are either entirely within the Company’s control or based on an event management considers the probability of occurring as extremely remote. Therefore, the group of embedded features which are contingent on certain events and required to be bifurcated would likely have minimal or no value and therefore deemed to not be material to the Condensed Consolidated Financial Statements. The Company engaged an independent valuation firm to assist with the valuation of the Notes and the PIPE Shares. Refer to Note 12 - Convertible Note for further valuation details. The Company recognized issuance costs of $3.5 million in connection with the Note Purchase Agreement. Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount. Recently Adopted Accounting Pronouncements - In June 2016, FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASC 326 significantly changes the way impairment of financial assets is recognized by requiring companies to immediately recognize estimated credit losses expected to occur over the remaining life of many financial assets. The immediate recognition of the estimated credit losses generally will result in an earlier recognition of allowance for credit losses on loans and other financial instruments. The Company adopted this ASU effective January 1, 2023. The adoption of ASC 326 did not have a significant impact on the Company’s Condensed Consolidated Financial Statements. Recent Accounting Pronouncements Not Yet Adopted — In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides practical expedients and exceptions for applying GAAP when modifying contracts and hedging relationships that use the London Interbank Offered Rate (“LIBOR”) as a reference rate. In addition, these amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024. The Company does not anticipate a material increase in interest rates from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. | Note 2 — Summary of significant accounting policies Use of Estimates — Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. Accounts Receivable — Inventories and Cost of Sales — — Developed lots — This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. For the years ended December 31, 2022 and 2021, the amount of developed lots included in inventory was $16,205,448 and $17,025,273, respectively. Developed lots purchased at fair value from third parties was $10,052,179 and $9,445,580 as of December 31, 2022 and December 31, 2021, respectively, which is included in Developed Lots on the Balance Sheets. — Homes under construction — At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. For the years ended December 31, 2022 and 2021, the amount of inventory related to homes under construction included in homes under construction and finished homes was $141,863,561 and $110,224,757, respectively. — Finished homes — This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the amount of inventory related to finished homes included in homes under construction and finished homes was $22,133,926 and $12,775,442, respectively. Upon settlement, costs associated with units sold are expensed to Cost of sales based on a specific identification basis. Costs of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home. In addition, the Company receives rebates with certain suppliers for the use of their product. The Company records the receipt of the rebate as a reduction in Cost of sales based on a specific identification basis. At the time of closing, the Company performs an analysis to accrue for costs that were incurred as part of the construction of the home but unpaid at the time of closing. The costs are recorded in Cost of sales in the Statements of Income. Lot Purchase Agreement Deposits — Note 7 — Lot purchase agreement deposits Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes the Land Developers under the variable interest model to determine if such interest in Land Developers is considered a variable interest, and, if so, whether the Land Developers are required to be consolidated in the Company’s financial statements. Management determines whether the Land Developers are considered variable interest entities (“VIEs”) at the time management becomes involved with Land Developers. The Company invests in less than half of the fair value of the Land Developers’ assets. The Company does not have any specific performance obligations to purchase a certain number or any of the lots or guarantee any of the Land Developers’ financial or other liabilities. The Company is not involved in the design or creation of these entities. As such, the deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be variable interests in the respective Land Developers. Property and Equipment — Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years Normal repairs and maintenance costs are expensed as incurred, whereas significant improvements which materially increase the value or extend the useful life of an asset are capitalized and depreciated over the remaining estimated useful life of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts. Any gain or loss on the sale or retirement of the depreciable asset is recognized as Other income (expense) on the Statements of Income. Long-Lived Assets — Inventory impairment exists if the carrying amount of the asset is not recoverable from the sale prices expected from future home sales. The Company reviews the performance and outlook of its inventories for indicators of potential impairment on a community level. Any calculated impairments are recorded immediately in Cost of sales. Recoverability for Property and equipment is measured by the expected undiscounted future cash flows of the assets compared to the carrying amounts of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions and appraisal. There were no triggering events or impairments recorded for all years presented. Deferred Loan Costs — Note 5 — Homebuilding debt and other affiliate debt Earnings per Share — Note 13 — Earnings per share . Investment in Joint Venture The Company accounts for its investment in the Joint Venture under the equity method of accounting, as it determined that the Company has the ability to exercise significant influence over the venture, but does not have control. Under the equity method, the investment in the unconsolidated joint venture is recorded initially at cost, as Investment in Joint Venture, and subsequently adjusted for equity in earnings, cash contributions, less distributions and impairments. The Joint Venture commenced operations in June 2022. Equity in earnings from the investment in the Joint Venture for the period from the commencement of operations through December 31, 2022 was $137,086, increasing the investment in Joint Venture as of December 31, 2022 to $186,086. There were no additional capital contributions and distributions for the year ended December 31, 2022 aside from the initial contribution of $49,000. Additionally, there were no impairment losses related to the Company’s investment in the Joint Venture recognized during the year ended December 31, 2022. Share-Based Compensation Note 1 — Nature of operations and basis of presentation Stock option awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant. GSH accounts for forfeitures when they occur. Stock warrant awards do not contain a service condition and are expensed on the grant date. The fair value of share-based awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black-Scholes option pricing model. This model requires the input of highly subjective assumptions, including the option’s expected term and stock price volatility. See Note 10 — Stock compensation . Transaction costs — Note 1 — Nature of operations and basis of presentation Leases — Leases (Topic 842) Leases operating The Company determines if an arrangement is, or contains, a lease at inception. Leases are recognized when the contract provides the Company the right to use an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease ROU assets and operating lease liabilities in the Balance Sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As most of the Company’s leases do not provide an explicit borrowing rate, management uses the Company’s incremental borrowing rate based on information available at the commencement date, or at the date of transition for leases transitioned to Topic 842 on January 1, 2022, in determining the present value of the lease payments. In determining the incremental borrowing rate, the Company considered the lease term, credit risk of the lessee and the lease, the size of the lease payments, the current economic environment affecting the lessee and the lease, and the collateralized nature of the lease. The ROU assets also include any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. The Company elected the practical expedient to combine lease and non-lease components when accounting for ROU assets and lease liabilities of all asset classes. Variable lease costs represent additional expenses incurred by the Company that are not included in the lease payment. Variable lease costs include maintenance charges, taxes, insurance, and other similar costs, and are recorded within Selling, general and administrative expense on the statement of income for the year ended December 31, 2022. The Company has elected not to recognize leases with an initial term of 12 months or less (“short-term leases”) on the Balance Sheet. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. Unless otherwise noted, GSH accounts for sale-leaseback transactions at their contractually stated terms. As the leases do not provide an explicit borrowing rate, management used the Company’s incremental borrowing rate based on information available as of the lease commencement date. Refer to Note 6 - Related party transactions Revenue Recognition — Performance obligations are generally satisfied at a point in time, when the control of the home is transferred to the customer. Control is considered to be transferred to the customer at the time of closing when the title and possession of the home are received by the homebuyer. The Company generally requires initial cash deposits from the homebuyer at the time the sales contract is executed which is held by an unrelated third-party escrow agent. The remaining consideration to which the Company is entitled to is received at the time of closing through an escrow agent, typically within five days or less of the closing date. For the years ended December 31, 2022, 2021 and 2020, revenue recognized at a point in time from speculative homes totaled $456,792,005 In some contracts, the Company is contracted to construct a home or homes on underlying land the customer controls. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts using the input method based on costs incurred as compared to total estimated project costs. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. For the years ended December 31, 2022, 2021, and 2020, revenue recognized over time from land owned by customers totaled $20,253,944, $13,176,752, and $9,213,106, respectively. For homes with revenue recognized over time, a large portion of the Company’s contracts with these customers and the related performance obligations have an original expected duration of one year or less. As a result, the Company elected the practical expedient and does not disclose the value of unsatisfied performance obligations for these contracts. The Company periodically bills these customers over the term of the project and performs a quarterly analysis between billings and revenue recognized. The Company records a contract asset when work performed by the Company is greater than the amount billed. Conversely, the Company records deferred revenue when the amount billed is greater than the work performed. As of December 31, 2022 and 2021, the Company recorded a contract asset of $611,343 and $1,361,590, respectively, which is included in Prepaid expense and other assets on the Balance Sheets. As of December 31, 2022 and 2021, the Company recorded deferred revenue of $305,701 and $957,926, respectively, which is included in Other accrued expenses and liabilities on the Balance Sheets. Substantially all deferred revenue is recognized in revenue within twelve months of being received from customers. The Company frequently performs reviews of all contracts to estimate profitability in the future. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total estimated loss at the time it is fully determinable. For the years ended December 31, 2022, 2021, and 2020, the Company did not recognize a loss on any contracts. Concurrent with the recognition of revenues in our Statements of Income, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. Homebuilding revenues include forfeited deposits, which occur when home sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits were considered insignificant for all years presented. The Company determined that costs to obtain a contract include sales commission paid to agents and brokers for selling services to attract home buyers into sales agreements. The contract term is typically the closing date when the title and consideration are exchanged. The Company adopted the practical expedient associated with ASC 606 to recognize the incremental costs of obtaining a contract as an expense when incurred, i.e., when the amortization period of the asset that the Company otherwise would have recognized is one year or less. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. The Company recognized revenue of $5,188,716 on the Statement of income for the year ended December 31, 2022. Refer to Note 6 - Related party transactions Backlog — Advertising — Warranties — cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, and consultations with engineers. The warranty accrual is periodically evaluated for adequacy and any accrual adjustments are made on a per unit basis if deemed necessary. Income Taxes — Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt Reporting Segment Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurement | |
Fair Value Measurement | Note 4 — Fair Value Measurement Certain assets and liabilities measured and reported at fair value under GAAP are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. Categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgments about assumptions that market participants would use in pricing the asset or liability. Due to the short-term nature of the Company’s Cash and cash equivalents, Accounts receivable, Lot deposits, and Accounts payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 7 - Homebuilding debt and other affiliate debt for additional detail on the determination of these instruments’ interest rate. As the reference rate of the Homebuilding debt and other affiliate debt at any point in time is reflective of the current interest rate environment the Company operates in, the carrying amount of these instruments approximates their fair value. The Convertible note payable is presented on the Condensed Consolidated Balance Sheet at its amortized cost and not at fair value. As of March 31, 2023, the fair value of the convertible note is $193,100,000 . See Note 12 - Convertible Note for further details on how the fair value was estimated. All other financial instruments except for Derivative private placement warrants liability, Contingent earnout liability, Derivative stock option liability and Convertible note payable are valued either based on recent trades of securities in active markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. The estimated fair value of the Derivative private placement warrants liability, Contingent earnout liability, Derivative stock option liability and Convertible note payable is determined using Level 3 inputs. The models and significant assumptions used in preparing the valuations are disclosed in Note 15 - Warrant liability and Note 14 - Earnout Shares respectively. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and indicates the fair value hierarchy of the valuation. There were no assets or liabilities that are measured at fair value as of December 31, 2022. Fair Value Measurements as of March 31, 2023 Level 1 Level 2 Level 3 Total Contingent earnout liability $ — $ — $ 445,630,296 $ 445,630,296 Derivative private placement warrant liability — — 949,332 949,332 Derivative public warrant liability 2,415,000 — — 2,415,000 Derivative stock option liability $ — $ — $ 2,111,948 $ 2,111,948 Total Derivative Liability $ 2,415,000 $ — $ 448,691,576 $ 451,106,576 Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. There were no transfers to/from levels during the three months period ended March 31, 2023 and the year ended December 31, 2022. The change in the fair value of Level 3 liabilities as of March 31, 2023: Derivative private Derivative Contingent placement stock earnout warrant option liability liability liability Liability at January 1, 2023 $ — $ — $ — Recognition 242,211,404 625,370 1,189,685 Forfeitures — (890,001) — Change in fair value 203,418,892 1,213,963 922,263 Liability at March 31, 2023 $ 445,630,296 $ 949,332 $ 2,111,948 |
Capitalized interest
Capitalized interest | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Capitalized interest | ||
Capitalized interest | Note 5 — Capitalized interest The Company accrues interest on the Company’s Homebuilding debt. That debt is used to finance homebuilding operations (see Note 7 - Homebuilding debt and other affiliate debt ) and the associated interest is capitalized and included within inventory for homes under construction and finished homes. Interest is expensed to Cost of sales upon the sale of the home. Capitalized interest activity is summarized in the table below for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Capitalized interest at January 1: $ 1,250,460 $ 1,190,318 Interest cost capitalized 2,237,900 837,780 Interest cost expensed (2,386,832) (957,900) Capitalized interest at March 31: $ 1,101,528 $ 1,070,198 | Note 3 — Capitalized interest The Company accrues interest on the Company’s Homebuilding debt. That debt is used to finance homebuilding operations (see Note 5 — Homebuilding debt and other affiliate debt 2022 2021 Capitalized interest at January 1: $ 1,190,318 $ 812,874 Interest cost capitalized 5,515,372 3,400,879 Interest cost expensed (5,455,230) (3,023,435) Capitalized interest at December 31: $ 1,250,460 $ 1,190,318 |
Property and equipment
Property and equipment | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Property and equipment | ||
Property and equipment | Note 6 — Property and equipment Property and equipment consisted of the following as of March 31, 2023 and December 31, 2022: Asset Group March 31, 2023 December 31, 2022 Furniture and fixtures $ 738,361 $ 688,487 Leasehold improvements 380,187 380,187 Machinery and equipment 164,258 1,037,231 Office equipment 175,130 165,774 Vehicles 361,755 750,950 Total Property and equipment $ 1,819,691 $ 3,022,629 Less: Accumulated depreciation (1,143,283) (1,636,931) Property and equipment, net $ 676,408 $ 1,385,698 Depreciation expense, included within Selling, general and administrative expense on the Condensed Consolidated Statements of Operations was $93,942 and $86,829 for the three months ended March 31, 2023 and 2022, respectively. | Note 4 — Property and equipment Property and equipment consisted of the following as of December 31, 2022 and 2021: Asset Group 2022 2021 Furniture and fixtures $ 688,487 $ 580,065 Leasehold improvements 380,187 380,187 Machinery and equipment 1,037,231 985,699 Office equipment 165,774 154,043 Vehicles 750,950 790,519 Total Property and equipment 3,022,629 2,890,513 Less: Accumulated depreciation (1,636,931) (1,300,160) Property and equipment, net $ 1,385,698 $ 1,590,353 Depreciation expense, included within Selling, general and administrative expense on the Statements of Income was $355,566, $358,587 and $182,786 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Homebuilding debt and other aff
Homebuilding debt and other affiliate debt | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Homebuilding debt and other affiliate debt | ||
Homebuilding debt and other affiliate debt | Note 7 — Homebuilding debt and other affiliate debt Prior to the Business Combination, Legacy UHG, jointly with its Other Affiliates considered to be under common control, entered into debt arrangements with financial institutions. These debt arrangements are in the form of revolving lines of credit and are generally secured by land (developed lots and undeveloped land) and homes (under construction and finished). Legacy UHG and certain related Other Affiliates, were collectively referred to as the Nieri Group. The Nieri Group entities were jointly and severally liable for the outstanding balances under the revolving lines of credit, however, Legacy UHG was deemed the primary obligor. Legacy UHG was considered the primary legal obligor of such debt as it was the sole cash generating entity and responsible for repayment of the debt. As such, Legacy UHG had recorded the outstanding advances under the financial institution debt and other debt within these financial statements as of December 31, 2022. A portion of the revolving lines of credit were drawn down for the sole operational benefit of the Nieri Group and Other Affiliates outside of Legacy UHG. These line of credit balances are reflected in the table below as Other Affiliates’ debt. Post Business Combination, the Company no longer enters into debt arrangements with Other Affiliates of Legacy UHG. As discussed further below, in connection with the Business Combination, the Wells Fargo Syndication line was amended and restated to exclude any members of the Nieri Group and Other Affiliates of Legacy UHG from the borrower list. The advances from the revolving construction lines, reflected as Homebuilding debt, are used to build homes and are repaid incrementally upon individual home sales. The various revolving construction lines are collateralized by the homes under construction and developed lots. The revolving construction lines are fully secured, and the availability of funds are based on the inventory value at the time of the draw request. Interest accrued on the loans is added to the balance of the loans outstanding and is paid concurrently with the principal repayments made upon the occurrence of individual home sales. As the average construction time for homes is less than one year, all outstanding debt is considered short-term as of March 31, 2023 and December 31, 2022. The following table and descriptions summarize the Company’s debt as of March 31, 2023 and December 31, 2022: March 31, 2023 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Wells Fargo Bank 7.63 % $ 39,982,270 Regions Bank 7.63 % 25,499,203 Texas Capital Bank 7.63 % 18,211,439 Truist Bank 7.63 % 18,195,498 First National Bank 7.63 % 7,284,576 Total debt on contracts $ 109,172,986 December 31, 2022 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Other Affiliates (1) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 (1) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. Wells Fargo Syndication In July 2021, the Nieri Group entities entered into a $150,000,000 Syndicated Credit Agreement (“Syndicated Line”) with Wells Fargo Bank, National Association (“Wells Fargo”). The Syndicated Line is a three-year revolving credit facility with a maturity date of July 2024, and an option to extend the maturity date for one year that can be exercised upon approval from Wells Fargo. The Syndicated Line also includes a $2,000,000 letter of credit as a sub-facility subjected to the same terms and conditions as the Syndicated Line. The Syndicated Line was amended and restated on March 30, 2023 (“Amendment Date”) in connection with the Business Combination (as defined in Note 1 - Nature of operations and basis of presentation ). As a result of the amended and restated agreement, Great Southern Homes, Inc., a consolidated subsidiary of the Company, is now the sole borrower of the Syndicated Line. No significant terms were changed other than described below. The remaining availability on the Syndicated Line was $40,827,014 as of March 31, 2023 and $32,044,028 as of December 31, 2022. The Company pays a fee ranging between 15 and 30 basis points per annum depending on the unused amount of the Syndicated Line. The fee is computed on a daily basis and paid quarterly in arrears. The Syndication Agreement contains financial covenants, including (a) a minimum tangible net worth of no less than the sum of (x) $65 million and (y) 25% of positive after-tax income until the Amendment Date (which amount is subject to increase over time based on earnings) and no less than $70 million from the Amendment Date, (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.75 to 1.00 for any fiscal quarter until the Amendment Date and 2.50 to 1.00 for any fiscal quarter after the Amendment Date, (c) a minimum debt service coverage ratio to be less than 2.50 to 1.00 for any fiscal quarter, and (d) a minimum liquidity amount of not less than $15,000,000 at all times and unrestricted cash of not less than $7,500,000 at all times. The Company was in compliance with all debt covenants as of March 31, 2023. Legacy UHG was in compliance with all debt covenants as of December 31, 2022. The interest rates on the borrowings under the Syndicated Line vary based on the leverage ratio. In connection with the amended and restated Syndicated Line, the benchmark interest rate was converted from LIBOR to Secured Overnight Financing Rate (“SOFR”), with no changes in the applicable rate margins. The interest rate is based on the greater of either LIBOR prior to Amendment Date or SOFR post Amendment Date plus an applicable margin (ranging from 275 basis points to 350 basis points) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or the base rate plus the aforementioned applicable margin. Other Affiliates debt The amounts in Other Affiliates debt are unrelated to the operations of Legacy UHG, and therefore, an equal amount was included as an offset in Retained Earnings as of December 31, 2022. For the three months ended March 31, 2023 and 2022, Other Affiliates borrowed $136,773 ,and $2,154,624 , respectively. These amounts are recorded on the Statements of Cash Flows, financing activities section, with borrowings presented as Proceeds from other affiliate debt and repayments as Repayments of other affiliate debt. On February 27, 2023, Legacy UHG paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, Legacy UHG was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Business Combination that closed on March 30, 2023 as discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of March 31, 2023. In connection with the amendment of the Syndicated Line, the Company incurred debt issuance costs, from which $469,585 is deferred and will be amortized over the remaining life of the Syndicated Line. The amendment is accounted for as a modification of an existing line of credit under ASC 470 Debt and, therefore, any previously unamortized deferred costs continue to be amortized over the remaining life of the Syndicated Line. The Company recognized $120,988 and $85,782 , respectively, of amortized deferred financing costs within Other income (expense), net for the three months ended March 31, 2023 and 2022, respectively. Outstanding deferred financing costs related to the Company’s Homebuilding debt were $1,059,657 and $888,179 as of March 31, 2023 and 2022, respectively, and are included in Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets as the debt is a revolving arrangement. | Note 5 — Homebuilding debt and other affiliate debt GSH, jointly with Other Affiliates considered to be under common control, enters into debt arrangements with financial institutions. These debt arrangements are in the form of revolving lines of credit and are generally secured by land (developed lots and undeveloped land) and homes (under construction and finished). GSH and certain related Other Affiliates, are collectively referred to as the Nieri Group. The Nieri Group entities are jointly and severely liable for the outstanding balances under the revolving lines of credit, however, the Company has been deemed the primary obligor. The Company is considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. As such, the Company has recorded the outstanding advances under the financial institution debt and other debt within these financial statements as of December 31, 2022 and 2021. A portion of the revolving lines of credit were drawn down for the sole operational benefit of the Nieri Group and Other Affiliates outside of the Company. These line of credit balances are reflected in the table below as Other Affiliates’ debt The advances from the revolving construction lines, reflected as Homebuilding debt, are used to build homes and are repaid incrementally upon individual home sales. The various revolving construction lines are collateralized by the homes under construction and developed lots. The revolving construction lines are fully secured, and the availability of funds are based on the inventory value at the time of the draw request. Interest accrued on the loans is added to the balance of the loans outstanding and is paid concurrently with the principal repayments made upon the occurrence of individual home sales. As the average construction time for homes is less than one year, all outstanding debt is considered short-term as of December 31, 2022 and 2021. The following table and descriptions summarize the Company’s debt as of December 31, 2022 and 2021: 2022 Homebuilding Weighted Debt – Wells average Fargo interest rate Syndication Other Affiliates (2) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 2021 Homebuilding Weighted Debt – Wells average Fargo Homebuilding interest rate (1) Syndication Debt – Other Other Affiliates (2) Total Wells Fargo Bank 3.63 % $ 36,453,801 $ — $ — $ 36,453,801 Regions Bank 3.63%/ 4.40 % 23,189,545 — 918,453 24,107,998 Texas Capital Bank 3.63 % 16,561,385 — — 16,561,385 Truist Bank 3.63 % 16,543,353 — — 16,543,353 First National Bank 3.63%/ 3.88 % 6,624,554 — 21,160 6,645,714 Anderson Brothers 4.25 % — 439,200 1,608,300 2,047,500 Other debt — % — 142,536 — 142,536 Total debt on contracts $ 99,372,638 $ 581,736 $ 2,547,913 $ 102,502,287 (1) The weighted average interest rate for the Wells Fargo Syndication debt is 3.63 %. The 4.40 % and 3.88 % represents the weighted average interest rate for Other Affiliates debt for Regions Bank and First National Bank, respectively. (2) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. Wells Fargo Syndication In July 2021, the Nieri Group entities entered into a $150,000,000 Syndicated Credit Agreement (“Syndicated Line”) with Wells Fargo Bank, National Association (“Wells Fargo”). The Syndicated Line is a three-year revolving credit facility with a maturity date of July 2024, and an option to extend the maturity date for one year that can be exercised upon approval from Wells Fargo. The Syndicated Line also includes a $2,000,000 letter of credit as a sub-facility subjected to the same terms and conditions as the Syndicated Line. The Company used the proceeds from the Syndicated Line to repay all syndication group participants’ outstanding construction line balances. The syndication group consisted of Wells Fargo Bank, Regions Bank, Texas Capital Bank, Truist Bank and First National Bank. The remaining availability on the Syndicated Line was $32,044,028, as of December 31, 2022 and $50,627,362 as of December 31, 2021. The Company pays a fee ranging between 15 and 30 basis points per annum depending on the unused amount of the Syndicated Line. The fee is computed on a daily basis and paid quarterly in arrears. The Syndication Agreement contains financial covenants, including (a) a minimum tangible net worth of no less than the sum of (x) $65 million and (y) 25% of positive after-tax income, as of December 31, 2022 (which amount is subject to increase over time based on earnings), (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.75 to 1.00 for any fiscal quarter, (c) a minimum debt service coverage ratio to be less than 2.50 to 1.00 for any fiscal quarter, and (d) a minimum liquidity amount of not less than $15,000,000 at all times and unrestricted cash of not less than $7,500,000 at all times. The Nieri Group was in compliance with all debt covenants as of December 31, 2022, and 2021. The interest rates on the borrowings under the Syndicated Line vary based on the Nieri Group’s leverage ratio and may be based on the greater of either LIBOR plus an applicable margin (ranging from 275 basis points to 350 basis points) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or the base rate plus the aforementioned applicable margin. The interest rate on borrowings under the Syndicated Line may be based on the LIBOR rate and if the LIBOR rate is no longer available, the agreement contemplates transitioning to an alternative widely available market rate agreeable between parties. The amounts in Other Affiliates debt are unrelated to the operations of the Company, and therefore, an equal amount is included in Net due to and due from shareholders and other affiliates on the Balance Sheets. For the years ended December 31, 2022, 2021, and 2020, Other Affiliates borrowed $10,851,187, $10,025,865, $13,259,394, respectively and repaid $918,453, $5,624,330, and $7,499,472, respectively. These amounts are recorded on the Statements of Cash Flows, financing activities section, with borrowings presented as Proceeds from other affiliate debt and repayments as Repayments of other affiliate debt. For the years ended December 31, 2022, 2021, and 2020, the Company capitalized $141,245, $1,264,403, $337,500, of deferred loan costs, respectively. The Company recognized $404,146, $421,186, and $408,674, respectively, of amortized deferred loan costs within Other income (expense), net for the years ended December 31, 2022, 2021, and 2020, respectively. Outstanding deferred loan costs related to the Company’s Homebuilding debt were $711,060 and $973,961 as of December 31, 2022 and 2021, respectively, and are included in Prepaid expenses and other assets on the Balance Sheets. Other Debt The Company enters into retail installment contracts with unrelated third parties. The maturity date of the borrowings was in August 2022 and the amount was repaid in full. |
Related party transactions
Related party transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Related party transactions | ||
Related party transactions | Note 8 — Related party transactions Prior to the Business Combination, Legacy UHG transacted with Other Affiliates that were owned by the shareholders of GSH. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 - Nature of operations and basis of presentation). Post Business Combination, the Company continues to transact with these parties, however, they are no longer considered affiliates of the Company. Land Development Affiliates and Other Affiliates of Legacy UHG (post Business Combination) meet the definition of related parties of the Company as defined in ASC 850-10-20. Prior to the Business Combination, Legacy UHG maintained the cash management and treasury function for its Other Affiliates. Cash receipts from customers and cash disbursements made to vendors were recorded through one centralized bank account. Legacy UHG recorded a Due from Other Affiliate when cash was disbursed, generally to a vendor, on behalf of an affiliate. Conversely, Legacy UHG recorded a Due to Other Affiliate when cash was received from a customer on behalf of an affiliate. The balances were settled through equity upon the consummation of the Business Combination. The below table summarizes Legacy UHG transactions with the Land Development and Other Affiliates for the three months ended March 31, 2023 and 2022. Three Months ended March 31, 2023 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (384,349) $ — $ (384,349) Other activities (225,392) (422,342) (647,734) Total financing cash flows $ (609,741) $ (422,342) $ (1,032,083) Non-cash activities Settlement of co-obligor debt to other affiliates $ 8,340,545 $ — $ 8,340,545 Release of guarantor from GSH to shareholder 2,841,034 — 2,841,034 Credit for earnest money deposits 2,521,626 — 2,521,626 Total non-cash activity $ 13,703,205 $ — $ 13,703,205 Three Months ended March 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (7,642,371) $ (360,831) $ (8,003,202) Other activities (407,782) (70,476) (478,258) Cash transfer — (10,000,000) (10,000,000) Total financing cash flows $ (8,050,153) $ (10,431,307) $ (18,481,460) Non-cash activities Acquisition of developed lots 4,624,810 — 4,624,810 Total non-cash activity $ 4,624,810 $ — $ 4,624,810 Land development expense — Represents costs that were paid for by Legacy UHG that relate to the Land Development Affiliates’ operations. The Land Development Affiliates acquire raw parcels of land and develop them so that Legacy UHG can build houses on the land. Other activities — Represent other transactions with Legacy UHG’s Other Affiliates. This includes, predominately, rent expense incurred for leased model homes and payment of real estate taxes. Settlement of co-obligor debt to other affiliates — The amount represents the settlement of Wells Fargo debt associated with Other Affiliates. Release of guarantor from GSH to shareholder — The amount represents that Legacy UHG was released as a co-obligor from the Anderson Brothers debt associated with Other Affiliates. Credit for earnest money deposits — The amount represents credit received from Legacy UHG affiliate in relation to lot deposits that Legacy UHG paid on behalf of the affiliate. Cash transfer — A direct cash contribution to Other Affiliates from Legacy UHG. Legacy UHG transferred cash to a related party. This cash transfer is in anticipation of separating the homebuilding operations from land development operations. Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Once the Land Development Affiliates of Legacy UHG have developed the raw parcels of land, they transfer the land to Legacy UHG in a non-cash transaction. The transfer amount is derived from the costs incurred to develop the land. Leases In addition to the transactions above, Legacy UHG has entered into three separate operating lease agreements with a related party. The terms of the leases, including rent expense and future minimum payments, are described in Note 11 - Commitments and contingencies . Other The Company shares office spaces with a related party and certain employees of the Company provide services to the same related party, as such, the Company is allocating certain shared costs to the related party in line with a predetermined methodology based on headcount. During the three months ended March 31, 2023, the Company allocated overhead costs to the related party in the amount of $185,812 and was charged for street maintenance in the amount of $59,825 by the same related party. The remaining balance outstanding as of March 31, 2023 is $125,987 and is presented on the Condensed Consolidated Balance Sheet. | Note 6 — Related party transactions Distributions and net transfer to shareholders and other affiliates Before the carve-out, the Company’s financial information was included in the financial statements and accounting records of GSH. The following transactions consisting of distributions and net transfer to shareholders and other affiliates summarizes the activity between the Company and shareholders and Other Affiliates before the carve-out. Shareholders’ and Other Affiliates’ net investment reflects transactions that occurred between the Company and the Shareholders, and the Company and Other Affiliates, that were not settled in cash. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 — Nature of operations and basis of presentation). net transfer to shareholders’ and other affiliates’ net investment for the years ended December 31, 2022, 2021, and 2020 are as follows: 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. General Corporate Allocations — General Financing Activities — Related party transactions The Company transacts with Other Affiliates that are owned by the shareholders of the Company as discussed above. The Company operates and maintains the cash management and treasury function for the Other Affiliates. Cash receipts from customers and cash disbursements made to vendors are recorded through one centralized bank account. The Company records a Due from Other Affiliate when cash is disbursed, generally to a vendor, on behalf of an affiliate. Conversely, the Company records a Due to Other Affiliate when cash is received from a customer on behalf of an affiliate. As of December 31, 2022 and 2021, the Company recorded a Due from Other Affiliates of $72,739,572 and $48,004,261, respectively, and a Due to Other Affiliates of $31,420,651 and $30,975,951, respectively. These balances are presented net as a contra-account against Shareholders’ and other affiliates’ net investment, as the settlement of these balances is not expected in cash. As of December 31, 2022, the Company recorded a Due from related party of $1,437,235 as an asset on the Balance Sheet as the Company is reasonably certain that this amount will be collected because both parties have entered into a binding construction contract and agreed on the expected contract price. The below table summarizes the transactions with the Land Development and Other Affiliates for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 Land development expense Other activities Cash transfer — Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Model home sales Transfer of constructed model homes to related parties Contribution of fixed assets Sale-leaseback transaction In connection with these transactions, GSH simultaneously entered into individual lease agreements for all 19 model homes sold, whereby GSH is the lessee. The Company is responsible for paying the operating expenses associated with the model homes while under lease. Nine of the 19 individual leases had a lease term greater than twelve months. In connection with these nine leases, the Company recognized an operating lease right-of-use-asset and a corresponding operating As the leases associated with the transactions do not commence until 2023, the Company did not pay rent or recognize lease expense associated with the leases during the year ended December 31, 2022. Rent expense will be paid monthly, consistent with the lease contract. Other - Leases In addition to the transactions above, the Company has entered into three separate operating lease agreements with one related party. The terms of the lease, including rent expense and future minimum payments, are described in Note 9 - Commitments and contingencies |
Lot purchase agreement deposits
Lot purchase agreement deposits | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Lot purchase agreement deposits | ||
Lot purchase agreement deposits | Note 9 — Lot purchase agreement deposits The Company does not engage in the land development business. The Company’s strategy is to acquire developed lots through related parties and unrelated third party land developers pursuant to lot purchase agreements. Most lot purchase agreements require the Company to pay a nonrefundable cash deposit of at least 10% of the agreed-upon fixed purchase price of the developed lots. In exchange for the deposit, the Company receives the right to purchase the finished developed lot at a preestablished price. Such contracts enable the Company to defer acquiring portions of properties owned by third parties until the Company determines whether and when to complete such acquisition, which may serve to reduce financial risks associated with long-term land holdings. Prior to the Business Combination, when Legacy UHG was acquiring lots through Land Development Affiliates, it did not have to pay deposits as the land development operations were owned by the shareholders of GSH. As such, the table below as of December 31, 2022, does not include lot purchase agreement deposits with related parties, and it consists of unrelated third party lot purchase agreement deposits only. Post Business Combination, the Company continues to purchase lots from the former Land Development Affiliates of Legacy UHG, however, as the Company is no longer owned by the shareholders of GSH, the Company must pay lot purchase agreement deposits to acquire lots. As such, as of March 31, 2023 all interests in lot purchase agreements, including with related parties, is recorded within Lot purchase agreement deposits on the Condensed Consolidated Balance Sheet and presented in the table below. The following table provides a summary of the Company’s interest in lot purchase agreements as of March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 Lot purchase agreement deposits $ 8,113,303 $ 3,804,436 Remaining purchase price 205,808,168 65,451,928 Total contract value $ 213,921,471 $ 69,256,364 Out of the $8,113,303 lot purchase agreement deposits outstanding as of March 31, 2023, $4,595,626 are with related parties. The Company has the right to cancel or terminate the lot purchase agreement at any time for any reason. The legal obligation and economic loss resulting from a cancellation or termination is limited to the amount of the deposits paid. The cancellation or termination of a lot purchase agreement results in the Company recording a write-off of the nonrefundable deposit to Cost of sales. For the three months ended March 31, 2023 and 2022, the Company recorded $8,664 and $89,361 , respectively, to Cost of sales for the forfeited lot purchase agreement deposits. The deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be a variable interest in the respective third-party land developers. | Note 7 - Lot purchase agreement deposits As the carved-out entity, the Company does not engage in the land development business. In certain instances, the Company’s strategy is to acquire developed lots through unrelated third party land developers pursuant to lot purchase agreements. Most lot purchase agreements require the Company to pay a nonrefundable cash deposit of approximately 10% of the agreed-upon fixed purchase price of the developed lots. In exchange for the deposit, the Company receives the right to purchase the finished developed lot at a preestablished price. Such contracts enable the Company to defer acquiring portions of properties owned by third parties until the Company determines whether and when to complete such acquisition, which may serve to reduce financial risks associated with long-term land holdings. The following table provides a summary of the Company’s interest in lot purchase agreements as of December 31, 2022 and 2021: 2022 2021 Deposit and pre-acquisition costs $ 3,804,436 $ 2,946,001 Remaining purchase price 65,451,928 77,007,079 Total contract value $ 69,256,364 $ 79,953,080 The Company has the right to cancel or terminate the lot purchase agreement at any time for any reason. The legal obligation and economic loss resulting from a cancellation or termination is limited to the amount of the deposits paid. The cancellation or termination of a lot purchase agreement results in the Company recording a write-off of the nonrefundable deposit to Cost of sales. For the years ended December 31, 2022, 2021, and 2020, the Company recorded $0, $211,482, and $84,619, respectively, to Cost of sales for the forfeited lot purchase agreement deposits. As discussed in Note 2 — Summary of significant accounting policies |
Warranty reserves
Warranty reserves | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Warranty reserves | ||
Warranty reserves | Note 10 — Warranty reserves The Company establishes warranty reserves to provide for estimated future costs as a result of construction and product defects. Estimates are determined based on management’s judgment considering factors such as historical spend and projected cost of corrective action. The following table provides a summary of the activity related to warranty reserves, which are included in Other accrued expenses and liabilities on the accompanying Condensed Consolidated Balance Sheets as follows: Three Months Ended Year Ended March 31, 2023 December 31, 2022 Warranty reserves at beginning of the period $ 1,371,412 $ 1,275,594 Reserves provided 242,720 1,156,027 Payments for warranty costs and other (204,713) (1,060,209) Warranty reserves at end of the period $ 1,409,419 $ 1,371,412 | Note 8 — Warranty reserves The Company establishes warranty reserves to provide for estimated future costs as a result of construction and product defects. Estimates are determined based on management’s judgment considering factors such as historical spend and projected cost of corrective action. The following table provides a summary of the activity related to warranty reserves, which are included in Other accrued expenses and liabilities on the accompanying Balance Sheets as follows: 2022 2021 Warranty reserves at January 1 $ 1,275,594 $ 963,204 Reserves provided 1,156,027 1,206,142 Payments for warranty costs and other (1,060,209) (893,752) Warranty reserves at December 31 $ 1,371,412 $ 1,275,594 |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and contingencies | ||
Commitments and contingencies | Note 11 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years , some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $201,439 and $159,679 within Selling, general, and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Operating lease expense included variable lease expense of $11,925 and $18,237 for the three months ended March 31, 2023 and 2022, respectively. The weighted-average discount rate for the operating leases entered into during the three months ended March 31, 2023 and 2022 was 5.54% and 3.16% and the weighted-average remaining lease term was 2.11 and 2.4 years, respectively. During the year ended December 31, 2022, Legacy UHG closed on 19 sale-leaseback transactions with related parties, whereby it is the lessee. Leases commenced on January 1, 2023. The Company is responsible for paying the operating expenses associated with the model homes while under lease. The rent expense associated with sale-leaseback agreements that mature in less than 12 months (and are excluded thus from the ROU asset and lease liability) is $68,625 for the three months ended March 31, 2023. The maturity of the contractual, undiscounted operating lease liabilities as of March 31, 2023 are as follows: Lease Payment 2023 $ 361,734 2024 292,992 2025 108,792 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 811,518 Interest on operating lease liabilities (43,236) Total present value of operating lease liabilities $ 768,282 The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $95,381 and $34,335 of rent expense related to the short-term leases within Selling, general and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Litigation The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these Condensed Consolidated Financial Statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of recent and current pending litigation involving the Company. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for in the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. The Company is a defendant in a claim involving construction defects associated with improper slope of a sewer line in and under the slab at the property causing damages, where the Company served as the general contractor for original construction of the residence. The Company was served with a summons and complaint in this matter on February 1, 2023. The Company has submitted this matter to the insurance carrier, and they have engaged a law firm. The Company’s assessment of liability at this time is unknown as it has been just served with the summons and complaint. According to the insurance carrier, there is no deductible for this claim. The Company believes the insurance will cover any amounts that may ultimately be determined to be owed, if any. The Company is involved in a litigation regarding a variance for a subdivision. The Company applied for a variance for a subdivision from the Horry County Supplemental Flood Zone freeboard requirement, which was granted by the Horry County Board of Construction Adjustments and Appeals in August 2022. The Horry County Board of Construction Adjustments and Appeals reconsidered the variance in September 2022 to allow county staff and the Company to reach a compromise on the freeboard requirement. County staff and the Company agreed to a reduction in the freeboard requirement to two feet rather than three, and the Board again approved the variance at its February 2023. Due to a lack of information on the possible impact to the county’s flood insurance rating, a vote on the amendment failed at the Horry County Council meeting later that month. Subsequently, Horry County filed an appeal of the Board’s decision to grant the variance. If the Horry County Council approves the amendment, the litigation will be moot. However, it the amendment does not get approved, the Company would have to build to the three-foot freeboard rather than the two-foot previously granted. The Company is of the opinion that such matter will be resolved without material effect on the Company’s financial condition or results of operations as the plaintiff is not seeking monetary damages and the Company is expecting the case to be dismissed in near future. The Company is a defendant in a claim regarding high levels of Volatile Organic Compound in a house in Anderson, South Carolina. The Company’s investigations into this matter have resulted in indoor air sampling and soil gas screening indicating that the subject lot, and potentially others in the area, have been impacted by historical industrial activities predating the construction of the houses. The Company is investigating the extent and degree to which these impacts may have impacted other homes and is working with South Carolina environmental regulators to determine if additional actions will be required. Potential costs or liabilities associated with this matter cannot be determined at this time. | Note 9 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $555,806 within Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. Operating lease expense included variable lease expense of $92,285 for the year ended December 31, 2022. The weighted-average discount rate for the operating leases entered into during the year ended December 31, 2022 was 4.90% and the weighted-average remaining lease term was 2.16 years. During the year ended December 31, 2022, the Company closed on 19 sale-leaseback transactions with related parties. For information on sale-leaseback transaction with related parties, see Note 6 — Related party transaction The maturity of the contractual, undiscounted operating lease liabilities as of December 31, 2022 are as follows: December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 Total rent expense for the year ended December 31, 2021 was $931,078. The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $94,386 and $344,016 of rent expense related to the short-term leases within selling, general and administrative expense on the Statements of Income for the year ended December 31, 2022, and 2021, respectively. Litigation The Company is considered to be the primary responsible party for claims and lawsuits brought against the Shareholders and Other Affiliates based on its financial resources. The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these financial statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of current pending litigation involving the Company. The Company is a defendant in a claim involving residential construction defects associated with the premature deterioration of sloped land behind neighboring homes, where the Company served as the general contractor for original construction of the residence in 2013. The Company asserts the slope failure that has caused damage to the structural integrity of the plaintiff’s homes is the result of the plaintiff’s next-door neighbor who voluntarily cleared vegetation from the rear of their home thereby causing the erosion of soil and resulting damages. In 2022, the matter was settled, and the case was dismissed for an immaterial amount. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. |
Convertible Note
Convertible Note | 3 Months Ended |
Mar. 31, 2023 | |
Convertible Note | |
Convertible Note | Note 12 — Convertible Note In connection with the closing of the Business Combination, GSH entered into the Note Purchase Agreement, dated March 21, 2023, and effective March 30, 2023, with DHHC and the Convertible Note Investors. As part of the PIPE Investment, the Convertible Note Investors agreed to purchase $80.0 million in original principal amount of Notes at a 6.25% original issue discount and were issued an additional 744,588 UHG Class A Common Shares. The aggregate proceeds of the PIPE Investment were $75.0 million. The Notes mature on March 30, 2028, and bear interest at a rate of 15% . The Company has the option to pay any accrued and unpaid interest at a rate in excess of 10% either in cash or by capitalizing such interest and adding it to the then outstanding principal amount of the Notes (“PIK Interest”). The Company has elected to pay the full accrued and unpaid interest in excess of 10% as PIK Interest. The effective interest rate on the Notes is 19.75% . The Notes are convertible at the holder’s option into UHG Class A Common Shares at any time after March 30, 2024 through March 30, 2028, at a per share price (the “Initial Conversion Price”) equal to 80% of volume-weighted average trading sale price (“VWAP”) per UHG Class A Common Share during the 30 consecutive trading days prior to the first anniversary of the Closing Date (the “Measurement Period”). Pursuant to the Note Purchase Agreement, the Initial Conversion Price has a floor of $5.00 per share and a cap of $10.00 per share. The Initial Conversion Price is subject to adjustments for certain anti-dilution provisions as provided in the Notes. If an anti-dilution event occurs, the number of shares of common stock issuable upon conversion may be higher than implied by the Initial Conversion Price. Each Note is also convertible at the Company’s option into UHG Class A Common Shares, at any time after the second anniversary of the Closing Date if the VWAP per UHG Class A Common Share exceeds $13.50 for 20 trading days in a 30 consecutive trading day period. The Company was not required to bifurcate either of these conversion features as they met the derivative classification scope exception as described in ASC 815-15. The Notes may be redeemed by the Company at any time prior to 60 days before March 30, 2028, by repaying all principal and interest amounts outstanding at the time of redemption plus a make-whole amount equal to the additional interest that would accrue if the Notes remained outstanding through their maturity date. The Company was not required to bifurcate the embedded redemption feature, as the economic characteristics and risks of the redemption feature were clearly and closely related to the economic characteristics and risk of the Notes in accordance with ASC 815-15. The Notes also contain additional conversion, redemption, and payment provision features, at the option of the holder, which can be exercised upon contingent events such as the Company defaulting on the Notes, a change of control in the ownership of the Company, or other events requiring indemnification. As the contingent events are either entirely within the Company’s control or based on an event management considers the probability of occurring as extremely remote, these features which are required to be bifurcated, would likely have minimal or no value, and therefore deemed to not be material to the Condensed Consolidated Financial Statements. The fair value of the Notes was calculated using a Binomial model and a Monte Carlo model. The PIPE Shares were valued using a Discounted Cash Flow Model. The Company will accrete the value of the discount across the expected term of the Note using the effective interest method. The below table presents the outstanding balance of the Notes on March 31, 2023: March 31, 2023 Beginning Balance — Par $ 80,000,000 Unamortized Discount (13,285,724) Carrying Value $ 66,714,276 The Company did not recognize interest expense for the Notes for the period ended March 31, 2023, as the Company believes the interest accrued during the time the Notes were outstanding is immaterial as of March 31, 2023. The following assumptions were used in the Binomial and Monte Carlo valuation models to determine the estimated fair value of the Notes at the grant date, March 30, 2023 and for the period ended March 31, 2023. March 31, 2023 March 30, 2023 Risk-free interest rate 3.70 % 3.80 % Expected volatility 40 % 40 % Expected dividend yield — % — % Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury zero coupon bond used to reduce any projected future cash flows derived from the payoff of the Notes as UHG common shares. Expected Volatility — The Company’s expected volatility was estimated based on the average historical volatility for comparable publicly traded companies. Expected Dividend Yield — The dividend yield is based on the Company’s history and expectation of dividend payouts. The Company does not expect to pay cash dividends to shareholders during the term of options, therefore the expected dividend yield is determined to be zero. |
Share-based compensation
Share-based compensation | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based compensation | ||
Share-based compensation | Note 13 — Share-based compensation Equity Incentive Plans In January 2022, the Board of Directors of GSH approved and adopted the Great Southern Homes, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan is administered by a committee appointed by the Board of Directors and has reserved 3,000 common shares to be issued as equity-based awards to directors and employees of GSH. The number of awards reserved is subject to change based on certain corporate events or changes in GSH’s capital structure and the shares vest ratably over four years . The 2022 Plan defines awards to include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. Effective as of March 30, 2023, in connection with the Business Combination, the Company’s board of directors adopted the United Homes Group, Inc. 2023 Equity Incentive Plan (the “2023 Plan”) at which time the 2022 Plan was terminated. The outstanding options prior to the Business Combination were cancelled in exchange of substantially equivalent options to acquire shares of Common Stock of the Company based on the conversion ratio for the UHG common shares in the Business Combination. No further grants can be made under the 2022 Plan. The 2023 Plan provides that the number of shares reserved and available for issuance under the 2023 Plan will automatically increase each January 1, beginning on January 1, 2024, by 4% of the number of outstanding shares of Common Stock on the immediately preceding December 31, or such lesser amount as determined by the Company’s board of directors. Each replacement stock option is subject to the same terms and conditions as were applicable under the 2022 Plan. The Company concluded that the replacement stock options issued in connection with the Business Combination did not require accounting for effects of the modification under ASC 718 as it was concluded that a) the fair value of the replacement award is the same as the fair value of the original award immediately before the original award was replaced, b) there were no changes in the vesting terms, and c) the classification of awards did not change. As of March 31, 2023, the Company had only issued incentive and non-qualified stock options. The following table summarizes the activity relating to the Company’s stock options. The below stock option figures are presented giving effect to a retroactive application of the Business Combination which resulted in a replacement of the previous 2022 Plan stock options with the 2023 Plan, as described above, at an Exchange Ratio of approximately 373.47 . In addition, the exercise price for each replacement stock option was also adjusted using the Exchange Ratio. Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2022 870,567 $ 2.81 Granted — 2.81 Forfeited (85,555) 2.81 Outstanding, March 31, 2023 785,012 $ 2.81 Options exercisable at March 31, 2023 197,912 $ 2.81 The aggregate intrinsic value of the stock options outstanding was $10,561,716 and $7,460,132 as of March 31, 2023 and December 31, 2022 respectively. The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the price of the option. The Company recognizes stock compensation expense resulting from the equity-based awards over the requisite service period. Stock compensation expense is recorded based on the estimated fair value of the equity ‑ based award on the grant date using the Black ‑ Scholes valuation model. Stock compensation expense is recognized in the Selling, general and administrative expense line item in the Condensed Consolidated Statements of Operations. Total stock compensation expense included in the Condensed Consolidated Statements of Operations for the three-months period ended March 31, 2023 and 2022 was $51,079 and $41,422, respectively. As of March 31, 2023, there was unrecognized stock compensation expense related to non-vested stock option arrangements totaling $602,264 . The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 2.81 years. Prior to the Business Combination, Legacy UHG’s common stock was not publicly traded, it estimated the fair value of common stock based on the combination of the three methods: (i) the discounted cash flow method of the income approach; (ii) the guideline company method of the market approach; and (iii) the subject transaction method of the market approach. Legacy UHG considers numerous objective and subjective factors to determine the fair value of the Company’s common stock. The factors considered include, but are not limited to: (i) the results of periodic independent third-party valuations; (ii) nature of the business and history of the enterprise from its inception; (iii) the economic outlook in general and for the specific industry; (iv) the book value of the stock and financial condition of the business; (v) earning and dividend paying capacity of the business; (vi) the market prices of stocks of corporations engaged in the same or similar lines of business having their stock actively traded in a free and open market, either on an exchange or over-the-counter. The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock options granted during the year ended December 31, 2022 adjusted by the Exchange Ratio, the fair value of stock options immediately before the original award was replaced and the fair value of stock options replaced on the replacement date. Inputs March 30, 2023 January 19, 2022 Risk-free interest rate 3.77 % 1.82 % Expected volatility 40 % 35 % Expected dividend yield — % — % Expected life (in years) 5.10 6.25 Fair value of options $ 10.41 $ 1.06 Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury zero coupon bond issued in effect at the time of the grant for the periods corresponding with the expected term of the stock option. Expected Volatility — The expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected term of the options. Expected Dividend Yield — The dividend yield is based on the history and expectation of dividend payouts. The Company does not expect to pay cash dividends to shareholders during the term of options, therefore the expected dividend yield is determined to be zero. Expected Life — The expected term represents the period the options granted are expected to be outstanding in years. As Legacy UHG does not have sufficient historical experience for determining the expected term, the expected term has been derived based on the SAB 107 simplified method for awards that qualify as plain-vanilla options. Certain stock options issued under the 2023 Plan are issued to individuals who are not employees of the Company and who are not providing goods or services to the Company. These options are recognized in accordance with ASC 815 as a derivative liability and marked to market at each reporting period end. The derivative liability of stock options amounts to $2,111,948 and is included within Derivative liability on the Condensed Consolidated Balance Sheet as of March 31, 2023. Unrealized loss on the derivative liability of stock options amounts to $922,263 and is included as Change in fair value of derivative liability within the Condensed Consolidated Statement of Operations for the three-months period ended March 31, 2023. Stock warrants In January 2022, Legacy UHG granted an option to non-employee directors to purchase 1,867,368 stock warrants for $150,000 . Each warrant represents one non-voting common share. The warrants are exercisable at $4.05 per warrant, which represents an out-of-the-money strike price. The warrants can be exercised for 10 years starting from July 1, 2022. Using the Black-Scholes valuation model, the Company determined the aggregate fair value of these warrants to be approximately $1,376,800 as of the grant date. Because there is no continued service requirement for the warrant holders, the Company recorded a one-time stock compensation expense in the amount of $1,226,800 within the Selling, general and administrative expense line item in the Condensed Consolidated Statement of Operations for the year ended December 31, 2022. The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock warrants granted during the year ended December 31, 2022. There were no warrants granted during the three month period ended March 31, 2023. Inputs December 31, 2022 Risk-free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 0.7 The methodology for determining the inputs is consistent with the input methodology for stock options as described above. In March 2022, the option holders purchased the warrants in exchange for $150,000 cash consideration. This amount was recorded directly to Additional Paid-in Capital in the Company’s Condensed Consolidated Balance Sheet. The outstanding stock warrants prior to the Business Combination were converted into warrants to acquire a number of shares of Common Stock of the Company based on the Exchange Ratio for the UHG common shares in the Business Combination. The above stock warrants figures are presented giving effect to a retroactive application of the Business Combination which resulted in a conversion of the warrants at an Exchange Ratio of approximately 373.47 :1. In addition, the exercise price for each converted stock warrant was also adjusted using the Exchange Ratio. Each converted stock warrant is subject to the same terms and conditions as were applicable prior to the conversion. As of March 31, 2023, no warrants have been exercised. The Earnout Shares issuable to holders of equity stock options as of the Closing Date are accounted for as equity classified stock compensation and do not have a requisite service period. During the three months ended March 31, 2023, the Company recognized a one-time stock-based compensation expense related to the Earnout of $4.4 million, which is excluded from the above stock-based compensation expense table. See Note 14 - Earnout Shares for the assumptions and inputs used in the valuation of the Earnout Shares. | Note 10 — Stock compensation Stock options In January 2022, the Board of Directors of GSH approved and adopted the Great Southern Homes, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan is administered by a committee appointed by the Board of Directors and has reserved 3,000 common shares to be issued as equity-based awards to directors and employees of GSH. The number of awards reserved is subject to change based on certain corporate events or changes in GSH’s capital structure and the shares vest ratably over four years. The 2022 Plan defines awards to include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. As of December 31, 2022, GSH had only issued incentive and non-qualified stock options. The following table summarizes the GSH stock options that were specifically granted to directors and employees of Homebuilding for the year ended December 31, 2022: Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2021 — $ — Granted 2,524 1,049.60 Forfeited (193) 1,049.60 Outstanding, December 31, 2022 2,331 $ 1,049.60 Options exercisable at December 31, 2022 — $ — The aggregate intrinsic value of the stock options outstanding was $7,460,132 as of December 31, 2022. The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the price of the option. GSH recognizes stock compensation expense resulting from the equity-based awards over the requisite service period. Stock compensation expense is recorded based on the estimated fair value of the equity-based award on the grant date using the Black-Scholes valuation model. Stock compensation expense is recognized in the Selling, general and administrative expense line item in the statement of income. Stock compensation expense included in the carve-out statement of income for the year ended December 31, 2022 was $195,830. As of December 31, 2022, there was unrecognized stock compensation expense related to non-vested stock option arrangements totaling $608,826. The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 3 years. As GSH’s common stock is not publicly traded, it estimates the fair value of common stock based on the combination of the three methods: (i) the discounted cash flow method of the income approach; (ii) the guideline company method of the market approach; and (iii) the subject transaction method of the market approach. GSH considers numerous objective and subjective factors to determine the fair value of the Company’s common stock. The factors considered include, but are not limited to: (i) the results of periodic independent third-party valuations; (ii) nature of the business and history of the enterprise from its inception; (iii) the economic outlook in general and for the specific industry; (iv) the book value of the stock and financial condition of the business; (v) earning and dividend paying capacity of the business; (vi) the market prices of stocks of corporations engaged in the same or similar lines of business having their stock actively traded in a free and open market, either on an exchange or over-the-counter. The following assumptions were used in the Black-Scholes valuation model to determine the estimated fair value of the stock options granted during the year ended December 31, 2022: Inputs December 31, 2022 Risk free interest rate 1.82 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.25 Fair value of options $ 394.7 Risk-Free Interest Rate Expected Volatility Expected Dividend Yield Expected Life Stock warrants In January 2022, GSH granted an option to non-employee directors to purchase 5,000 stock warrants for $150,000. Each warrant represents one non-voting common share. The warrants are exercisable at $1,512 per warrant, which represents an out-of-the-money strike price. The warrants can be exercised for 10 years starting from July 1, 2022. Using the Black-Scholes valuation model, GSH determined the aggregate fair value of these warrants to be approximately $1,376,800 as of the grant date. Because there is no continued service requirement for the warrant holders, the Company recorded a one-time stock compensation expense in the amount of $1,226,800 within the Selling, general and administrative expense line item in the Statement of income for the year ended December 31, 2022. The following assumptions were used in the Black-Scholes valuation model to determine the estimated fair value of the stock warrants granted during the year ended December 31, 2022: Inputs December 31, 2022 Risk free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 275.4 The methodology for determining the inputs is consistent with the input methodology for stock options as described above. In March 2022, the option holders purchased the warrants in exchange for $150,000 cash consideration. This amount was recorded directly to Shareholders’ and other affiliates’ net investment in the Company’s Balance sheet. As of December 31, 2022, no warrants have been exercised. |
Earnout Shares
Earnout Shares | 3 Months Ended |
Mar. 31, 2023 | |
Earnout Shares | |
Earnout Shares | Note 14 — Earnout Shares During the five year period after the Closing (“Earnout Period”), eligible GSH Equity Holders and Employee Option Holders are entitled to receive up to 20,000,000 Earnout Shares. Additionally, and pursuant the Sponsor Support Agreement, the Sponsor surrendered 1,886,378 DHHC Class B Shares for the contingent right to receive Earnout Shares. All Earnout Shares issuable to GSH Equity Holders, Employee Option Holders and the Sponsors are subject to the same Triggering Events (defined below). On the date when the VWAP of one share of the UHG Class A Common Shares quoted on the NASDAQ has been greater than or equal to $12.50 , $15.00 , $17.50 (“Triggering Event I,” “Triggering Event II,” and “Triggering Event III,” respectively, and together the “Triggering Events”) for any twenty trading days within any thirty consecutive trading day period within the Earnout Period, the eligible GSH Equity Holders, Employee Option Holders, and the Sponsors will receive Earnout Shares distributed on a pro-rata basis. For Triggering Event I and Triggering Event II, 37.5% of Earnout Shares will be released and following the achievement of Triggering Event III, 25.0% of Earnout Shares will be released. As discussed in Note 3 - Summary of significant accounting policies , there are two units of account within the Earnout Shares depending on the Earnout Holder. If the Earnout Holder is either a GSH Equity Holder or Sponsor, the instrument will be accounted for as a derivative liability. If the Earnout Holder is an Employee Option Holder, the instrument will be accounted for as an equity classified award. The following table summarizes the number of Earnout Shares allocated to each unit of account as of March 31, 2023: Triggering Event I Triggering Event II Triggering Event III Derivative liability 8,059,386 8,059,386 5,372,923 Stock compensation 148,006 148,006 98,671 Total Earnout Shares 8,207,392 8,207,392 5,471,594 As of March 30, 2023, the fair value of the Earnout Shares was $12.10 per share issuable upon Triggering Event I, $11.16 per share issuable upon Triggering Event II and $10.19 per share issuable upon Triggering Event III. As of March 31, 2023, the fair value of the Earnout Shares was $20.81 per share issuable upon Triggering Event I, $20.77 per share issuable upon Triggering Event II and $20.57 per share issuable upon Triggering Event III. The preliminary estimated fair value of the Earnout Shares was determined as of March 30, 2023 (the “Grant Date”) and the period end date of March 31, 2023, using a Monte Carlo simulation using a distribution of potential outcomes on a daily basis over the Earnout Period. The assumptions used in the valuation of these instruments, using the most reliable information available, include: Inputs March 31, 2023 March 30, 2023 Current stock price $ 20.80 $ 12.68 Stock price targets $12.50, $15.00, $17.50 $12.50, $15.00, $17.50 Expected life (in years) 5.0 5.0 Earnout period (in years) 4.75 4.75 Risk-free interest rate 3.69 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — % — % The change in the fair value of the Earnout Shares between March 30, 2023 and March 31, 2023 was primarily attributable to the increase in the current stock price of the Company from $12.68 as of March 30, 2023 to $20.80 as of March 31, 2023. As none of the earnout Triggering Events have occurred as of March 31, 2023, no shares have been distributed. |
Warrant liability
Warrant liability | 3 Months Ended |
Mar. 31, 2023 | |
Warrant liability | |
Warrant liability | Note 15 — Warrant liability Immediately prior to the Closing Date, 2,966,669 of the 5,933,333 Private Placement Warrants were forfeited. The remaining 2,966,664 Private Placement Warrants were recognized as a liability on March 30, 2023 at a fair value of $0.30 per warrant for a total of $0.9 million. The Warrants were remeasured to a fair value of $0.32 per share for a total of $1.0 million as of March 31, 2023. The Company recorded a loss of $0.1 million for the period ended March 31, 2023, which is included in Change in fair value of derivative liabilities on the Condensed Consolidated Statement of Operations. The Private Placement Warrants were valued using the following assumptions under the Monte Carlo method: Inputs March 31, 2023 March 30, 2023 Current stock price $ 20.80 $ 12.68 Exercise price $ 11.50 $ 11.50 Expected life (in years) 5.0 5.0 Risk-free interest rate 3.69 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — % — % The Public Warrants were initially recognized as a liability on March 30, 2023 at a fair value of $0.30 per warrant for a total of $2.6 million. The Warrants were remeasured to a fair value of $0.28 per share for a total of $2.4 million as of March 31, 2023. The Company recorded a loss of $0.2 million for the period ended March 31, 2023, which is included in Change in fair value of derivative liabilities on the Condensed Consolidated Statement of Operations. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income taxes | |
Income taxes | Note 16 — Income taxes For the three months ended March 31, 2023, the Company recognized income tax benefit of $2,021,265 , from which $821,811 is in connection with continuing operations for the post transaction two-day period ended March 31, 2023. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year and this rate is applied to the results for the year-to-date period, and then adjusted for any discrete period items. The Company’s estimated annual effective tax rate for the three months ended March 31, 2023 is 25.3% . This differs from the federal statutory rate of 21% primarily due to state income tax expense and non-deductible expenses. The company has determined that changes in fair value of derivative liabilities, as well as offsetting tax adjustments, will be treated as discrete items in the period incurred. Great Southern Homes, Inc., a consolidated subsidiary of the Company, had a change in tax status from an S Corporation to a C Corporation during the current period. In connection with its change in status to a taxable entity, it recorded an income tax benefit of $1,199,454 in order to establish various deferred tax assets, primarily attributable to timing differences in revenue recognition. This benefit is treated as a discrete item. Only income recognized during the period in which Great Southern Homes, Inc. was a taxable entity is included in the calculation of the consolidated estimated annual effective tax rate for the three months ended March 31, 2023. |
Employee benefit plan
Employee benefit plan | 3 Months Ended |
Mar. 31, 2023 | |
Employee benefit plan | |
Employee benefit plan | Note 17 — Employee benefit plan Effective January 1, 2021, GSH sponsored an elective safe harbor 401(k) contribution plan covering substantially all employees who have completed three consecutive months of service. The plan provides that GSH will match up to the first 3% of the participant’s base salary rate at 100% and 50% of the next 2% for a maximum contribution of 4% . In addition, participants become 100% vested with respect to employer contributions after completing six years of service starting in 2021. Administrative costs for the plan were paid by GSH. Total contributions paid to the plans for Legacy UHG’s employees for the three months ended March 31, 2023 and 2022 were approximately $80,077 , and $37,652 respectively. These amounts are recorded in Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations. |
Net (Loss) Earnings Per Share
Net (Loss) Earnings Per Share | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Net (Loss) Earnings Per Share | ||
Net (Loss) Earnings Per Share | Note 18 — Net (Loss) Earnings Per Share The Company computes basic net (loss) earnings per share using net (loss) income attributable to Company common stockholders and the weighted average number of common shares outstanding during each period. The weighted average number of shares of common stock outstanding prior to the Business Combination have been retroactively adjusted by the Exchange Ratio to give effect to the reverse recapitalization treatment of the Business Combination. The equity structure of the Company for the three months ended March 31, 2023 reflects the equity structure of DHHC, including the equity interests issued by DHHC to effect the business combination. The following table sets forth the computation of the Company’s basic and diluted net (loss) profit per share: March 31, 2023 March 31, 2022 Numerator Net (loss) income $ (204,504,328) $ 17,017,928 Denominator Weighted-average number of common shares outstanding - basic 37,575,074 37,347,350 Effect of dilutive securities — — Weighted-average number of common shares outstanding - diluted 37,575,074 37,347,350 Net (loss) earnings per common share: Basic $ (5.44) $ 0.46 Diluted $ (5.44) $ 0.46 The following table summarizes potentially dilutive outstanding securities for the three months ended March 31, 2023 and 2022 that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive. March 31, 2023 March 31, 2022 Stock warrants 1,867,368 1,867,368 Private placement warrants 2,966,664 — Public warrants 8,625,000 — Stock options 899,295 944,262 Convertible notes 8,000,000 — Total anti-dilutive features 22,358,327 2,811,630 The Company’s 21,886,378 Earnout Shares are excluded from the anti-dilutive table above as of March 31, 2023, as the underlying shares remain contingently issuable as the Earnout Triggering Events have not been satisfied. | Note 13 — Earnings per Share Earnings per share was calculated based on the 100,000 weighted average number of common shares issued and outstanding by GSH for the years ended December 31, 2022, 2021, and 2020. 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 The following table summarizes potentially dilutive outstanding securities for the years ended December 31, 2022, 2021 and 2020 that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive. December 31, 2022 December 31, 2021 December 31, 2020 Warrants 3,090 — — Stock Options 1,376 — — Total anti-dilutive features 4,466 — — |
Subsequent events
Subsequent events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent events | ||
Subsequent events | Note 19 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of March 31, 2023 through the date the Condensed Consolidated Financial Statements were available to be issued. On April 28, 2023, a warrant holder of the stock warrants described in Note 13 — Share-based compensation exercised their warrants. The Company issued 748,020 UHG Class A Common Shares through a cashless exercise of the warrants in accordance with the conversion terms of the underlying agreement. | Note 14 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of December 31, 2022 through March 17, 2023, which is the date the financial statements were available to be issued. During this period, the Company has not identified any subsequent events that require recognition or disclosure, except for the ones noted below. On February 27, 2023, the Company paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, the Company was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Proposed Business Combination discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of the date when financial statements were available to be issued. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Summary of significant accounting policies | ||
Unaudited Interim Condensed Consolidated Financial Statements | Unaudited Interim Condensed Consolidated Financial Statements - The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with GAAP for interim financial information and the rules and regulations of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, certain information, footnotes, and disclosures normally included in the annual financial statements prepared under GAAP have been condensed or omitted in accordance with SEC rules and regulations. Therefore, these Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes included in the audited financial statements of Legacy UHG for the year ended December 31, 2022 included in the Form S-1 filed with the SEC on April 28, 2023. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying Condensed Consolidated Financial Statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of March 31, 2023 and results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The Condensed Consolidated Balance Sheet at December 31, 2022, was derived from audited annual financial statements and adjusted for the retrospective recapitalization as described in Note 1 - Nature of operations and basis of presentation and Note 2 - Merger and Reverse Recapitalization but does not contain all of the footnote disclosures from the annual financial statements. Other than policies noted below, there have been no significant changes to the significant accounting policies disclosed in Note 2 of audited Legacy UHG financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022. The results for the three months ended March 31, 2023 and 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. | |
Emerging Growth Company | Emerging Growth Company - The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is not an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. | |
Principles of consolidation | Principles of consolidation — The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. | |
Use of Estimates | Use of Estimates — The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates made by the Company include corporate expense allocation, useful lives of depreciable assets, revenue recognition associated with contracts recognized over time, capitalized interest, warranty reserves, share-based compensation, valuation of earnout liability, valuation of convertible note and valuation of stock warrants. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. | Use of Estimates — |
Segment Information | Segment Information — The Company determines its chief operating decision maker (“CODM”) based on the person responsible for making resource allocation decisions. Operating segments are components of the business for which the CODM regularly reviews discrete financial information. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. | Reporting Segment |
Inventories and Cost of Sales | Inventories and Cost of Sales — The carrying value of inventory is stated at cost unless events and circumstances indicate the carrying value may not be recoverable. Inventory consists of developed lots, homes under construction, and finished homes. — Developed lots - This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. As of March 31, 2023 and December 31, 2022, the amount of developed lots included in inventory was $21,189,983 and $16,205,448 , respectively. Developed lots purchased at fair value from third parties was $15,815,143 and $10,052,179 as of March 31, 2023 and December 31, 2022, respectively, which is included in Developed Lots on the Condensed Consolidated Balance Sheets. — Homes under construction - At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. As of March 31, 2023 and December 31, 2022, the amount of inventory related to homes under construction included in homes under construction and finished homes was $88,872,575 and $141,863,561 , respectively. — Finished homes - This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. As of March 31, 2023 and December 31, 2022, the amount of inventory related to finished homes included in homes under construction and finished homes was $40,078,317 and $22,133,926 , respectively. | Inventories and Cost of Sales — — Developed lots — This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. For the years ended December 31, 2022 and 2021, the amount of developed lots included in inventory was $16,205,448 and $17,025,273, respectively. Developed lots purchased at fair value from third parties was $10,052,179 and $9,445,580 as of December 31, 2022 and December 31, 2021, respectively, which is included in Developed Lots on the Balance Sheets. — Homes under construction — At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. For the years ended December 31, 2022 and 2021, the amount of inventory related to homes under construction included in homes under construction and finished homes was $141,863,561 and $110,224,757, respectively. — Finished homes — This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the amount of inventory related to finished homes included in homes under construction and finished homes was $22,133,926 and $12,775,442, respectively. Upon settlement, costs associated with units sold are expensed to Cost of sales based on a specific identification basis. Costs of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home. In addition, the Company receives rebates with certain suppliers for the use of their product. The Company records the receipt of the rebate as a reduction in Cost of sales based on a specific identification basis. At the time of closing, the Company performs an analysis to accrue for costs that were incurred as part of the construction of the home but unpaid at the time of closing. The costs are recorded in Cost of sales in the Statements of Income. |
Revenue Recognition | Revenue Recognition - The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers . For the three months ended March 31, 2023 and 2022, revenue recognized at a point in time from speculative homes totaled $92,389,410 , and $104,450,041 respectively. For the three months ended March 31, 2023 and 2022, revenue recognized over time from land owned by customers totaled $2,437,292 , and $3,986,819 , respectively. | Revenue Recognition — Performance obligations are generally satisfied at a point in time, when the control of the home is transferred to the customer. Control is considered to be transferred to the customer at the time of closing when the title and possession of the home are received by the homebuyer. The Company generally requires initial cash deposits from the homebuyer at the time the sales contract is executed which is held by an unrelated third-party escrow agent. The remaining consideration to which the Company is entitled to is received at the time of closing through an escrow agent, typically within five days or less of the closing date. For the years ended December 31, 2022, 2021 and 2020, revenue recognized at a point in time from speculative homes totaled $456,792,005 In some contracts, the Company is contracted to construct a home or homes on underlying land the customer controls. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts using the input method based on costs incurred as compared to total estimated project costs. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. For the years ended December 31, 2022, 2021, and 2020, revenue recognized over time from land owned by customers totaled $20,253,944, $13,176,752, and $9,213,106, respectively. For homes with revenue recognized over time, a large portion of the Company’s contracts with these customers and the related performance obligations have an original expected duration of one year or less. As a result, the Company elected the practical expedient and does not disclose the value of unsatisfied performance obligations for these contracts. The Company periodically bills these customers over the term of the project and performs a quarterly analysis between billings and revenue recognized. The Company records a contract asset when work performed by the Company is greater than the amount billed. Conversely, the Company records deferred revenue when the amount billed is greater than the work performed. As of December 31, 2022 and 2021, the Company recorded a contract asset of $611,343 and $1,361,590, respectively, which is included in Prepaid expense and other assets on the Balance Sheets. As of December 31, 2022 and 2021, the Company recorded deferred revenue of $305,701 and $957,926, respectively, which is included in Other accrued expenses and liabilities on the Balance Sheets. Substantially all deferred revenue is recognized in revenue within twelve months of being received from customers. The Company frequently performs reviews of all contracts to estimate profitability in the future. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total estimated loss at the time it is fully determinable. For the years ended December 31, 2022, 2021, and 2020, the Company did not recognize a loss on any contracts. Concurrent with the recognition of revenues in our Statements of Income, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. Homebuilding revenues include forfeited deposits, which occur when home sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits were considered insignificant for all years presented. The Company determined that costs to obtain a contract include sales commission paid to agents and brokers for selling services to attract home buyers into sales agreements. The contract term is typically the closing date when the title and consideration are exchanged. The Company adopted the practical expedient associated with ASC 606 to recognize the incremental costs of obtaining a contract as an expense when incurred, i.e., when the amortization period of the asset that the Company otherwise would have recognized is one year or less. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. The Company recognized revenue of $5,188,716 on the Statement of income for the year ended December 31, 2022. Refer to Note 6 - Related party transactions |
Advertising | Advertising — The Company expenses advertising and marketing costs as incurred and includes such costs within Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2023 and 2022, the Company incurred $490,980 , and $452,765 , respectively, in advertising and marketing costs. | Advertising — |
Income Taxes | Income Taxes — Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than not” that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positive and negative, is evaluated. The Company recognizes interest and penalties related to the underpayment of income taxes, including those resulting from the late filing of tax returns within the provision for income taxes in the Condensed Consolidated Statements of Operations. The Company analyzes its tax filing positions in the U.S. federal, state, and local tax jurisdictions where the Company is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is enacted or new information becomes available. Prior to the Business Combination, Legacy UHG was included in the tax filing of the shareholders of GSH, which was taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code. Individual shareholders were liable for income taxes on their respective shares of GSH’s taxable income. No income tax liability nor income tax was allocated to Legacy UHG as of December 31, 2022 or for the three months ended March 31, 2023, nor was there any recorded liability for uncertain tax positions. | Income Taxes — |
Derivative liabilities | Derivative liabilities — The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The 8,625,000 warrants issued in connection with DHHC’s Initial Public Offering (the “Public Warrants”), the 2,966,664 Private Placement Warrants, 21,491,695 Earnout Shares and certain stock options (as discussed in Note 13 - Share-based compensation ) are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments, earnout shares and stock options as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised or issued, respectively. The Public Warrant quoted market price was used as the fair value for the Public Warrants as of March 30, 2023 and March 31, 2023. The Private Placement Warrants and the Earnout shares were valued using a Monte Carlo analysis. See the Earnout Shares and Warrant Liabilities sections below for further detail on each instrument and their classification. Stock options were valued using Black ‑ Scholes valuation model. See Note 13 - Share-based compensation for further detail. | |
Earnout | Earnout - In connection with the Business Combination, Earnout Holders are entitled to receive consideration in the form of Earnout Shares upon the Company achieving certain Triggering Events, as described in Note 14 - Earnout Shares. The contingent obligations to issue Earnout Shares to the Earnout Holders, excluding Employee Option Holders, are recognized on the Closing Date as derivative liabilities in accordance with ASC 815. The liabilities were recognized at fair value on the Closing Date and are subsequently remeasured at each reporting date with changes in fair value recorded in the Condensed Consolidated Statements of Operations. Earnout Shares issuable to Employee Option Holders at the Closing Date are considered a separate unit of account from the Earnout Shares issuable to GSH Equity Holders, and the Sponsors, and are accounted for as equity classified stock compensation. The Earnout Shares issuable to Employee Option Holders are fully vested upon issuance, thus there is no requisite service period, and the value of these shares is recognized as a one-time stock compensation expense for the grant date fair value. The estimated fair values of the Earnout Shares were determined by using a Monte Carlo simulation valuation model using a distribution of potential outcomes on a daily basis over the Earnout Period as defined in Note 14 - Earnout Shares . The preliminary estimated fair values of the Earnout Shares were determined using the most reliable information available, including the current trading price of the UHG Class A Common Shares, expected volatility, risk-free rate, expected term and dividend rate. The earnout liability is categorized as a Level 3 fair value measurement because the Company estimated projections during the Earnout Period utilizing unobservable inputs. See Note 4 — Fair Value Measurement for further detail on UHG’s accounting policy related to the fair value of financial instruments. | |
Warrant Liabilities | Warrant Liabilities — The Company assumed 8,625,000 publicly-traded warrants (“Public Warrants”) from DHHC’s initial public offering and 2,966,664 private placement warrants originally issued by DHHC (“Private Placement Warrants” and, together with the Public Warrants, the “Common Stock Warrants” or “Warrants”). Upon consummation of the Business Combination, each Common Stock Warrant issued entitled the holder to purchase one UHG Class A Common Share at an exercise price of $11.50 per share. The Common Stock Warrants are exercisable as of April 29, 2023. The Private Placement Warrants are identical to the Public Warrants, except that of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain exceptions. During the three months ended March 31, 2023, no Common Stock Warrants were exercised. The Public Warrants are publicly traded and are exercisable unless certain conditions occur which would permit a cashless exercise. The Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees, subject to certain exceptions. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company evaluated the Public Warrants and Private Placement Warrants and concluded that both meet the definition of a derivative and will be accounted for in accordance with ASC Topic 815-40, as the Public Warrants and Private Placement Warrants are not considered indexed to UHG’s stock. | |
PIPE Investment | PIPE Investment — In connection with the closing of the Business Combination, GSH entered into the Note Purchase Agreement, dated March 21, 2023, and effective March 30, 2023, with DHHC and the Convertible Note Investors. As part of the PIPE Investment, the Convertible Note Investors agreed to purchase $80.0 million in original principal amount of Notes at a 6.25% original issue discount and were issued an additional 744,588 UHG Class A Common Shares. The aggregate proceeds received from the Convertible Note Investors is $75.0 million. Additionally, in connection with the Business Combination, (i) the PIPE Investors purchased from the Company an aggregate of (A) 471,500 UHG Class A Common Shares at a purchase price of $10.00 per share, and (B) 117,875 UHG Class A Common Shares at a purchase price of $0.01 per share for gross proceeds to the Company of approximately $4.7 million, pursuant to the PIPE Subscription Agreements, and (ii) the Lock-Up Investors purchased from the Company an aggregate of 421,100 UHG Class A Common Shares at a purchase price of $0.01 per share pursuant to the Share Lock-Up Agreements. Following the closing of the Business Combination, UHG notified each Lock-Up Investor that UHG waived the lock-up restriction contained in the Share Lock-Up Agreements. The Company accounts for the Notes and PIPE Shares as two freestanding financial instruments. The Company accounts for the Notes at amortized cost and amortizes the debt discount to interest expense using the effective interest method over the expected term of the Notes pursuant to ASC 835 Interest (“ASC 835”). The Company accounts for the PIPE Shares as equity, as they are not in the scope of ASC 480. The Company applied the relative fair value method to allocate the $75.0 million in aggregate proceeds received among the freestanding instruments issued. Specifically, $70.2 million was allocated to the Notes, and $4.8 million was allocated to the PIPE Shares. The amount allocated to the PIPE Shares is presented as an increase in additional paid-in capital. The Notes are considered a hybrid financial instrument consisting of a debt “host” and embedded features. The Company evaluated the Notes at issuance for embedded derivative features and the potential need for bifurcation under ASC 815, and determined that the Notes contained embedded derivatives, including conversion features and redemption rights. Although the Company determined that a group of these embedded features which are contingent on certain events occurring, as further discussed in Note 12 - Convertible Note , would need to be bifurcated, the contingencies themselves are either entirely within the Company’s control or based on an event management considers the probability of occurring as extremely remote. Therefore, the group of embedded features which are contingent on certain events and required to be bifurcated would likely have minimal or no value and therefore deemed to not be material to the Condensed Consolidated Financial Statements. The Company engaged an independent valuation firm to assist with the valuation of the Notes and the PIPE Shares. Refer to Note 12 - Convertible Note for further valuation details. The Company recognized issuance costs of $3.5 million in connection with the Note Purchase Agreement. Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount. | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements - In June 2016, FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASC 326 significantly changes the way impairment of financial assets is recognized by requiring companies to immediately recognize estimated credit losses expected to occur over the remaining life of many financial assets. The immediate recognition of the estimated credit losses generally will result in an earlier recognition of allowance for credit losses on loans and other financial instruments. The Company adopted this ASU effective January 1, 2023. The adoption of ASC 326 did not have a significant impact on the Company’s Condensed Consolidated Financial Statements. | Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted — In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides practical expedients and exceptions for applying GAAP when modifying contracts and hedging relationships that use the London Interbank Offered Rate (“LIBOR”) as a reference rate. In addition, these amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024. The Company does not anticipate a material increase in interest rates from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. |
Merger and Reverse Recapitali_2
Merger and Reverse Recapitalization (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Merger and Reverse Recapitalization | |
Schedule of consummation of business combination | Shares Ownership % DHHC public shareholders - UHG Class A Common Shares (1) 4,331,606 9.1 % DHHC sponsor shareholders - UHG Class A Common Shares 4,160,931 8.7 % GSH existing shareholders - UHG Class B Common Shares 36,973,877 77.7 % GSH existing shareholders - UHG Class A Common Shares 373,473 0.8 % Convertible Note Investors - UHG Class A Common Shares 744,588 1.6 % PIPE Investors - UHG Class A Common Shares 589,375 1.2 % Lock-up Investors - UHG Class A Common Shares 421,100 0.9 % Total Closing Shares 47,594,950 100 % (1) Represents remaining DHHC Class A shares following share redemptions prior to the Business Combination. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurement | |
Summary of assets and liabilities that are measured at fair value | Fair Value Measurements as of March 31, 2023 Level 1 Level 2 Level 3 Total Contingent earnout liability $ — $ — $ 445,630,296 $ 445,630,296 Derivative private placement warrant liability — — 949,332 949,332 Derivative public warrant liability 2,415,000 — — 2,415,000 Derivative stock option liability $ — $ — $ 2,111,948 $ 2,111,948 Total Derivative Liability $ 2,415,000 $ — $ 448,691,576 $ 451,106,576 |
Summary of change in the fair value of Level 3 liabilities | Derivative private Derivative Contingent placement stock earnout warrant option liability liability liability Liability at January 1, 2023 $ — $ — $ — Recognition 242,211,404 625,370 1,189,685 Forfeitures — (890,001) — Change in fair value 203,418,892 1,213,963 922,263 Liability at March 31, 2023 $ 445,630,296 $ 949,332 $ 2,111,948 |
Capitalized interest (Tables)
Capitalized interest (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Capitalized interest | ||
Summary of capitalized interest activity | Three Months Ended March 31, 2023 2022 Capitalized interest at January 1: $ 1,250,460 $ 1,190,318 Interest cost capitalized 2,237,900 837,780 Interest cost expensed (2,386,832) (957,900) Capitalized interest at March 31: $ 1,101,528 $ 1,070,198 | 2022 2021 Capitalized interest at January 1: $ 1,190,318 $ 812,874 Interest cost capitalized 5,515,372 3,400,879 Interest cost expensed (5,455,230) (3,023,435) Capitalized interest at December 31: $ 1,250,460 $ 1,190,318 |
Property and equipment (Tables)
Property and equipment (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Property and equipment | ||
Schedule of components of property and equipment | Asset Group March 31, 2023 December 31, 2022 Furniture and fixtures $ 738,361 $ 688,487 Leasehold improvements 380,187 380,187 Machinery and equipment 164,258 1,037,231 Office equipment 175,130 165,774 Vehicles 361,755 750,950 Total Property and equipment $ 1,819,691 $ 3,022,629 Less: Accumulated depreciation (1,143,283) (1,636,931) Property and equipment, net $ 676,408 $ 1,385,698 | Asset Group 2022 2021 Furniture and fixtures $ 688,487 $ 580,065 Leasehold improvements 380,187 380,187 Machinery and equipment 1,037,231 985,699 Office equipment 165,774 154,043 Vehicles 750,950 790,519 Total Property and equipment 3,022,629 2,890,513 Less: Accumulated depreciation (1,636,931) (1,300,160) Property and equipment, net $ 1,385,698 $ 1,590,353 |
Homebuilding debt and other a_2
Homebuilding debt and other affiliate debt (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Homebuilding debt and other affiliate debt | ||
Summary of Company's debt | March 31, 2023 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Wells Fargo Bank 7.63 % $ 39,982,270 Regions Bank 7.63 % 25,499,203 Texas Capital Bank 7.63 % 18,211,439 Truist Bank 7.63 % 18,195,498 First National Bank 7.63 % 7,284,576 Total debt on contracts $ 109,172,986 December 31, 2022 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Other Affiliates (1) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 (1) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. | 2022 Homebuilding Weighted Debt – Wells average Fargo interest rate Syndication Other Affiliates (2) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 2021 Homebuilding Weighted Debt – Wells average Fargo Homebuilding interest rate (1) Syndication Debt – Other Other Affiliates (2) Total Wells Fargo Bank 3.63 % $ 36,453,801 $ — $ — $ 36,453,801 Regions Bank 3.63%/ 4.40 % 23,189,545 — 918,453 24,107,998 Texas Capital Bank 3.63 % 16,561,385 — — 16,561,385 Truist Bank 3.63 % 16,543,353 — — 16,543,353 First National Bank 3.63%/ 3.88 % 6,624,554 — 21,160 6,645,714 Anderson Brothers 4.25 % — 439,200 1,608,300 2,047,500 Other debt — % — 142,536 — 142,536 Total debt on contracts $ 99,372,638 $ 581,736 $ 2,547,913 $ 102,502,287 (1) The weighted average interest rate for the Wells Fargo Syndication debt is 3.63 %. The 4.40 % and 3.88 % represents the weighted average interest rate for Other Affiliates debt for Regions Bank and First National Bank, respectively. (2) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. |
Related party transactions (Tab
Related party transactions (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Related party transactions | ||
Schedule of components of the distributions and net transfer to shareholders' and other affiliates' net investment | 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. | |
Schedule of related party transactions | Three Months ended March 31, 2023 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (384,349) $ — $ (384,349) Other activities (225,392) (422,342) (647,734) Total financing cash flows $ (609,741) $ (422,342) $ (1,032,083) Non-cash activities Settlement of co-obligor debt to other affiliates $ 8,340,545 $ — $ 8,340,545 Release of guarantor from GSH to shareholder 2,841,034 — 2,841,034 Credit for earnest money deposits 2,521,626 — 2,521,626 Total non-cash activity $ 13,703,205 $ — $ 13,703,205 Three Months ended March 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (7,642,371) $ (360,831) $ (8,003,202) Other activities (407,782) (70,476) (478,258) Cash transfer — (10,000,000) (10,000,000) Total financing cash flows $ (8,050,153) $ (10,431,307) $ (18,481,460) Non-cash activities Acquisition of developed lots 4,624,810 — 4,624,810 Total non-cash activity $ 4,624,810 $ — $ 4,624,810 | Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 |
Lot purchase agreement deposi_2
Lot purchase agreement deposits (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Lot purchase agreement deposits | ||
Summary of the interest in lot purchase agreements | March 31, 2023 December 31, 2022 Lot purchase agreement deposits $ 8,113,303 $ 3,804,436 Remaining purchase price 205,808,168 65,451,928 Total contract value $ 213,921,471 $ 69,256,364 | 2022 2021 Deposit and pre-acquisition costs $ 3,804,436 $ 2,946,001 Remaining purchase price 65,451,928 77,007,079 Total contract value $ 69,256,364 $ 79,953,080 |
Warranty reserves (Tables)
Warranty reserves (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Warranty reserves | ||
Summary of the activity related to warranty reserves | Three Months Ended Year Ended March 31, 2023 December 31, 2022 Warranty reserves at beginning of the period $ 1,371,412 $ 1,275,594 Reserves provided 242,720 1,156,027 Payments for warranty costs and other (204,713) (1,060,209) Warranty reserves at end of the period $ 1,409,419 $ 1,371,412 | 2022 2021 Warranty reserves at January 1 $ 1,275,594 $ 963,204 Reserves provided 1,156,027 1,206,142 Payments for warranty costs and other (1,060,209) (893,752) Warranty reserves at December 31 $ 1,371,412 $ 1,275,594 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and contingencies | ||
Schedule of the maturity of the contractual, undiscounted operating lease liabilities | The maturity of the contractual, undiscounted operating lease liabilities as of March 31, 2023 are as follows: Lease Payment 2023 $ 361,734 2024 292,992 2025 108,792 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 811,518 Interest on operating lease liabilities (43,236) Total present value of operating lease liabilities $ 768,282 | December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 |
Convertible Note (Tables)
Convertible Note (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Convertible Note | |
Summary of outstanding balance of Convertible Note | March 31, 2023 Beginning Balance — Par $ 80,000,000 Unamortized Discount (13,285,724) Carrying Value $ 66,714,276 |
Summary of assumptions used in the Binomial and Monte Carlo valuation models to determine the estimated fair value of the Convertible Note at the grant date | March 31, 2023 March 30, 2023 Risk-free interest rate 3.70 % 3.80 % Expected volatility 40 % 40 % Expected dividend yield — % — % |
Share-based compensation (Table
Share-based compensation (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based compensation | ||
Summary of stock options granted | Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2021 — $ — Granted 2,524 1,049.60 Forfeited (193) 1,049.60 Outstanding, December 31, 2022 2,331 $ 1,049.60 Options exercisable at December 31, 2022 — $ — | |
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk-free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 0.7 | |
Stock warrants | ||
Share-based compensation | ||
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs March 30, 2023 January 19, 2022 Risk-free interest rate 3.77 % 1.82 % Expected volatility 40 % 35 % Expected dividend yield — % — % Expected life (in years) 5.10 6.25 Fair value of options $ 10.41 $ 1.06 | |
Stock options | ||
Share-based compensation | ||
Summary of stock options granted | Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2022 870,567 $ 2.81 Granted — 2.81 Forfeited (85,555) 2.81 Outstanding, March 31, 2023 785,012 $ 2.81 Options exercisable at March 31, 2023 197,912 $ 2.81 | |
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk free interest rate 1.82 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.25 Fair value of options $ 394.7 |
Earnout Shares (Tables)
Earnout Shares (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnout Shares | |
Schedule of number of Earnout Shares | Triggering Event I Triggering Event II Triggering Event III Derivative liability 8,059,386 8,059,386 5,372,923 Stock compensation 148,006 148,006 98,671 Total Earnout Shares 8,207,392 8,207,392 5,471,594 |
Schedule of assumptions used in valuation of instruments | Inputs March 31, 2023 March 30, 2023 Current stock price $ 20.80 $ 12.68 Stock price targets $12.50, $15.00, $17.50 $12.50, $15.00, $17.50 Expected life (in years) 5.0 5.0 Earnout period (in years) 4.75 4.75 Risk-free interest rate 3.69 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — % — % |
Warrant liability (Tables)
Warrant liability (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Warrant liability | |
Schedule of Private Placement Warrants valued using assumptions under the Monte Carlo method | Inputs March 31, 2023 March 30, 2023 Current stock price $ 20.80 $ 12.68 Exercise price $ 11.50 $ 11.50 Expected life (in years) 5.0 5.0 Risk-free interest rate 3.69 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — % — % |
Net (Loss) Earnings Per Share (
Net (Loss) Earnings Per Share (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Net (Loss) Earnings Per Share | ||
Schedule of earnings per share, weighted average number of common shares issued and outstanding by GSH | March 31, 2023 March 31, 2022 Numerator Net (loss) income $ (204,504,328) $ 17,017,928 Denominator Weighted-average number of common shares outstanding - basic 37,575,074 37,347,350 Effect of dilutive securities — — Weighted-average number of common shares outstanding - diluted 37,575,074 37,347,350 Net (loss) earnings per common share: Basic $ (5.44) $ 0.46 Diluted $ (5.44) $ 0.46 | 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 |
Summary of potentially dilutive outstanding securities | March 31, 2023 March 31, 2022 Stock warrants 1,867,368 1,867,368 Private placement warrants 2,966,664 — Public warrants 8,625,000 — Stock options 899,295 944,262 Convertible notes 8,000,000 — Total anti-dilutive features 22,358,327 2,811,630 | December 31, 2022 December 31, 2021 December 31, 2020 Warrants 3,090 — — Stock Options 1,376 — — Total anti-dilutive features 4,466 — — |
Merger and Reverse Recapitali_3
Merger and Reverse Recapitalization - Transactions completed and outstanding securities (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition | ||
Number of shares issued | 47,594,950 | |
Exercise price | $ 11.50 | |
Rollover options outstanding | 785,012 | 870,567 |
Exercise price of options | $ 2.81 | $ 2.81 |
Warrants issued in connection with the DHHC initial public offering and are held by Anchor Investors | ||
Business Acquisition | ||
Number of outstanding warrants | 2,966,664 | |
Exercise price | $ 11.50 | |
Warrants issued in connection with the DHHC initial public offering | ||
Business Acquisition | ||
Number of outstanding warrants | 8,625,000 | |
Exercise price | $ 11.50 | |
Assumed Warrants | ||
Business Acquisition | ||
Number of outstanding warrants | 1,867,368 | |
Exercise price | $ 4.05 | |
Class A common stock | ||
Business Acquisition | ||
Number of shares issued | 1,755,063 | |
Common stock, shares outstanding | 10,621,073 | 10,621,073 |
Number of shares called by options outstanding | 905,930 | |
Class A common stock | Warrants issued in connection with the DHHC initial public offering and are held by Anchor Investors | ||
Business Acquisition | ||
Number of shares called by warrants outstanding | 2,966,664 | |
Class A common stock | Warrants issued in connection with the DHHC initial public offering | ||
Business Acquisition | ||
Number of shares called by warrants outstanding | 8,625,000 | |
Class A common stock | Assumed Warrants | ||
Business Acquisition | ||
Number of shares called by warrants outstanding | 1,867,368 | |
Class A common stock | DHP SPAC II Sponsor LLC (the "Sponsor") | ||
Business Acquisition | ||
Number of shares issued upon conversion | 4,160,931 | |
Class B common stock | ||
Business Acquisition | ||
Common stock, shares outstanding | 36,973,877 | 36,973,877 |
DHHC Class B common stock | ||
Business Acquisition | ||
Common stock, shares outstanding | 8,625,000 | |
DHHC Class B common stock | DHP SPAC II Sponsor LLC (the "Sponsor") | Warrants issued in connection with the DHHC initial public offering | ||
Business Acquisition | ||
Number of shares converted | 8,625,000 | |
Legacy UHG | ||
Business Acquisition | ||
Number of outstanding options of GSH assumed | 2,426 | |
Number of Rollover Options issued upon exchange | 905,930 | |
Number of outstanding warrants to purchase GSH Class A Common Shares assumed | 5,000 | |
Legacy UHG | Assumed Warrants | ||
Business Acquisition | ||
Number of shares called by warrants outstanding | 1,867,368 | |
Legacy UHG | GSH Class A Common Shares | ||
Business Acquisition | ||
Number of issued and outstanding shares exchanged | 1,000 | |
Legacy UHG | GSH Class B Common Shares | ||
Business Acquisition | ||
Number of issued and outstanding shares exchanged | 99,000 | |
Legacy UHG | Class A common stock | ||
Business Acquisition | ||
Number of shares issued upon exchange | 373,473 | |
Legacy UHG | Class B common stock | ||
Business Acquisition | ||
Number of shares issued upon exchange | 36,973,877 |
Merger and Reverse Recapitali_4
Merger and Reverse Recapitalization - Earnout & Other agreements (Details) - USD ($) | 3 Months Ended | |||
Mar. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2020 | |
Merger and Reverse Recapitalization | ||||
Original principal amount | $ 1,693,800 | |||
Number of shares issued | 47,594,950 | |||
Gross proceeds | $ 4,700,000 | |||
Note Purchase Agreement | ||||
Merger and Reverse Recapitalization | ||||
Original principal amount | $ 80,000,000 | |||
Note Purchase Agreement | Convertible Note | ||||
Merger and Reverse Recapitalization | ||||
Original principal amount | 80,000,000 | $ 80,000,000 | ||
PIPE Subscription Agreements | ||||
Merger and Reverse Recapitalization | ||||
Gross proceeds | $ 4,700,000 | |||
Share Lock-Up Agreements | ||||
Merger and Reverse Recapitalization | ||||
Number of shares issued | 421,100 | |||
Purchase price per share | $ 0.01 | |||
Class A common stock | ||||
Merger and Reverse Recapitalization | ||||
Earnout Shares, Number | 21,886,378 | |||
Earnout Shares, Number of shares in earnout consideration | 20,000,000 | |||
Common stock, shares outstanding | 10,621,073 | 10,621,073 | ||
Number of shares issued | 1,755,063 | |||
Class A common stock | Convertible Note | ||||
Merger and Reverse Recapitalization | ||||
Number of shares issued | 744,588 | |||
Class A common stock | Note Purchase Agreement | ||||
Merger and Reverse Recapitalization | ||||
Number of shares issued | 744,588 | |||
Class A common stock | Note Purchase Agreement | Convertible Note | ||||
Merger and Reverse Recapitalization | ||||
Number of shares issued | 744,588 | |||
Class A common stock | Share Lock-Up Agreements | ||||
Merger and Reverse Recapitalization | ||||
Purchase price per share | $ 0.01 | |||
Number of shares agreed to issue to each investor | $ 0.25 | |||
Maximum number of shares agreed to issue | 421,100 | |||
Class A common stock | DHP SPAC II Sponsor LLC (the "Sponsor") | ||||
Merger and Reverse Recapitalization | ||||
Earnout Shares, Number | 1,886,378 | |||
Number of shares issued upon conversion | 4,160,931 | |||
Common class two | PIPE Subscription Agreements | ||||
Merger and Reverse Recapitalization | ||||
Number of shares issued | 117,875 | 117,875 | ||
Purchase price per share | $ 0.01 | $ 0.01 | ||
DHHC Class B common stock | ||||
Merger and Reverse Recapitalization | ||||
Common stock, shares outstanding | 8,625,000 | |||
Common stock, shares outstanding remaining after surrender | 6,738,622 | |||
Number of shares forfeited | 2,577,691 | |||
DHHC Class B common stock | DHP SPAC II Sponsor LLC (the "Sponsor") | ||||
Merger and Reverse Recapitalization | ||||
Number of shares surrendered | 1,886,378 | |||
Common class one | PIPE Subscription Agreements | ||||
Merger and Reverse Recapitalization | ||||
Number of shares issued | 471,500 | 471,500 | ||
Purchase price per share | $ 10 | |||
Common class one | PIPE Subscription Agreements | Convertible Note | ||||
Merger and Reverse Recapitalization | ||||
Purchase price per share | $ 10 |
Merger and Reverse Recapitali_5
Merger and Reverse Recapitalization - Common Shares issued (Details) | 3 Months Ended |
Mar. 31, 2023 shares | |
Business Acquisition | |
Number of shares issued | 47,594,950 |
Ownership % | 100% |
DHHC public shareholders - Class A1 | |
Business Acquisition | |
Number of shares issued | 4,331,606 |
Ownership % | 9.10% |
DHHC sponsor shareholders - Class A | |
Business Acquisition | |
Number of shares issued | 4,160,931 |
Ownership % | 8.70% |
GSH existing shareholders - Class B | |
Business Acquisition | |
Number of shares issued | 36,973,877 |
Ownership % | 77.70% |
GSH existing shareholders - Class A | |
Business Acquisition | |
Number of shares issued | 373,473 |
Ownership % | 0.80% |
PIPE Investor - Class A | |
Business Acquisition | |
Number of shares issued | 589,375 |
Ownership % | 1.20% |
Convertible Note Investors | |
Business Acquisition | |
Number of shares issued | 744,588 |
Ownership % | 1.60% |
Lock-up Investors | |
Business Acquisition | |
Number of shares issued | 421,100 |
Ownership % | 0.90% |
Merger and Reverse Recapitali_6
Merger and Reverse Recapitalization - Treatment of Merger (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) | Dec. 31, 2020 USD ($) | |
Business Acquisition | ||
Principal amount | $ 1,693,800 | |
Transaction costs including advisory, banking, legal, and other professional fees | $ 25,700,000 | |
Legacy UHG | ||
Business Acquisition | ||
Transaction costs including advisory, banking, legal, and other professional fees | $ 12,100,000 | |
Diamondhead Holdings Corp. ("DHHC") | ||
Business Acquisition | ||
Exchange ratio | 373.47 | |
Gross proceeds | $ 128,600,000 | |
Cash held in trust account | 43,900,000 | |
Cash in connection with the Subscription Agreement PIPE Financing | 4,700,000 | |
Cash in connection with Notes PIPE Financing | 80,000,000 | |
Principal amount | 80,000,000 | |
Debt issuance costs | 5,000,000 | |
Transaction costs | 3,500,000 | |
Net cash proceeds | 71,500,000 | |
Transaction costs including advisory, banking, legal, and other professional fees | $ 13,600,000 |
Summary of significant accoun_3
Summary of significant accounting policies - Inventories and Cost of Sales (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Inventories and Cost of Sales | |||
Developed lots included in inventory | $ 21,189,983 | $ 16,205,448 | $ 17,025,273 |
Developed lots purchased at fair value from third parties | 15,815,143 | 10,052,179 | 9,445,580 |
Homes under construction | 88,872,575 | 141,863,561 | 110,224,757 |
Finished homes | $ 40,078,317 | $ 22,133,926 | $ 12,775,442 |
Summary of significant accoun_4
Summary of significant accounting policies - Revenue recognition (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of significant accounting policies | |||||
Revenue | $ 94,826,702 | $ 108,436,860 | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 |
Revenue recognized at a point in time | |||||
Summary of significant accounting policies | |||||
Revenue | 92,389,410 | 104,450,041 | 419,714,758 | 318,041,199 | |
Revenue recognized over time | |||||
Summary of significant accounting policies | |||||
Revenue | $ 2,437,292 | $ 3,986,819 | $ 20,253,944 | $ 13,176,752 | $ 9,213,106 |
Summary of significant accoun_5
Summary of significant accounting policies - Advertising (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of significant accounting policies | |||||
Advertising and marketing costs | $ 490,980 | $ 452,765 | $ 2,709,488 | $ 1,831,526 | $ 1,926,172 |
Summary of significant accoun_6
Summary of significant accounting policies - Derivative liabilities (Details) | Mar. 31, 2023 shares |
Public Warrants | |
Summary of significant accounting policies | |
Number of outstanding warrants | 8,625,000 |
Private Placement Warrants | |
Summary of significant accounting policies | |
Number of outstanding warrants | 2,966,664 |
Earnout Shares | |
Summary of significant accounting policies | |
Number of outstanding warrants | 21,491,695 |
Summary of significant accoun_7
Summary of significant accounting policies - Warrant Liabilities (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Summary of significant accounting policies | |
Number of shares per warrant | 1 |
Exercise price | $ / shares | $ 11.50 |
Term for which shares or warrants not transferable, assignable or salable | 30 days |
Common stock warrants exercised | 0 |
Public Warrants | |
Summary of significant accounting policies | |
Number of outstanding warrants | 8,625,000 |
Private Placement Warrants | |
Summary of significant accounting policies | |
Number of outstanding warrants | 2,966,664 |
Summary of significant accoun_8
Summary of significant accounting policies - PIPE Investment (Details) | 3 Months Ended | ||
Mar. 30, 2023 USD ($) item $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) | |
Summary of significant accounting policies | |||
Original principal amount | $ 1,693,800 | ||
Number of shares issued | shares | 47,594,950 | ||
Aggregate proceeds from the PIPE Investment | $ 71,500,000 | ||
Gross proceeds | $ 4,700,000 | ||
Number of freestanding financial instruments | item | 2 | ||
Proceeds from freestanding instruments issued | $ 75,000,000 | ||
Proceeds allocated to notes | 70,200,000 | ||
Proceeds allocated to shares | 4,800,000 | ||
Class A Common Shares | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 1,755,063 | ||
Convertible Note | Class A Common Shares | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 744,588 | ||
PIPE Subscription Agreements | |||
Summary of significant accounting policies | |||
Gross proceeds | $ 4,700,000 | ||
PIPE Subscription Agreements | Common class one | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 471,500 | 471,500 | |
Purchase price | $ / shares | $ 10 | ||
PIPE Subscription Agreements | Common class two | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 117,875 | 117,875 | |
Purchase price | $ / shares | $ 0.01 | $ 0.01 | |
PIPE Subscription Agreements | Convertible Note | Common class one | |||
Summary of significant accounting policies | |||
Purchase price | $ / shares | 10 | ||
Share Lock-Up Agreements | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 421,100 | ||
Purchase price | $ / shares | $ 0.01 | ||
Share Lock-Up Agreements | Class A Common Shares | |||
Summary of significant accounting policies | |||
Purchase price | $ / shares | $ 0.01 | ||
Note Purchase Agreement | |||
Summary of significant accounting policies | |||
Original principal amount | $ 80,000,000 | ||
Issuance costs | $ 3,500,000 | ||
Note Purchase Agreement | Class A Common Shares | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 744,588 | ||
Note Purchase Agreement | Convertible Note | |||
Summary of significant accounting policies | |||
Original principal amount | $ 80,000,000 | $ 80,000,000 | |
Original issue discount | 6.25% | ||
Aggregate proceeds from the PIPE Investment | $ 75,000,000 | ||
Note Purchase Agreement | Convertible Note | Class A Common Shares | |||
Summary of significant accounting policies | |||
Number of shares issued | shares | 744,588 |
Fair Value Measurement (Details
Fair Value Measurement (Details) | Mar. 31, 2023 USD ($) |
Fair Value Measurement | |
Fair value of the convertible note | $ 193,100,000 |
Fair Value Measurement -Company
Fair Value Measurement -Company's assets and liabilities that are measured at fair value (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurement | ||
Transfers to/from levels | $ 0 | $ 0 |
Contingent earnout liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 445,630,296 | 0 |
Derivative private placement warrant liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 949,332 | 0 |
Derivative stock option liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 2,111,948 | $ 0 |
Recurring | ||
Fair Value Measurement | ||
Total Derivative Liability | 451,106,576 | |
Recurring | Level 1 | ||
Fair Value Measurement | ||
Total Derivative Liability | 2,415,000 | |
Recurring | Level 3 | ||
Fair Value Measurement | ||
Total Derivative Liability | 448,691,576 | |
Recurring | Contingent earnout liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 445,630,296 | |
Recurring | Contingent earnout liability | Level 3 | ||
Fair Value Measurement | ||
Total Derivative Liability | 445,630,296 | |
Recurring | Derivative private placement warrant liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 949,332 | |
Recurring | Derivative private placement warrant liability | Level 3 | ||
Fair Value Measurement | ||
Total Derivative Liability | 949,332 | |
Recurring | Derivative public warrant liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 2,415,000 | |
Recurring | Derivative public warrant liability | Level 1 | ||
Fair Value Measurement | ||
Total Derivative Liability | 2,415,000 | |
Recurring | Derivative stock option liability | ||
Fair Value Measurement | ||
Total Derivative Liability | 2,111,948 | |
Recurring | Derivative stock option liability | Level 3 | ||
Fair Value Measurement | ||
Total Derivative Liability | $ 2,111,948 |
Fair Value Measurement -Change
Fair Value Measurement -Change in the fair value of Level 3 liabilities (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Contingent earnout liability | |
Change in the fair value of Level 3 liabilities | |
Liability at January 1, 2023 | $ 0 |
Recognition | 242,211,404 |
Change in fair value | 203,418,892 |
Liability at March 31, 2023 | 445,630,296 |
Derivative private placement warrant liability | |
Change in the fair value of Level 3 liabilities | |
Liability at January 1, 2023 | 0 |
Recognition | 625,370 |
Forfeitures | (890,001) |
Change in fair value | 1,213,963 |
Liability at March 31, 2023 | 949,332 |
Derivative stock option liability | |
Change in the fair value of Level 3 liabilities | |
Liability at January 1, 2023 | 0 |
Recognition | 1,189,685 |
Change in fair value | 922,263 |
Liability at March 31, 2023 | $ 2,111,948 |
Capitalized interest (Details)
Capitalized interest (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Capitalized interest costs | ||||
Capitalized interest, beginning of period | $ 1,250,460 | $ 1,190,318 | $ 1,190,318 | $ 812,874 |
Interest cost capitalized | 2,237,900 | 837,780 | 5,515,372 | 3,400,879 |
Interest cost expensed | (2,386,832) | (957,900) | (5,455,230) | (3,023,435) |
Capitalized interest, end of period | $ 1,101,528 | $ 1,070,198 | $ 1,250,460 | $ 1,190,318 |
Property and equipment (Details
Property and equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | |||||
Property and equipment | $ 1,819,691 | $ 3,022,629 | $ 2,890,513 | ||
Less: Accumulated depreciation | (1,143,283) | (1,636,931) | (1,300,160) | ||
Property and equipment, net | 676,408 | 1,385,698 | 1,590,353 | ||
Depreciation expense | 93,942 | $ 86,829 | 355,566 | 358,587 | $ 182,786 |
Furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment | 738,361 | 688,487 | 580,065 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment | 380,187 | 380,187 | 380,187 | ||
Machinery and equipment | |||||
Property and Equipment | |||||
Property and equipment | 164,258 | 1,037,231 | 985,699 | ||
Office equipment | |||||
Property and Equipment | |||||
Property and equipment | 175,130 | 165,774 | 154,043 | ||
Vehicles | |||||
Property and Equipment | |||||
Property and equipment | $ 361,755 | $ 750,950 | $ 790,519 |
Homebuilding debt and other a_3
Homebuilding debt and other affiliate debt (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 120,797,006 | $ 102,502,287 | |
Homebuilding Debt - Wells Fargo Syndication | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 109,172,986 | 109,752,200 | 99,372,638 |
Homebuilding Debt - Other | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | 581,736 | ||
Other Affiliates | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 11,044,806 | $ 2,547,913 | |
Wells Fargo Bank | |||
Homebuilding debt and other affiliate debt | |||
Weighted average interest rate | 7.63% | 4.98% | 3.63% |
Debt on contracts | $ 43,198,852 | $ 36,453,801 | |
Wells Fargo Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 39,982,270 | 34,995,080 | 36,453,801 |
Wells Fargo Bank | Other Affiliates | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 8,203,772 | ||
Regions Bank | |||
Homebuilding debt and other affiliate debt | |||
Weighted average interest rate | 7.63% | 4.98% | |
Debt on contracts | $ 27,550,618 | 24,107,998 | |
Regions Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 25,499,203 | $ 27,550,618 | 23,189,545 |
Regions Bank | Other Affiliates | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 918,453 | ||
Texas Capital Bank | |||
Homebuilding debt and other affiliate debt | |||
Weighted average interest rate | 7.63% | 4.98% | 3.63% |
Debt on contracts | $ 19,676,552 | $ 16,561,385 | |
Texas Capital Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 18,211,439 | $ 19,676,552 | $ 16,561,385 |
Truist Bank | |||
Homebuilding debt and other affiliate debt | |||
Weighted average interest rate | 7.63% | 4.98% | 3.63% |
Debt on contracts | $ 19,659,329 | $ 16,543,353 | |
Truist Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 18,195,498 | $ 19,659,329 | 16,543,353 |
First National Bank | |||
Homebuilding debt and other affiliate debt | |||
Weighted average interest rate | 7.63% | 4.98% | |
Debt on contracts | $ 7,870,621 | 6,645,714 | |
First National Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 7,284,576 | $ 7,870,621 | 6,624,554 |
First National Bank | Other Affiliates | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 21,160 | ||
Anderson Brothers | |||
Homebuilding debt and other affiliate debt | |||
Weighted average interest rate | 4.74% | 4.25% | |
Debt on contracts | $ 2,841,034 | $ 2,047,500 | |
Anderson Brothers | Homebuilding Debt - Other | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | 439,200 | ||
Anderson Brothers | Other Affiliates | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 2,841,034 | 1,608,300 | |
Other Debt | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | 142,536 | ||
Other Debt | Homebuilding Debt - Other | |||
Homebuilding debt and other affiliate debt | |||
Debt on contracts | $ 142,536 |
Homebuilding debt and other a_4
Homebuilding debt and other affiliate debt - Activity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2023 | Feb. 27, 2023 | Jul. 31, 2021 | Mar. 31, 2023 | Mar. 30, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Homebuilding debt and other affiliate debt | |||||||||
Proceeds from other affiliate debt | $ 136,773 | $ 2,154,624 | $ 10,851,187 | $ 10,025,865 | $ 13,259,394 | ||||
Settlement of co-obligor debt to other affiliates | 8,340,545 | (21,160) | |||||||
Outstanding Debt Balance | 0 | ||||||||
Repayments of other affiliate debt | 918,453 | 5,624,330 | 7,499,472 | ||||||
Amortization of deferred financing costs | 120,988 | 85,782 | 404,146 | 421,186 | 408,674 | ||||
Wells Fargo Bank | |||||||||
Homebuilding debt and other affiliate debt | |||||||||
Borrowing capacity | $ 150,000,000 | ||||||||
Credit facility term | 3 years | ||||||||
Extension period | 1 year | ||||||||
Remaining availability | $ 40,827,014 | 40,827,014 | 32,044,028 | 50,627,362 | |||||
Minimum tangible net worth, dollar component | $ 70,000,000 | $ 65,000,000 | $ 65,000,000 | ||||||
Minimum tangible net worth, income component as percent of after-tax income | 25% | 25% | |||||||
Minimum liquidity | 15,000,000% | 15,000,000% | |||||||
Minimum cash amount | 7,500,000% | 7,500,000% | |||||||
Deferred loan costs capitalized | $ 469,585 | $ 141,245 | 1,264,403 | 337,500 | |||||
Amortization of deferred financing costs | 120,988 | 85,782 | $ 404,146 | 421,186 | 408,674 | ||||
Outstanding deferred loan costs | $ 1,059,657 | 888,179 | |||||||
Wells Fargo Bank | Maximum | |||||||||
Homebuilding debt and other affiliate debt | |||||||||
Unused amount fee, as a percent | 30% | 30% | |||||||
Maximum leverage ratio | 2.50% | 2.75% | 2.75% | ||||||
Minimum debt service coverage | 2.50% | 2.50% | |||||||
Applicable margin | 350% | 350% | |||||||
Wells Fargo Bank | Minimum | |||||||||
Homebuilding debt and other affiliate debt | |||||||||
Unused amount fee, as a percent | 15% | 15% | |||||||
Maximum leverage ratio | 1% | 1% | 1% | ||||||
Minimum debt service coverage | 1% | 1% | |||||||
Applicable margin | 275% | 275% | |||||||
Wells Fargo Bank | Letter of Credit | |||||||||
Homebuilding debt and other affiliate debt | |||||||||
Borrowing capacity | $ 2,000,000 | ||||||||
Wells Fargo Bank | Homebuilding Debt - Other | |||||||||
Homebuilding debt and other affiliate debt | |||||||||
Outstanding deferred loan costs | $ 711,060 | 973,961 | |||||||
Wells Fargo Bank | Other Affiliates | |||||||||
Homebuilding debt and other affiliate debt | |||||||||
Proceeds from other affiliate debt | $ 136,773 | $ 2,154,624 | 10,851,187 | 10,025,865 | 13,259,394 | ||||
Settlement of co-obligor debt to other affiliates | $ 8,340,545 | ||||||||
Repayments of other affiliate debt | $ 918,453 | $ 5,624,330 | $ 7,499,472 |
Related party transactions (Det
Related party transactions (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2023 | |
Related party transaction | ||||
General corporate allocations | $ (6,590,564) | $ (2,867,929) | $ (1,733,849) | |
General financing activities | (46,162,495) | (30,655,681) | (20,596,420) | |
Distributions and net transfer to shareholders and other affiliates, including stock compensation | (52,753,059) | (33,523,610) | (22,330,269) | |
Stock compensation | 1,422,630 | |||
Overhead costs allocated to related party | $ 185,812 | |||
Street maintenance | 59,825 | |||
Remaining balance outstanding | 1,437,235 | $ 125,987 | ||
Shareholders And Other Affiliates | ||||
Related party transaction | ||||
Stock compensation | 1,422,630 | |||
Reallocation of selling, general and administrative expenses | 6,299,064 | 2,592,429 | 1,561,349 | |
Lot purchase agreement deposits paid (received) | 291,500 | 275,500 | $ 172,500 | |
Remaining balance outstanding | 1,437,235 | |||
Other Affiliates | ||||
Related party transaction | ||||
Due to shareholders and other affiliates presented as equity | 31,420,651 | 30,975,951 | ||
Due from shareholders and other affiliates presented as equity | $ 72,739,572 | $ 48,004,261 |
Related party transactions - Tr
Related party transactions - Transactions with Land Development and Other Affiliates (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from financing activities: | |||||
Repayment of cash transfer | $ 7,300,000 | ||||
Total financing cash flows | (37,816,087) | $ (28,497,772) | $ (18,579,633) | ||
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | $ (4,624,810) | 13,504,316 | 33,170,761 | 19,541,090 | |
Settlement of co-obligor debt to other affiliates | $ 8,340,545 | (21,160) | |||
Release of guarantor from GSH to shareholder | 2,841,034 | ||||
Earnest Money Receivable From Other Affiliates | 2,521,626 | ||||
Contribution of fixed assets | 344,511 | ||||
Total non-cash activity | (320,147,937) | (5,774,642) | 16,525,253 | 39,983,799 | 21,952,201 |
Shareholders And Other Affiliates | |||||
Cash flows from financing activities: | |||||
Land development expense | (384,349) | (8,003,202) | (44,113,503) | (30,308,528) | (23,087,743) |
Model home sales | 6,039,243 | 3,266,711 | |||
Other activities | (647,734) | (478,258) | 8,997,416 | (4,228,487) | 1,241,399 |
Cash transfer, net of repayment | (2,700,000) | ||||
Cash transfer | (10,000,000) | ||||
Total financing cash flows | (1,032,083) | (18,481,460) | (37,816,087) | (28,497,772) | (18,579,633) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 4,624,810 | 13,504,316 | 33,170,761 | 19,541,090 | |
Settlement of co-obligor debt to other affiliates | 8,340,545 | ||||
Release of guarantor from GSH to shareholder | 2,841,034 | ||||
Earnest Money Receivable From Other Affiliates | (2,521,626) | ||||
Credit for earnest money deposits | (1,517,030) | (3,690,084) | |||
Contribution of fixed assets | 344,511 | ||||
Total non-cash activity | 13,703,205 | 4,624,810 | 13,504,316 | 31,998,242 | 15,851,006 |
Other Affiliates | |||||
Cash flows from financing activities: | |||||
Land development expense | (360,831) | (665,777) | (76,762) | (96,903) | |
Model home sales | 6,039,243 | 3,266,711 | |||
Other activities | (422,342) | (70,476) | 197,818 | (3,537,447) | 791,117 |
Cash transfer, net of repayment | (2,700,000) | ||||
Cash transfer | (10,000,000) | ||||
Total financing cash flows | (422,342) | (10,431,307) | (3,167,959) | 2,425,034 | 3,960,925 |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | (219,999) | 656,500 | |||
Credit for earnest money deposits | (1,517,030) | (3,690,084) | |||
Contribution of fixed assets | 344,511 | ||||
Total non-cash activity | (1,392,518) | (3,033,584) | |||
Land Development Affiliates | |||||
Cash flows from financing activities: | |||||
Land development expense | (384,349) | (7,642,371) | (43,447,726) | (30,231,766) | (22,990,840) |
Other activities | (225,392) | (407,782) | 8,799,598 | (691,040) | 450,282 |
Total financing cash flows | (609,741) | (8,050,153) | (34,648,128) | (30,922,806) | (22,540,558) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 4,624,810 | 13,504,316 | 33,390,760 | 18,884,590 | |
Settlement of co-obligor debt to other affiliates | 8,340,545 | ||||
Release of guarantor from GSH to shareholder | 2,841,034 | ||||
Earnest Money Receivable From Other Affiliates | (2,521,626) | ||||
Total non-cash activity | $ 13,703,205 | $ 4,624,810 | $ 13,504,316 | $ 33,390,760 | $ 18,884,590 |
Related party transactions - Sa
Related party transactions - Sale-leaseback, other, leases (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) lease | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) item lease | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Related party transaction | ||||||
Revenue, net of sales discounts | $ 94,826,702 | $ 108,436,860 | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 | |
Cost of sales | $ 78,048,929 | $ 81,164,960 | $ 358,238,703 | 332,274,788 | $ 260,115,893 | |
Number of units in sale-leaseback | lease | 19 | 19 | ||||
Contract asset included in Prepaid expense and other assets | $ 611,343 | $ 611,343 | 1,361,590 | |||
Contract liability included in Other accrued expenses | 305,701 | 305,701 | $ 957,926 | |||
Sale Leaseback Of Model Homes | ||||||
Related party transaction | ||||||
Revenue, net of sales discounts | 5,188,716 | |||||
Cost of sales | 4,508,819 | |||||
Contract asset included in Prepaid expense and other assets | 435,264 | 435,264 | ||||
Contract liability included in Other accrued expenses | 435,264 | $ 435,264 | ||||
Unspecified Related Party | Sale Leaseback Of Model Homes | ||||||
Related party transaction | ||||||
Number of units in sale-leaseback with lease terms greater than 12 months | item | 9 | |||||
Revenue recognized | 2,507,216 | |||||
Costs recognized | $ 2,093,635 | |||||
Chief Executive Officer | Sale Leaseback Of Model Homes | ||||||
Related party transaction | ||||||
Number of units in sale-leaseback | item | 19 | |||||
Number of lease agreements | item | 19 |
Lot purchase agreement deposi_3
Lot purchase agreement deposits (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lot purchase agreement deposits | |||||
Cash deposit percentage | 10% | 10% | |||
Lot purchase agreement deposits | $ 8,113,303 | $ 3,804,436 | $ 3,804,436 | $ 2,946,001 | |
Remaining purchase price | 205,808,168 | 65,451,928 | 65,451,928 | 77,007,079 | |
Total contract value | 213,921,471 | 69,256,364 | 69,256,364 | 79,953,080 | |
Forfeited lot purchase agreement deposits | 8,664 | $ 89,361 | $ 0 | $ 211,482 | $ 84,619 |
Purchase agreement deposits outstanding, related party | $ 4,595,626 |
Warranty reserves (Details)
Warranty reserves (Details) - Other accrued expenses and liabilities - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of the activity related to warranty reserve | ||||
Warranty reserves at beginning of the period | $ 1,371,412 | $ 1,275,594 | $ 1,275,594 | $ 963,204 |
Reserves provided | 242,720 | 1,156,027 | 1,156,027 | 1,206,142 |
Payments for warranty costs and other | (204,713) | (1,060,209) | (1,060,209) | (893,752) |
Warranty reserves at end of the period | $ 1,409,419 | $ 1,371,412 | $ 1,371,412 | $ 1,275,594 |
Commitments and contingencies_2
Commitments and contingencies (Details) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 USD ($) lease | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) lease | Dec. 31, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Commitments and contingencies | |||||
Remaining lease term | 5 years | 5 years | |||
Operating lease expense | $ 201,439 | $ 159,679 | $ 555,806 | ||
Variable lease expense | $ 11,925 | $ 18,237 | $ 92,285 | ||
Discount rate | 4.90% | ||||
Weighted-average discount rate for the operating leases | 5.54% | 3.16% | |||
Weighted-average remaining lease term | 2 years 1 month 9 days | 2 years 4 months 24 days | 2 years 1 month 28 days | ||
Number of units in sale-leaseback | lease | 19 | 19 | |||
Maturity of the contractual, undiscounted operating lease liabilities | |||||
2023 | $ 578,280 | ||||
2023 | $ 361,734 | ||||
2024 | 292,992 | 305,400 | |||
2025 | 108,792 | 121,200 | |||
2026 | 48,000 | 48,000 | |||
Total undiscounted operating lease liabilities | 811,518 | 1,052,880 | |||
Interest on operating lease liabilities | (43,236) | (51,603) | |||
Total present value of operating lease liabilities | 768,282 | 1,001,277 | $ 1,149,832 | ||
Total rent expense | 68,625 | $ 931,078 | |||
Rent expense related to the short-term leases | $ 95,381 | $ 34,335 | $ 94,386 | $ 344,016 |
Convertible Note (Details)
Convertible Note (Details) - USD ($) | 3 Months Ended | ||
Mar. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2020 | |
Convertible Note | |||
Principal amount | $ 1,693,800 | ||
Number of shares issued | 47,594,950 | ||
Proceeds from convertible note, net of transaction costs | $ 71,500,000 | ||
Class A common stock | |||
Convertible Note | |||
Number of shares issued | 1,755,063 | ||
Convertible Note | Class A common stock | |||
Convertible Note | |||
Number of shares issued | 744,588 | ||
Note Purchase Agreement | |||
Convertible Note | |||
Principal amount | $ 80,000,000 | ||
Note Purchase Agreement | Class A common stock | |||
Convertible Note | |||
Number of shares issued | 744,588 | ||
Note Purchase Agreement | Convertible Note | |||
Convertible Note | |||
Principal amount | $ 80,000,000 | $ 80,000,000 | |
Original issue discount | 6.25% | ||
Proceeds from convertible note, net of transaction costs | $ 75,000,000 | ||
Interest rate | 15% | ||
Accrued and unpaid interest rate over which the entity elected to pay PIK interest | 10% | ||
Effective interest rate | 19.75% | ||
Note Purchase Agreement | Convertible Note | Class A common stock | |||
Convertible Note | |||
Number of shares issued | 744,588 |
Convertible Note - Conversion h
Convertible Note - Conversion holder's option and company's option (Details) - Note Purchase Agreement - Convertible Note | Mar. 30, 2023 item $ / shares |
Convertible Note | |
Redemption term before maturity date | 60 days |
Notes convertible at the holder's option | |
Convertible Note | |
Initial conversion price as percentage of VWAP per common share | 80% |
Number of trading days in a 30 consecutive trading day | item | 30 |
Notes convertible at the holder's option | Minimum | |
Convertible Note | |
Initial conversion price has a floor | $ / shares | $ 5 |
Notes convertible at the holder's option | Maximum | |
Convertible Note | |
Initial conversion price has a floor | $ / shares | 10 |
Notes convertible at the company's option | |
Convertible Note | |
Conversion price | $ / shares | $ 13.50 |
Number of trading days in a 30 consecutive trading day | item | 20 |
Number of consecutive trading days | item | 30 |
Convertible Note - Outstanding
Convertible Note - Outstanding balance of convertible note (Details) - Note Purchase Agreement - Convertible Note - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Convertible Note | ||
Beginning Balance - Par | $ 80,000,000 | |
Unamortized Discount | $ (13,285,724) | |
Carrying Value | $ 66,714,276 |
Convertible Note - Estimated fa
Convertible Note - Estimated fair value of convertible note (Details) - Note Purchase Agreement - Convertible Note | Mar. 31, 2023 | Mar. 30, 2023 |
Risk-free interest rate | ||
Convertible Note | ||
Convertible note, measurement input | 3.70% | 3.80% |
Expected volatility | ||
Convertible Note | ||
Convertible note, measurement input | 40% | 40% |
Share-based compensation - Equi
Share-based compensation - Equity Incentive Plans (Details) | 1 Months Ended | |
Jan. 31, 2022 shares | Mar. 31, 2023 | |
2022 Plan | ||
Share-based compensation | ||
Common shares reserved to be issued as equity-based awards to directors and employees | 3,000 | |
Vesting period | 4 years | |
2023 Plan | ||
Share-based compensation | ||
Increase in shares reserved and available for issuance as percentage of number of outstanding shares | 4% | |
Exchange Ratio | 373.47 |
Share-based compensation - Comp
Share-based compensation - Company's stock options (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Stock options | |
Stock options outstanding, at beginning of period | shares | 870,567 |
Forfeited, Stock options | shares | (85,555) |
Stock options outstanding, at end of period | shares | 785,012 |
Stock options exercisable | shares | 197,912 |
Weighted-Average Per share Exercise Price | |
Exercise price, at beginning of period | $ 2.81 |
Granted, exercise price | 2.81 |
Forfeited, exercise price | 2.81 |
Exercise price, at end of period | 2.81 |
Exercisable, exercise price | $ 2.81 |
Share-based compensation - Stoc
Share-based compensation - Stock options narratives (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Share-based compensation | |||
Total stock compensation expense | $ 4,400,000 | ||
Stock options | |||
Share-based compensation | |||
Aggregate intrinsic value of stock options outstanding | 10,561,716 | $ 7,460,132 | |
Total stock compensation expense | 51,079 | $ 41,422 | 195,830 |
Unrecognized stock compensation expense | $ 602,264 | $ 608,826 | |
Weighted average period for unrecognized stock compensation expense | 2 years 9 months 21 days | 3 years |
Share-based compensation - St_2
Share-based compensation - Stock options assumptions used (Details) - Stock options - $ / shares | 12 Months Ended | ||
Mar. 30, 2023 | Jan. 19, 2022 | Dec. 31, 2022 | |
Estimated fair value of the stock options | |||
Risk-free interest rate | 3.77% | 1.82% | 1.82% |
Expected volatility | 40% | 35% | 35% |
Expected life (in years) | 5 years 1 month 6 days | 6 years 3 months | 6 years 3 months |
Share Price | $ 10.41 | $ 1.06 |
Share-based compensation - Deri
Share-based compensation - Derivative liability (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Share-based compensation | |
Derivative liabilities | $ 451,106,576 |
Stock options | |
Share-based compensation | |
Derivative liabilities | 2,111,948 |
Unrealized loss on derivative liability of stock option | $ 922,263 |
Share-based compensation - St_3
Share-based compensation - Stock warrants (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2022 | Jan. 31, 2022 | Mar. 31, 2023 | |
Share-based compensation | |||
Number of shares per warrant | 1 | ||
Exercise price | $ 11.50 | ||
Stock compensation expense | $ 4,400,000 | ||
Stock warrants | |||
Share-based compensation | |||
Granted, Stock options | 1,867,368 | ||
Proceeds from issuance | $ 150,000 | $ 150,000 | |
Number of shares per warrant | 1 | ||
Exercise price | $ 4.05 | ||
Warrants exercisable term | 10 years | ||
Aggregate fair value of warrants | $ 1,376,800 | ||
Stock compensation expense | $ 1,226,800 | ||
Number of warrants granted | 0 |
Share-based compensation - St_4
Share-based compensation - Stock warrants - assumptions used (Details) - Stock warrants | 3 Months Ended |
Mar. 31, 2023 $ / shares | |
Estimated fair value of the stock options | |
Risk-free interest rate | 1.78% |
Expected volatility | 35% |
Expected life (in years) | 6 years 4 months 24 days |
Fair value of warrants granted | $ 0.7 |
Share-based compensation - St_5
Share-based compensation - Stock warrants narratives (Details) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2022 USD ($) | Jan. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) shares | |
Share-based compensation | |||
Stock compensation expense | $ 4,400,000 | ||
Stock warrants | |||
Share-based compensation | |||
Cash consideration for issuance of warrants | $ 150,000 | $ 150,000 | |
Exchange Ratio | 373.47 | ||
Number of warrants exercised | shares | 0 | ||
Stock compensation expense | $ 1,226,800 |
Earnout Shares (Details)
Earnout Shares (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Triggering Event I | |
Earnout Shares | |
Derivative liability | 8,207,392 |
Triggering Event II | |
Earnout Shares | |
Derivative liability | 8,207,392 |
Triggering Event III | |
Earnout Shares | |
Derivative liability | 5,471,594 |
Sponsor Support Agreement | |
Earnout Shares | |
Earnout period | 5 years |
Derivative liability | 20,000,000 |
Sponsor Support Agreement | Triggering Event I | |
Earnout Shares | |
Threshold VWAP price for Earn-Out milestones | $ / shares | $ 12.50 |
Percentage of issuance of Earn Out Shares | 37.50% |
Sponsor Support Agreement | Triggering Event II | |
Earnout Shares | |
Threshold VWAP price for Earn-Out milestones | $ / shares | $ 15 |
Percentage of issuance of Earn Out Shares | 37.50% |
Sponsor Support Agreement | Triggering Event III | |
Earnout Shares | |
Threshold VWAP price for Earn-Out milestones | $ / shares | $ 17.50 |
Percentage of issuance of Earn Out Shares | 25% |
Sponsor Support Agreement | Class B common stock | |
Earnout Shares | |
Number of earnout shares surrendered | 1,886,378 |
Earnout Shares - Number of Earn
Earnout Shares - Number of Earnout Shares (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 30, 2023 | |
Triggering Event I | ||
Earnout Shares | ||
Derivative liability | 8,207,392 | |
Fair value of total earnout shares (in dollars per share) | $ 20.81 | $ 12.10 |
Triggering Event I | Derivative Liability | ||
Earnout Shares | ||
Derivative liability | 8,059,386 | |
Triggering Event I | Stock Compensation | ||
Earnout Shares | ||
Derivative liability | 148,006 | |
Triggering Event II | ||
Earnout Shares | ||
Derivative liability | 8,207,392 | |
Fair value of total earnout shares (in dollars per share) | $ 20.77 | 11.16 |
Triggering Event II | Derivative Liability | ||
Earnout Shares | ||
Derivative liability | 8,059,386 | |
Triggering Event II | Stock Compensation | ||
Earnout Shares | ||
Derivative liability | 148,006 | |
Triggering Event III | ||
Earnout Shares | ||
Derivative liability | 5,471,594 | |
Fair value of total earnout shares (in dollars per share) | $ 20.57 | $ 10.19 |
Triggering Event III | Derivative Liability | ||
Earnout Shares | ||
Derivative liability | 5,372,923 | |
Triggering Event III | Stock Compensation | ||
Earnout Shares | ||
Derivative liability | 98,671 |
Earnout Shares - Assumptions Us
Earnout Shares - Assumptions Used In Valuation Of Instruments (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) $ / shares Y | Mar. 30, 2023 $ / shares Y | |
Earnout Shares | ||
Amount of earnout occurred | $ | $ 0 | |
Current stock price | ||
Earnout Shares | ||
Fair value of total earnout shares (in dollars per share) | $ 20.80 | $ 12.68 |
Derivative liability | 20.80 | 12.68 |
Stock price targets | Minimum | ||
Earnout Shares | ||
Derivative liability | 12.50 | 12.50 |
Stock price targets | Median | ||
Earnout Shares | ||
Derivative liability | 15 | 15 |
Stock price targets | Maximum | ||
Earnout Shares | ||
Derivative liability | 17.50 | 17.50 |
Expected life (in years) | ||
Earnout Shares | ||
Derivative liability | Y | 5 | 5 |
Earnout period (in years) | ||
Earnout Shares | ||
Derivative liability | Y | 4.75 | 4.75 |
Risk-free interest rate | ||
Earnout Shares | ||
Derivative liability | 3.69 | 3.75 |
Expected volatility | ||
Earnout Shares | ||
Derivative liability | 40 | 40 |
Warrant liability (Details)
Warrant liability (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 30, 2023 | |
Summary of significant accounting policies | ||
Loss from fair value adjustment of warrant | $ 2,723,333 | |
Private Placement Warrants | ||
Summary of significant accounting policies | ||
Number of warrants forfeited | 2,966,669 | |
Number of outstanding warrants | 2,966,664 | |
Number of warrants recognized as liability | 5,933,333 | |
Fair value per warrant | $ 0.30 | |
Aggregate total fair value of warrant | $ 900,000 | |
Fair value of warrants remeasured | $ 0.32 | |
Aggregate total fair value of warrant remeasured | $ 1,000,000 | |
Loss from fair value adjustment of warrant | $ 100,000 |
Warrant liability - Private Pla
Warrant liability - Private Placement Warrants (Details) - Private Placement Warrants | Mar. 31, 2023 Y | Mar. 30, 2023 Y |
Current stock price | ||
Warrant liability | ||
Warrant liability, measurement input | 0.2080 | 0.1268 |
Exercise price | ||
Warrant liability | ||
Warrant liability, measurement input | 0.1150 | 0.1150 |
Expected life (in years) | ||
Warrant liability | ||
Warrant liability, measurement input | 5 | 5 |
Risk-free interest rate | ||
Warrant liability | ||
Warrant liability, measurement input | 0.0369 | 0.0375 |
Expected volatility | ||
Warrant liability | ||
Warrant liability, measurement input | 0.40 | 0.40 |
Warrant liability - Public Warr
Warrant liability - Public Warrants (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 30, 2023 | |
Warrant liability | ||
Loss from fair value adjustment of warrant | $ 2,723,333 | |
Public Warrants | ||
Warrant liability | ||
Fair value per warrant | $ 0.30 | |
Aggregate total fair value of warrant | $ 2,600,000 | |
Fair value of warrants remeasured | $ 0.28 | |
Aggregate total fair value of warrant remeasured | 2,400,000 | |
Loss from fair value adjustment of warrant | $ 200,000 |
Income taxes (Details)
Income taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income taxes | ||||
Income tax benefit | $ 2,021,265 | $ 0 | $ 0 | $ 0 |
Income tax continuing operations | $ 821,811 | |||
Annual effective tax rate | 25.30% | |||
Federal statutory rate | 21% | |||
Income tax benefit in order to establish various deferred tax assets, primarily attributable to timing differences in revenue recognition | $ 1,199,454 |
Employee benefit plan (Details)
Employee benefit plan (Details) - USD ($) | 3 Months Ended | ||
Jan. 01, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | |
Employee benefit plan | |||
Percent of employees gross pay, one | 3% | ||
Percent of match of employer contribution, one | 100% | ||
Percent of match of employer contribution, two | 50% | ||
Percent of employees gross pay, two | 2% | ||
Maximum contribution | 4% | ||
Vesting percentage with respect to employer contributions after completing six years of service | 100% | ||
Service term required for full vesting | 6 years | ||
Total contributions paid | $ 80,077 | $ 37,652 |
Net (Loss) Earnings Per Share_2
Net (Loss) Earnings Per Share (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
Net (Loss) Earnings Per Share | |||||||
Net (loss) income | $ (204,504,328) | $ 17,017,928 | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 | ||
Weighted-average number of common shares outstanding - basic | 37,575,074 | [1] | 37,347,350 | [1] | 100,000 | 100,000 | 100,000 |
Effect of dilutive securities | $ 2,960 | ||||||
Weighted-average number of common shares outstanding - diluted | 37,575,074 | [1] | 37,347,350 | [1] | 102,960 | 100,000 | 100,000 |
Basic earnings per share | $ (5.44) | $ 0.46 | $ 694.89 | $ 624.13 | $ 389.76 | ||
Diluted earnings per share | $ (5.44) | $ 0.46 | $ 674.92 | $ 624.13 | $ 389.76 | ||
[1] Retroactively restated for the three months ending March 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
Net (Loss) Earnings Per Share -
Net (Loss) Earnings Per Share - anti-dilutive - (Details) - shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Net (Loss) Profit Per Share | |||
Total anti-dilutive features | 22,358,327 | 2,811,630 | 4,466 |
Stock warrants | |||
Net (Loss) Profit Per Share | |||
Total anti-dilutive features | 1,867,368 | 1,867,368 | |
Private Placement Warrants [Member] | |||
Net (Loss) Profit Per Share | |||
Total anti-dilutive features | 2,966,664 | ||
Public Warrants [Member] | |||
Net (Loss) Profit Per Share | |||
Total anti-dilutive features | 8,625,000 | ||
Stock options | |||
Net (Loss) Profit Per Share | |||
Total anti-dilutive features | 899,295 | 944,262 | 1,376 |
Convertible notes | |||
Net (Loss) Profit Per Share | |||
Total anti-dilutive features | 8,000,000 |
Net (Loss) Earnings Per Share_3
Net (Loss) Earnings Per Share - Additional information (Details) | 3 Months Ended |
Mar. 31, 2023 shares | |
Net (Loss) Earnings Per Share | |
Earnout shares remain contingently issuable as the Earnout Triggering Events have not been satisfied | 21,886,378 |
Subsequent events (Details)
Subsequent events (Details) | Apr. 28, 2023 shares |
Subsequent Event | Class A common stock | |
Subsequent events | |
Number of shares called by warrants outstanding | 748,020 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Cash | $ 12,238,835 | $ 51,504,887 |
Accounts receivable | 1,976,334 | 2,086,018 |
Homes under construction and finished homes | 163,997,487 | 123,000,199 |
Developed lots | 16,205,448 | 17,025,273 |
Due from related party | 1,437,235 | |
Lot purchase agreement deposits | 3,804,436 | 2,946,001 |
Investment in Joint Venture | 186,086 | |
Property and equipment, net | 1,385,698 | 1,590,353 |
Operating right-of-use assets | 1,001,277 | |
Prepaid expenses and other assets | 6,112,044 | 4,107,254 |
Total Assets | 208,344,880 | 202,259,985 |
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Deficit: | ||
Accounts payable | 22,077,240 | 28,741,054 |
Homebuilding debt and other affiliate debt | 120,797,006 | 102,502,287 |
Operating lease liabilities | 1,001,277 | |
Other accrued expenses and liabilities | 5,465,321 | 4,458,232 |
Total Liabilities | 149,340,844 | 135,701,573 |
Commitments and Contingencies | ||
Total Shareholders' and Other Affiliates' Net investment | ||
Shareholders' and other affiliates' net investment | 100,322,957 | 83,586,722 |
Net due to and due from shareholders and other affiliates | (41,318,921) | (17,028,310) |
Total Shareholders' and Other Affiliates' Net investment | 59,004,036 | 66,558,412 |
Total Liabilities and Stockholders' equity | $ 208,344,880 | $ 202,259,985 |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Revenue, net of sales discounts | $ 94,826,702 | $ 108,436,860 | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 | ||
Cost of sales | 78,048,929 | 81,164,960 | 358,238,703 | 332,274,788 | 260,115,893 | ||
Gross Profit | 16,777,773 | 27,271,900 | 118,807,246 | 100,616,722 | 67,138,412 | ||
Selling, general and administrative expense | 16,687,401 | 10,425,050 | 49,685,730 | 38,461,370 | 29,891,622 | ||
Net income from operations | 90,372 | 16,846,850 | 69,121,516 | 62,155,352 | 37,246,790 | ||
Other income, net | 202,715 | 171,078 | 230,692 | 257,659 | 1,729,584 | ||
Equity in net earnings from investment in joint venture | 245,808 | 137,086 | |||||
Net Income | $ (204,504,328) | $ 17,017,928 | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 | ||
Basic and diluted net income per common stock: | |||||||
Basic | $ (5.44) | $ 0.46 | $ 694.89 | $ 624.13 | $ 389.76 | ||
Diluted | $ (5.44) | $ 0.46 | $ 674.92 | $ 624.13 | $ 389.76 | ||
Basic and diluted weighted-average number of shares | |||||||
Basic | 37,575,074 | [1] | 37,347,350 | [1] | 100,000 | 100,000 | 100,000 |
Diluted | 37,575,074 | [1] | 37,347,350 | [1] | 102,960 | 100,000 | 100,000 |
[1] Retroactively restated for the three months ending March 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | |||||
Beginning balance | $ 59,004,036 | $ 66,558,412 | $ 66,558,412 | $ 34,168,541 | $ 20,251,063 |
Distributions and net transfer to shareholders and other affiliates | (4,193,093) | (20,766,162) | (78,466,300) | (30,023,140) | (25,058,896) |
Stock compensation | 1,422,630 | ||||
Net Income (Loss) | (204,504,328) | 17,017,928 | 69,489,294 | 62,413,011 | 38,976,374 |
Ending balance | (363,261,008) | 64,078,400 | 59,004,036 | 66,558,412 | 34,168,541 |
Shareholders' and Other Affiliates' Net Investment | |||||
CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | |||||
Beginning balance | 100,322,957 | 83,586,722 | 83,586,722 | 54,697,321 | 38,051,216 |
Distributions and net transfer to shareholders and other affiliates | (54,175,689) | (33,523,610) | (22,330,269) | ||
Stock compensation | 1,422,630 | ||||
Net Income (Loss) | 69,489,294 | 62,413,011 | 38,976,374 | ||
Ending balance | 100,322,957 | 83,586,722 | 54,697,321 | ||
Net Due To and Due From Shareholders and Other Affiliates | |||||
CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | |||||
Beginning balance | $ (41,318,921) | $ (17,028,310) | (17,028,310) | (20,528,780) | (17,800,153) |
Distributions and net transfer to shareholders and other affiliates | (24,290,611) | 3,500,470 | (2,728,627) | ||
Ending balance | $ (41,318,921) | $ (17,028,310) | $ (20,528,780) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Equity in net earnings from investment in joint venture | (137,086) | ||
Depreciation | 355,566 | 358,587 | 182,786 |
Loss on sale of property and equipment | 6,966 | 15,000 | 14,368 |
Amortization of deferred loan costs | 404,146 | 421,186 | 408,674 |
Stock compensation expense | 1,422,630 | ||
Amortization of operating lease right-of-use assets | 525,434 | ||
Net change in operating assets and liabilities: | |||
Accounts receivable | 109,684 | (1,178,383) | (563,109) |
Related party receivable | (1,437,235) | ||
Inventories | (26,673,147) | (12,726,300) | 29,294,686 |
Lot purchase agreement deposits | (858,435) | 417,025 | (1,290,574) |
Prepaid expenses and other assets | (2,408,936) | (1,983,511) | 229,838 |
Accounts payable | (6,663,814) | 9,937,222 | 3,869,223 |
Operating lease liabilities | (525,434) | ||
Other accrued expenses and liabilities | 1,007,089 | 644,199 | 659,436 |
Net cash flows provided by operating activities | 34,616,722 | 58,318,036 | 71,781,702 |
Cash Flows from Investing Activities | |||
Purchases of property and equipment | (171,685) | (404,244) | (805,294) |
Proceeds from the sale of property and equipment | 13,808 | 10,190 | 20,000 |
Capital contribution in joint venture | (49,000) | ||
Net cash flows provided by (used in) investing activities | (206,877) | (394,054) | (785,294) |
Cash Flows from Financing Activities: | |||
Proceeds from homebuilding debt | 179,336,312 | 285,392,912 | 194,418,471 |
Repayments of homebuilding debt | (170,810,631) | (262,064,474) | (210,255,229) |
Proceeds from other affiliate debt | 10,851,187 | 10,025,865 | 13,259,394 |
Repayments of other affiliate debt | (918,453) | (5,624,330) | (7,499,472) |
Repayments on equipment financing | (142,536) | (43,070) | (95,411) |
Payment of deferred loan costs | (1,264,403) | (337,500) | |
Distributions and net transfer to shareholders and other affiliates | (54,175,689) | (33,523,610) | (22,330,269) |
Changes in net due to and due from shareholders and other affiliates | (37,816,087) | (28,497,772) | (18,579,633) |
Net cash flows provided by (used in) financing activities | (73,675,897) | (35,598,882) | (51,419,649) |
Net change in cash and cash equivalents | (39,266,052) | 22,325,100 | 19,576,759 |
Cash and cash equivalents, beginning of year | 51,504,887 | 29,179,787 | 9,603,028 |
Cash and cash equivalents, end of year | 12,238,835 | 51,504,887 | 29,179,787 |
Supplemental cash flow information: | |||
Cash paid for interest | 5,000,196 | 3,199,503 | 4,235,364 |
Conversion of other affiliates debt to homebuilding debt | 1,414,681 | 7,985,557 | 6,101,195 |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 13,504,316 | 33,170,761 | 19,541,090 |
Transfer of constructed model homes to related parties | (1,517,030) | (3,690,084) | |
Contribution of fixed assets | 344,511 | ||
Additions of right-of-use lease assets and liabilities | 1,585,096 | ||
Transfer of co-obligor debt to land development affiliate | 21,160 | ||
Total non-cash activity | $ 16,525,253 | $ 39,983,799 | $ 21,952,201 |
Nature of operations and basi_2
Nature of operations and basis of presentation | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Nature of operations and basis of presentation | ||
Nature of operations and basis of presentation | Note 1 — Nature of operations and basis of presentation The Company and Nature of Business United Homes Group, Inc. (“UHG”, the “Company”), a Delaware corporation, is a homebuilding business which operates with an asset-light strategy. The Company is a former blank check company incorporated on October 7, 2020 under the name DiamondHead Holdings Corp. (“DHHC”) as a Delaware corporation formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. UHG constructs single-family residential homes and has active operations in South Carolina and Georgia offering a range of residential products including entry-level attached and detached homes, first-time move up attached and detached homes and second move-up detached homes. The constructed homes appeal to a wide range of buyer profiles, from first-time to lifestyle buyers. The Company’s primary objective is to provide customers with homes of exceptional quality and value while maximizing its return on investment. The Company has grown by expanding its market share in existing markets and by expanding into markets contiguous to the current active markets. Business Combination On September 10, 2022, DHHC entered into a Business Combination Agreement (the “Business Combination Agreement”) with Hestia Merger Sub, Inc., a South Carolina corporation and wholly owned subsidiary of DHHC (“Merger Sub”), and Great Southern Homes, Inc., a South Carolina corporation (“GSH”). Upon the consummation of the transaction on March 30, 2023 (“Closing Date”), Merger Sub merged with and into GSH with GSH surviving the merger as a wholly owned subsidiary of the Company (“Business Combination”). As a result of the Business Combination, GSH is now a wholly owned subsidiary of DHHC, which has changed its name to United Homes Group, Inc. GSH’s business historically consisted of both homebuilding operations and land development operations. In anticipation of the Business Combination, GSH separated its land development operations and its homebuilding operations across separate entities in an effort to adopt best practices in the homebuilding industry associated with ownership and control of land and lots and production efficiency. For accounting treatment of the Business Combination, see Note 2 - Merger and Reverse Recapitalization . Unless otherwise indicated or the context otherwise requires, references in this quarterly report on Form 10-Q to “Legacy UHG” refer to the homebuilding operations of GSH prior to the consummation of the Business Combination. Basis of Presentation The Condensed Consolidated Financial Statements included in this report reflect (i) the historical operating results of Legacy UHG prior to the Business Combination; (ii) the combined results of UHG and DHHC following the Closing; (iii) the assets and liabilities of UHG and DHHC, and Legacy UHG at their historical cost; and (iv) the Company’s equity structure for all periods presented. The accompanying Condensed Consolidated Balance Sheet as of December 31, 2022 and the Condensed Consolidated Statement of Operations, Statement of Changes in Stockholders’ Equity, and Statement of Cash Flows for the three months ended March 31, 2022 (“Legacy UHG financial statements”) have been prepared from Legacy UHG’s historical financial records and reflect the historical financial position, results of operations and cash flows of the Legacy UHG for the periods presented on a carve-out basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Statement of Changes in Stockholders’ Equity is adjusted for the retroactive application of the reverse recapitalization using the Exchange Ratio. The Legacy UHG financial statements present historical information and results attributable to the homebuilding operations of GSH. The Legacy UHG financial statements exclude GSH’s operations related to land development operations as Legacy UHG historically did not operate as a standalone company. The carve-out methodology was used since Legacy UHG’s inception until the Closing Date. Thus, after March 30, 2023, no carve-out amounts were included in UHG’s financial statements. Periods prior to the Business Combination Prior to the Business Combination until the Closing Date, Legacy UHG has historically transacted with affiliates that were owned by the shareholders of GSH. Legacy UHG has categorized the various affiliates based on the nature of the transactions with Legacy UHG and their primary operations. The categories are as follows: Land Development Affiliates - Land development affiliates’ primary operations consist of acquiring and developing raw parcels of land for vertical home construction. Upon completion, the land development affiliates transfer the developed lots to Legacy UHG in a non-cash transaction. Other Operating Affiliates - Other operating affiliates’ operations consist of acquiring and developing land, purchasing constructed houses for rental properties, leasing activities, and purchasing model homes to be maintained during the sell down period of a community. Collectively, these are referred to as “Other Affiliates” in these financial statements and represented as related parties (see Note 8 - Related party transactions ). All assets, liabilities, revenues, and expenses directly associated with the activity of Legacy UHG are included in these financial statements. Cash and cash equivalents is included in these financial statements, as Legacy UHG provided the cash management/treasury function for the Other Affiliates until January 1, 2023. In addition, a portion of Legacy UHG’s corporate expenses including share-based compensation were allocated to Legacy UHG based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional cost of sales or employee headcount, as applicable. The corporate expense allocations include the cost of corporate functions and resources provided by or administered by GSH including, predominately, costs associated with executive management, finance, accounting, legal, human resources, and costs associated with operating GSH’s office buildings. The corporate expense allocation requires significant judgment and management believes the basis on which the corporate expenses have been allocated reasonably reflects the utilization of services provided to Legacy UHG during the periods presented. Balance Sheet accounts were reviewed to determine what was attributable to Legacy UHG. There were no Balance Sheet accounts that required allocation procedures for assets and liabilities. In addition, all significant transactions between Legacy UHG and GSH have been included in these financial statements. The aggregated net effect of transactions between Legacy UHG and GSH are settled within Retained Earnings/ (Accumulated Deficit) on the Balance Sheets as they were not expected to be settled in cash. These amounts were reflected in the Statements of Cash Flows within Distributions and net transfer to shareholders and other affiliates and, when transactions were historically not settled in cash, in Non-cash financing activities. GSH’s third-party long-term debt and related interest expense have all been allocated to Legacy UHG. Legacy UHG was considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. Certain portions of that long-term debt and the related interest consist of construction revolving lines of credit and are reflected as Homebuilding debt. The remaining portions of long-term debt and the related interest have been used to finance operations that were not related to Legacy UHG, primarily land development activities, and were presented as Other Affiliate debt. The results reported in these financial statements would not be indicative of Legacy UHG’s future performance, primarily because prior to the Business Combination, the lots developed by affiliates were not transferred to the homebuilding operations of GSH at a market rate. As such, these results do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. | Note 1 — Nature of operations and basis of presentation Nature of Business — GSH develops land and constructs single—family residential homes. GSH has active operations in South Carolina and Georgia offering a range of residential products including entry-level attached and detached homes, first-time move up attached and detached homes and second move-up detached homes. The constructed homes appeal to a wide range of buyer profiles, from first-time to lifestyle buyers. Basis of Presentation The Company’s primary objective is to provide customers with homes of exceptional quality and value while maximizing its return on investment. Generally, the Company grows by expanding its market share in existing markets and by expanding into markets contiguous to the current active markets. Throughout the periods covered by the financial statements, the Company operated as part of GSH. The accompanying financial statements have been prepared from GSH’s historical financial records and reflect the historical financial position, results of operations and cash flows of the Company for the periods presented on a carve-out basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company has historically transacted with affiliates that are owned by the shareholders of the Company. The Company has categorized the various affiliates based on the nature of the transactions with the Company and their primary operations. The categories are as follows: Land Development Affiliates Other Operating Affiliates Collectively, these are referred to as “Other Affiliates” in these financial statements and represented as related parties (see Note 6 — Related party transactions All assets, liabilities, revenues, and expenses directly associated with the activity of the Company are included in these financial statements. Cash and cash equivalents is included in these financial statements, as the Company provided the cash management/treasury function for the Other Affiliates. In addition, a portion of GSH’s corporate expenses including share-based compensation were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional cost of sales or employee headcount, as applicable. The corporate expense allocations include the cost of corporate functions and resources provided by or administered by GSH including, predominately, costs associated with executive management, finance, accounting, legal, human resources, and costs associated with operating GSH’s office buildings. The corporate expense allocation requires significant judgment and management believes the basis on which the corporate expenses have been allocated reasonably reflects the utilization of services provided to the Company during the periods presented. Balance sheet accounts were reviewed to determine what was attributable to the Company. There were no Balance Sheet accounts that required allocation procedures for assets and liabilities. In addition, all significant transactions between the Company and GSH have been included in these financial statements. The aggregated net effect of transactions between the Company and GSH are reflected in the Balance Sheets within Total shareholders’ and other affiliates’ net investment and in the Statements of Cash Flows within Distributions and net transfer to shareholders and other affiliates, changes in net due from and net due to shareholders and other affiliates and, when transactions were historically not settled in cash, in Non-cash financing activities. Net due to and due from shareholders and other affiliates balances are generally presented as a contra-account in the Balance Sheets within Total shareholders’ and other affiliates’ net investment due to the expectation they will not be settled in cash in the future. Certain related party amounts that are expected to be settled in cash are presented as Due from related party in the Balance Sheet. GSH’s third-party long-term debt and related interest expense have all been allocated to the Company. The Company is considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. Certain portions of that long-term debt and the related interest consist of construction revolving lines of credit and are reflected as Homebuilding debt. The remaining portions of long-term debt and the related interest have been used to finance operations that are not related to the Company, primarily land development activities, and are presented as Other Affiliate debt. The Other Affiliate debt balances related to these operations have an associated Due from shareholders and other affiliates recorded to the Balance Sheets as of December 31, 2022 and 2021. The results reported in these financial statements would not be indicative of the Company’s future performance, primarily because the lots developed by affiliates were not transferred to the Homebuilding Operations at a market rate. As such, these results do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Emerging Growth Company Status Proposed Business Combination — |
Summary of significant accoun_9
Summary of significant accounting policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Summary of significant accounting policies | ||
Summary of significant accounting policies | Note 3 — Summary of significant accounting policies The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s fiscal year end is December 31 and, unless otherwise stated, all years and dates refer to the fiscal year. Unaudited Interim Condensed Consolidated Financial Statements - The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with GAAP for interim financial information and the rules and regulations of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, certain information, footnotes, and disclosures normally included in the annual financial statements prepared under GAAP have been condensed or omitted in accordance with SEC rules and regulations. Therefore, these Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes included in the audited financial statements of Legacy UHG for the year ended December 31, 2022 included in the Form S-1 filed with the SEC on April 28, 2023. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying Condensed Consolidated Financial Statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of March 31, 2023 and results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The Condensed Consolidated Balance Sheet at December 31, 2022, was derived from audited annual financial statements and adjusted for the retrospective recapitalization as described in Note 1 - Nature of operations and basis of presentation and Note 2 - Merger and Reverse Recapitalization but does not contain all of the footnote disclosures from the annual financial statements. Other than policies noted below, there have been no significant changes to the significant accounting policies disclosed in Note 2 of audited Legacy UHG financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022. The results for the three months ended March 31, 2023 and 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. Emerging Growth Company - The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is not an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Principles of consolidation — The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates — The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates made by the Company include corporate expense allocation, useful lives of depreciable assets, revenue recognition associated with contracts recognized over time, capitalized interest, warranty reserves, share-based compensation, valuation of earnout liability, valuation of convertible note and valuation of stock warrants. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. Segment Information — The Company determines its chief operating decision maker (“CODM”) based on the person responsible for making resource allocation decisions. Operating segments are components of the business for which the CODM regularly reviews discrete financial information. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. Inventories and Cost of Sales — The carrying value of inventory is stated at cost unless events and circumstances indicate the carrying value may not be recoverable. Inventory consists of developed lots, homes under construction, and finished homes. — Developed lots - This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. As of March 31, 2023 and December 31, 2022, the amount of developed lots included in inventory was $21,189,983 and $16,205,448 , respectively. Developed lots purchased at fair value from third parties was $15,815,143 and $10,052,179 as of March 31, 2023 and December 31, 2022, respectively, which is included in Developed Lots on the Condensed Consolidated Balance Sheets. — Homes under construction - At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. As of March 31, 2023 and December 31, 2022, the amount of inventory related to homes under construction included in homes under construction and finished homes was $88,872,575 and $141,863,561 , respectively. — Finished homes - This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. As of March 31, 2023 and December 31, 2022, the amount of inventory related to finished homes included in homes under construction and finished homes was $40,078,317 and $22,133,926 , respectively. Revenue Recognition - The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers . For the three months ended March 31, 2023 and 2022, revenue recognized at a point in time from speculative homes totaled $92,389,410 , and $104,450,041 respectively. For the three months ended March 31, 2023 and 2022, revenue recognized over time from land owned by customers totaled $2,437,292 , and $3,986,819 , respectively. Advertising — The Company expenses advertising and marketing costs as incurred and includes such costs within Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2023 and 2022, the Company incurred $490,980 , and $452,765 , respectively, in advertising and marketing costs. Income Taxes — Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than not” that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positive and negative, is evaluated. The Company recognizes interest and penalties related to the underpayment of income taxes, including those resulting from the late filing of tax returns within the provision for income taxes in the Condensed Consolidated Statements of Operations. The Company analyzes its tax filing positions in the U.S. federal, state, and local tax jurisdictions where the Company is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is enacted or new information becomes available. Prior to the Business Combination, Legacy UHG was included in the tax filing of the shareholders of GSH, which was taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code. Individual shareholders were liable for income taxes on their respective shares of GSH’s taxable income. No income tax liability nor income tax was allocated to Legacy UHG as of December 31, 2022 or for the three months ended March 31, 2023, nor was there any recorded liability for uncertain tax positions. Derivative liabilities — The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The 8,625,000 warrants issued in connection with DHHC’s Initial Public Offering (the “Public Warrants”), the 2,966,664 Private Placement Warrants, 21,491,695 Earnout Shares and certain stock options (as discussed in Note 13 - Share-based compensation ) are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments, earnout shares and stock options as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised or issued, respectively. The Public Warrant quoted market price was used as the fair value for the Public Warrants as of March 30, 2023 and March 31, 2023. The Private Placement Warrants and the Earnout shares were valued using a Monte Carlo analysis. See the Earnout Shares and Warrant Liabilities sections below for further detail on each instrument and their classification. Stock options were valued using Black ‑ Scholes valuation model. See Note 13 - Share-based compensation for further detail. Earnout - In connection with the Business Combination, Earnout Holders are entitled to receive consideration in the form of Earnout Shares upon the Company achieving certain Triggering Events, as described in Note 14 - Earnout Shares. The contingent obligations to issue Earnout Shares to the Earnout Holders, excluding Employee Option Holders, are recognized on the Closing Date as derivative liabilities in accordance with ASC 815. The liabilities were recognized at fair value on the Closing Date and are subsequently remeasured at each reporting date with changes in fair value recorded in the Condensed Consolidated Statements of Operations. Earnout Shares issuable to Employee Option Holders at the Closing Date are considered a separate unit of account from the Earnout Shares issuable to GSH Equity Holders, and the Sponsors, and are accounted for as equity classified stock compensation. The Earnout Shares issuable to Employee Option Holders are fully vested upon issuance, thus there is no requisite service period, and the value of these shares is recognized as a one-time stock compensation expense for the grant date fair value. The estimated fair values of the Earnout Shares were determined by using a Monte Carlo simulation valuation model using a distribution of potential outcomes on a daily basis over the Earnout Period as defined in Note 14 - Earnout Shares . The preliminary estimated fair values of the Earnout Shares were determined using the most reliable information available, including the current trading price of the UHG Class A Common Shares, expected volatility, risk-free rate, expected term and dividend rate. The earnout liability is categorized as a Level 3 fair value measurement because the Company estimated projections during the Earnout Period utilizing unobservable inputs. See Note 4 — Fair Value Measurement for further detail on UHG’s accounting policy related to the fair value of financial instruments. Warrant Liabilities — The Company assumed 8,625,000 publicly-traded warrants (“Public Warrants”) from DHHC’s initial public offering and 2,966,664 private placement warrants originally issued by DHHC (“Private Placement Warrants” and, together with the Public Warrants, the “Common Stock Warrants” or “Warrants”). Upon consummation of the Business Combination, each Common Stock Warrant issued entitled the holder to purchase one UHG Class A Common Share at an exercise price of $11.50 per share. The Common Stock Warrants are exercisable as of April 29, 2023. The Private Placement Warrants are identical to the Public Warrants, except that of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain exceptions. During the three months ended March 31, 2023, no Common Stock Warrants were exercised. The Public Warrants are publicly traded and are exercisable unless certain conditions occur which would permit a cashless exercise. The Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees, subject to certain exceptions. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company evaluated the Public Warrants and Private Placement Warrants and concluded that both meet the definition of a derivative and will be accounted for in accordance with ASC Topic 815-40, as the Public Warrants and Private Placement Warrants are not considered indexed to UHG’s stock. PIPE Investment — In connection with the closing of the Business Combination, GSH entered into the Note Purchase Agreement, dated March 21, 2023, and effective March 30, 2023, with DHHC and the Convertible Note Investors. As part of the PIPE Investment, the Convertible Note Investors agreed to purchase $80.0 million in original principal amount of Notes at a 6.25% original issue discount and were issued an additional 744,588 UHG Class A Common Shares. The aggregate proceeds received from the Convertible Note Investors is $75.0 million. Additionally, in connection with the Business Combination, (i) the PIPE Investors purchased from the Company an aggregate of (A) 471,500 UHG Class A Common Shares at a purchase price of $10.00 per share, and (B) 117,875 UHG Class A Common Shares at a purchase price of $0.01 per share for gross proceeds to the Company of approximately $4.7 million, pursuant to the PIPE Subscription Agreements, and (ii) the Lock-Up Investors purchased from the Company an aggregate of 421,100 UHG Class A Common Shares at a purchase price of $0.01 per share pursuant to the Share Lock-Up Agreements. Following the closing of the Business Combination, UHG notified each Lock-Up Investor that UHG waived the lock-up restriction contained in the Share Lock-Up Agreements. The Company accounts for the Notes and PIPE Shares as two freestanding financial instruments. The Company accounts for the Notes at amortized cost and amortizes the debt discount to interest expense using the effective interest method over the expected term of the Notes pursuant to ASC 835 Interest (“ASC 835”). The Company accounts for the PIPE Shares as equity, as they are not in the scope of ASC 480. The Company applied the relative fair value method to allocate the $75.0 million in aggregate proceeds received among the freestanding instruments issued. Specifically, $70.2 million was allocated to the Notes, and $4.8 million was allocated to the PIPE Shares. The amount allocated to the PIPE Shares is presented as an increase in additional paid-in capital. The Notes are considered a hybrid financial instrument consisting of a debt “host” and embedded features. The Company evaluated the Notes at issuance for embedded derivative features and the potential need for bifurcation under ASC 815, and determined that the Notes contained embedded derivatives, including conversion features and redemption rights. Although the Company determined that a group of these embedded features which are contingent on certain events occurring, as further discussed in Note 12 - Convertible Note , would need to be bifurcated, the contingencies themselves are either entirely within the Company’s control or based on an event management considers the probability of occurring as extremely remote. Therefore, the group of embedded features which are contingent on certain events and required to be bifurcated would likely have minimal or no value and therefore deemed to not be material to the Condensed Consolidated Financial Statements. The Company engaged an independent valuation firm to assist with the valuation of the Notes and the PIPE Shares. Refer to Note 12 - Convertible Note for further valuation details. The Company recognized issuance costs of $3.5 million in connection with the Note Purchase Agreement. Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount. Recently Adopted Accounting Pronouncements - In June 2016, FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASC 326 significantly changes the way impairment of financial assets is recognized by requiring companies to immediately recognize estimated credit losses expected to occur over the remaining life of many financial assets. The immediate recognition of the estimated credit losses generally will result in an earlier recognition of allowance for credit losses on loans and other financial instruments. The Company adopted this ASU effective January 1, 2023. The adoption of ASC 326 did not have a significant impact on the Company’s Condensed Consolidated Financial Statements. Recent Accounting Pronouncements Not Yet Adopted — In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides practical expedients and exceptions for applying GAAP when modifying contracts and hedging relationships that use the London Interbank Offered Rate (“LIBOR”) as a reference rate. In addition, these amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024. The Company does not anticipate a material increase in interest rates from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. | Note 2 — Summary of significant accounting policies Use of Estimates — Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. Accounts Receivable — Inventories and Cost of Sales — — Developed lots — This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. For the years ended December 31, 2022 and 2021, the amount of developed lots included in inventory was $16,205,448 and $17,025,273, respectively. Developed lots purchased at fair value from third parties was $10,052,179 and $9,445,580 as of December 31, 2022 and December 31, 2021, respectively, which is included in Developed Lots on the Balance Sheets. — Homes under construction — At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. For the years ended December 31, 2022 and 2021, the amount of inventory related to homes under construction included in homes under construction and finished homes was $141,863,561 and $110,224,757, respectively. — Finished homes — This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the amount of inventory related to finished homes included in homes under construction and finished homes was $22,133,926 and $12,775,442, respectively. Upon settlement, costs associated with units sold are expensed to Cost of sales based on a specific identification basis. Costs of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home. In addition, the Company receives rebates with certain suppliers for the use of their product. The Company records the receipt of the rebate as a reduction in Cost of sales based on a specific identification basis. At the time of closing, the Company performs an analysis to accrue for costs that were incurred as part of the construction of the home but unpaid at the time of closing. The costs are recorded in Cost of sales in the Statements of Income. Lot Purchase Agreement Deposits — Note 7 — Lot purchase agreement deposits Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes the Land Developers under the variable interest model to determine if such interest in Land Developers is considered a variable interest, and, if so, whether the Land Developers are required to be consolidated in the Company’s financial statements. Management determines whether the Land Developers are considered variable interest entities (“VIEs”) at the time management becomes involved with Land Developers. The Company invests in less than half of the fair value of the Land Developers’ assets. The Company does not have any specific performance obligations to purchase a certain number or any of the lots or guarantee any of the Land Developers’ financial or other liabilities. The Company is not involved in the design or creation of these entities. As such, the deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be variable interests in the respective Land Developers. Property and Equipment — Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years Normal repairs and maintenance costs are expensed as incurred, whereas significant improvements which materially increase the value or extend the useful life of an asset are capitalized and depreciated over the remaining estimated useful life of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts. Any gain or loss on the sale or retirement of the depreciable asset is recognized as Other income (expense) on the Statements of Income. Long-Lived Assets — Inventory impairment exists if the carrying amount of the asset is not recoverable from the sale prices expected from future home sales. The Company reviews the performance and outlook of its inventories for indicators of potential impairment on a community level. Any calculated impairments are recorded immediately in Cost of sales. Recoverability for Property and equipment is measured by the expected undiscounted future cash flows of the assets compared to the carrying amounts of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions and appraisal. There were no triggering events or impairments recorded for all years presented. Deferred Loan Costs — Note 5 — Homebuilding debt and other affiliate debt Earnings per Share — Note 13 — Earnings per share . Investment in Joint Venture The Company accounts for its investment in the Joint Venture under the equity method of accounting, as it determined that the Company has the ability to exercise significant influence over the venture, but does not have control. Under the equity method, the investment in the unconsolidated joint venture is recorded initially at cost, as Investment in Joint Venture, and subsequently adjusted for equity in earnings, cash contributions, less distributions and impairments. The Joint Venture commenced operations in June 2022. Equity in earnings from the investment in the Joint Venture for the period from the commencement of operations through December 31, 2022 was $137,086, increasing the investment in Joint Venture as of December 31, 2022 to $186,086. There were no additional capital contributions and distributions for the year ended December 31, 2022 aside from the initial contribution of $49,000. Additionally, there were no impairment losses related to the Company’s investment in the Joint Venture recognized during the year ended December 31, 2022. Share-Based Compensation Note 1 — Nature of operations and basis of presentation Stock option awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant. GSH accounts for forfeitures when they occur. Stock warrant awards do not contain a service condition and are expensed on the grant date. The fair value of share-based awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black-Scholes option pricing model. This model requires the input of highly subjective assumptions, including the option’s expected term and stock price volatility. See Note 10 — Stock compensation . Transaction costs — Note 1 — Nature of operations and basis of presentation Leases — Leases (Topic 842) Leases operating The Company determines if an arrangement is, or contains, a lease at inception. Leases are recognized when the contract provides the Company the right to use an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease ROU assets and operating lease liabilities in the Balance Sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As most of the Company’s leases do not provide an explicit borrowing rate, management uses the Company’s incremental borrowing rate based on information available at the commencement date, or at the date of transition for leases transitioned to Topic 842 on January 1, 2022, in determining the present value of the lease payments. In determining the incremental borrowing rate, the Company considered the lease term, credit risk of the lessee and the lease, the size of the lease payments, the current economic environment affecting the lessee and the lease, and the collateralized nature of the lease. The ROU assets also include any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. The Company elected the practical expedient to combine lease and non-lease components when accounting for ROU assets and lease liabilities of all asset classes. Variable lease costs represent additional expenses incurred by the Company that are not included in the lease payment. Variable lease costs include maintenance charges, taxes, insurance, and other similar costs, and are recorded within Selling, general and administrative expense on the statement of income for the year ended December 31, 2022. The Company has elected not to recognize leases with an initial term of 12 months or less (“short-term leases”) on the Balance Sheet. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. Unless otherwise noted, GSH accounts for sale-leaseback transactions at their contractually stated terms. As the leases do not provide an explicit borrowing rate, management used the Company’s incremental borrowing rate based on information available as of the lease commencement date. Refer to Note 6 - Related party transactions Revenue Recognition — Performance obligations are generally satisfied at a point in time, when the control of the home is transferred to the customer. Control is considered to be transferred to the customer at the time of closing when the title and possession of the home are received by the homebuyer. The Company generally requires initial cash deposits from the homebuyer at the time the sales contract is executed which is held by an unrelated third-party escrow agent. The remaining consideration to which the Company is entitled to is received at the time of closing through an escrow agent, typically within five days or less of the closing date. For the years ended December 31, 2022, 2021 and 2020, revenue recognized at a point in time from speculative homes totaled $456,792,005 In some contracts, the Company is contracted to construct a home or homes on underlying land the customer controls. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts using the input method based on costs incurred as compared to total estimated project costs. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. For the years ended December 31, 2022, 2021, and 2020, revenue recognized over time from land owned by customers totaled $20,253,944, $13,176,752, and $9,213,106, respectively. For homes with revenue recognized over time, a large portion of the Company’s contracts with these customers and the related performance obligations have an original expected duration of one year or less. As a result, the Company elected the practical expedient and does not disclose the value of unsatisfied performance obligations for these contracts. The Company periodically bills these customers over the term of the project and performs a quarterly analysis between billings and revenue recognized. The Company records a contract asset when work performed by the Company is greater than the amount billed. Conversely, the Company records deferred revenue when the amount billed is greater than the work performed. As of December 31, 2022 and 2021, the Company recorded a contract asset of $611,343 and $1,361,590, respectively, which is included in Prepaid expense and other assets on the Balance Sheets. As of December 31, 2022 and 2021, the Company recorded deferred revenue of $305,701 and $957,926, respectively, which is included in Other accrued expenses and liabilities on the Balance Sheets. Substantially all deferred revenue is recognized in revenue within twelve months of being received from customers. The Company frequently performs reviews of all contracts to estimate profitability in the future. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total estimated loss at the time it is fully determinable. For the years ended December 31, 2022, 2021, and 2020, the Company did not recognize a loss on any contracts. Concurrent with the recognition of revenues in our Statements of Income, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. Homebuilding revenues include forfeited deposits, which occur when home sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits were considered insignificant for all years presented. The Company determined that costs to obtain a contract include sales commission paid to agents and brokers for selling services to attract home buyers into sales agreements. The contract term is typically the closing date when the title and consideration are exchanged. The Company adopted the practical expedient associated with ASC 606 to recognize the incremental costs of obtaining a contract as an expense when incurred, i.e., when the amortization period of the asset that the Company otherwise would have recognized is one year or less. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. The Company recognized revenue of $5,188,716 on the Statement of income for the year ended December 31, 2022. Refer to Note 6 - Related party transactions Backlog — Advertising — Warranties — cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, and consultations with engineers. The warranty accrual is periodically evaluated for adequacy and any accrual adjustments are made on a per unit basis if deemed necessary. Income Taxes — Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt Reporting Segment Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. |
Capitalized interest_2
Capitalized interest | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Capitalized interest | ||
Capitalized interest | Note 5 — Capitalized interest The Company accrues interest on the Company’s Homebuilding debt. That debt is used to finance homebuilding operations (see Note 7 - Homebuilding debt and other affiliate debt ) and the associated interest is capitalized and included within inventory for homes under construction and finished homes. Interest is expensed to Cost of sales upon the sale of the home. Capitalized interest activity is summarized in the table below for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Capitalized interest at January 1: $ 1,250,460 $ 1,190,318 Interest cost capitalized 2,237,900 837,780 Interest cost expensed (2,386,832) (957,900) Capitalized interest at March 31: $ 1,101,528 $ 1,070,198 | Note 3 — Capitalized interest The Company accrues interest on the Company’s Homebuilding debt. That debt is used to finance homebuilding operations (see Note 5 — Homebuilding debt and other affiliate debt 2022 2021 Capitalized interest at January 1: $ 1,190,318 $ 812,874 Interest cost capitalized 5,515,372 3,400,879 Interest cost expensed (5,455,230) (3,023,435) Capitalized interest at December 31: $ 1,250,460 $ 1,190,318 |
Property and equipment_2
Property and equipment | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Property and equipment | ||
Property and equipment | Note 6 — Property and equipment Property and equipment consisted of the following as of March 31, 2023 and December 31, 2022: Asset Group March 31, 2023 December 31, 2022 Furniture and fixtures $ 738,361 $ 688,487 Leasehold improvements 380,187 380,187 Machinery and equipment 164,258 1,037,231 Office equipment 175,130 165,774 Vehicles 361,755 750,950 Total Property and equipment $ 1,819,691 $ 3,022,629 Less: Accumulated depreciation (1,143,283) (1,636,931) Property and equipment, net $ 676,408 $ 1,385,698 Depreciation expense, included within Selling, general and administrative expense on the Condensed Consolidated Statements of Operations was $93,942 and $86,829 for the three months ended March 31, 2023 and 2022, respectively. | Note 4 — Property and equipment Property and equipment consisted of the following as of December 31, 2022 and 2021: Asset Group 2022 2021 Furniture and fixtures $ 688,487 $ 580,065 Leasehold improvements 380,187 380,187 Machinery and equipment 1,037,231 985,699 Office equipment 165,774 154,043 Vehicles 750,950 790,519 Total Property and equipment 3,022,629 2,890,513 Less: Accumulated depreciation (1,636,931) (1,300,160) Property and equipment, net $ 1,385,698 $ 1,590,353 Depreciation expense, included within Selling, general and administrative expense on the Statements of Income was $355,566, $358,587 and $182,786 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Homebuilding debt and other a_5
Homebuilding debt and other affiliate debt | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Homebuilding debt and other affiliate debt | ||
Homebuilding debt and other affiliate debt | Note 7 — Homebuilding debt and other affiliate debt Prior to the Business Combination, Legacy UHG, jointly with its Other Affiliates considered to be under common control, entered into debt arrangements with financial institutions. These debt arrangements are in the form of revolving lines of credit and are generally secured by land (developed lots and undeveloped land) and homes (under construction and finished). Legacy UHG and certain related Other Affiliates, were collectively referred to as the Nieri Group. The Nieri Group entities were jointly and severally liable for the outstanding balances under the revolving lines of credit, however, Legacy UHG was deemed the primary obligor. Legacy UHG was considered the primary legal obligor of such debt as it was the sole cash generating entity and responsible for repayment of the debt. As such, Legacy UHG had recorded the outstanding advances under the financial institution debt and other debt within these financial statements as of December 31, 2022. A portion of the revolving lines of credit were drawn down for the sole operational benefit of the Nieri Group and Other Affiliates outside of Legacy UHG. These line of credit balances are reflected in the table below as Other Affiliates’ debt. Post Business Combination, the Company no longer enters into debt arrangements with Other Affiliates of Legacy UHG. As discussed further below, in connection with the Business Combination, the Wells Fargo Syndication line was amended and restated to exclude any members of the Nieri Group and Other Affiliates of Legacy UHG from the borrower list. The advances from the revolving construction lines, reflected as Homebuilding debt, are used to build homes and are repaid incrementally upon individual home sales. The various revolving construction lines are collateralized by the homes under construction and developed lots. The revolving construction lines are fully secured, and the availability of funds are based on the inventory value at the time of the draw request. Interest accrued on the loans is added to the balance of the loans outstanding and is paid concurrently with the principal repayments made upon the occurrence of individual home sales. As the average construction time for homes is less than one year, all outstanding debt is considered short-term as of March 31, 2023 and December 31, 2022. The following table and descriptions summarize the Company’s debt as of March 31, 2023 and December 31, 2022: March 31, 2023 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Wells Fargo Bank 7.63 % $ 39,982,270 Regions Bank 7.63 % 25,499,203 Texas Capital Bank 7.63 % 18,211,439 Truist Bank 7.63 % 18,195,498 First National Bank 7.63 % 7,284,576 Total debt on contracts $ 109,172,986 December 31, 2022 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Other Affiliates (1) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 (1) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. Wells Fargo Syndication In July 2021, the Nieri Group entities entered into a $150,000,000 Syndicated Credit Agreement (“Syndicated Line”) with Wells Fargo Bank, National Association (“Wells Fargo”). The Syndicated Line is a three-year revolving credit facility with a maturity date of July 2024, and an option to extend the maturity date for one year that can be exercised upon approval from Wells Fargo. The Syndicated Line also includes a $2,000,000 letter of credit as a sub-facility subjected to the same terms and conditions as the Syndicated Line. The Syndicated Line was amended and restated on March 30, 2023 (“Amendment Date”) in connection with the Business Combination (as defined in Note 1 - Nature of operations and basis of presentation ). As a result of the amended and restated agreement, Great Southern Homes, Inc., a consolidated subsidiary of the Company, is now the sole borrower of the Syndicated Line. No significant terms were changed other than described below. The remaining availability on the Syndicated Line was $40,827,014 as of March 31, 2023 and $32,044,028 as of December 31, 2022. The Company pays a fee ranging between 15 and 30 basis points per annum depending on the unused amount of the Syndicated Line. The fee is computed on a daily basis and paid quarterly in arrears. The Syndication Agreement contains financial covenants, including (a) a minimum tangible net worth of no less than the sum of (x) $65 million and (y) 25% of positive after-tax income until the Amendment Date (which amount is subject to increase over time based on earnings) and no less than $70 million from the Amendment Date, (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.75 to 1.00 for any fiscal quarter until the Amendment Date and 2.50 to 1.00 for any fiscal quarter after the Amendment Date, (c) a minimum debt service coverage ratio to be less than 2.50 to 1.00 for any fiscal quarter, and (d) a minimum liquidity amount of not less than $15,000,000 at all times and unrestricted cash of not less than $7,500,000 at all times. The Company was in compliance with all debt covenants as of March 31, 2023. Legacy UHG was in compliance with all debt covenants as of December 31, 2022. The interest rates on the borrowings under the Syndicated Line vary based on the leverage ratio. In connection with the amended and restated Syndicated Line, the benchmark interest rate was converted from LIBOR to Secured Overnight Financing Rate (“SOFR”), with no changes in the applicable rate margins. The interest rate is based on the greater of either LIBOR prior to Amendment Date or SOFR post Amendment Date plus an applicable margin (ranging from 275 basis points to 350 basis points) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or the base rate plus the aforementioned applicable margin. Other Affiliates debt The amounts in Other Affiliates debt are unrelated to the operations of Legacy UHG, and therefore, an equal amount was included as an offset in Retained Earnings as of December 31, 2022. For the three months ended March 31, 2023 and 2022, Other Affiliates borrowed $136,773 ,and $2,154,624 , respectively. These amounts are recorded on the Statements of Cash Flows, financing activities section, with borrowings presented as Proceeds from other affiliate debt and repayments as Repayments of other affiliate debt. On February 27, 2023, Legacy UHG paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, Legacy UHG was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Business Combination that closed on March 30, 2023 as discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of March 31, 2023. In connection with the amendment of the Syndicated Line, the Company incurred debt issuance costs, from which $469,585 is deferred and will be amortized over the remaining life of the Syndicated Line. The amendment is accounted for as a modification of an existing line of credit under ASC 470 Debt and, therefore, any previously unamortized deferred costs continue to be amortized over the remaining life of the Syndicated Line. The Company recognized $120,988 and $85,782 , respectively, of amortized deferred financing costs within Other income (expense), net for the three months ended March 31, 2023 and 2022, respectively. Outstanding deferred financing costs related to the Company’s Homebuilding debt were $1,059,657 and $888,179 as of March 31, 2023 and 2022, respectively, and are included in Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets as the debt is a revolving arrangement. | Note 5 — Homebuilding debt and other affiliate debt GSH, jointly with Other Affiliates considered to be under common control, enters into debt arrangements with financial institutions. These debt arrangements are in the form of revolving lines of credit and are generally secured by land (developed lots and undeveloped land) and homes (under construction and finished). GSH and certain related Other Affiliates, are collectively referred to as the Nieri Group. The Nieri Group entities are jointly and severely liable for the outstanding balances under the revolving lines of credit, however, the Company has been deemed the primary obligor. The Company is considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. As such, the Company has recorded the outstanding advances under the financial institution debt and other debt within these financial statements as of December 31, 2022 and 2021. A portion of the revolving lines of credit were drawn down for the sole operational benefit of the Nieri Group and Other Affiliates outside of the Company. These line of credit balances are reflected in the table below as Other Affiliates’ debt The advances from the revolving construction lines, reflected as Homebuilding debt, are used to build homes and are repaid incrementally upon individual home sales. The various revolving construction lines are collateralized by the homes under construction and developed lots. The revolving construction lines are fully secured, and the availability of funds are based on the inventory value at the time of the draw request. Interest accrued on the loans is added to the balance of the loans outstanding and is paid concurrently with the principal repayments made upon the occurrence of individual home sales. As the average construction time for homes is less than one year, all outstanding debt is considered short-term as of December 31, 2022 and 2021. The following table and descriptions summarize the Company’s debt as of December 31, 2022 and 2021: 2022 Homebuilding Weighted Debt – Wells average Fargo interest rate Syndication Other Affiliates (2) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 2021 Homebuilding Weighted Debt – Wells average Fargo Homebuilding interest rate (1) Syndication Debt – Other Other Affiliates (2) Total Wells Fargo Bank 3.63 % $ 36,453,801 $ — $ — $ 36,453,801 Regions Bank 3.63%/ 4.40 % 23,189,545 — 918,453 24,107,998 Texas Capital Bank 3.63 % 16,561,385 — — 16,561,385 Truist Bank 3.63 % 16,543,353 — — 16,543,353 First National Bank 3.63%/ 3.88 % 6,624,554 — 21,160 6,645,714 Anderson Brothers 4.25 % — 439,200 1,608,300 2,047,500 Other debt — % — 142,536 — 142,536 Total debt on contracts $ 99,372,638 $ 581,736 $ 2,547,913 $ 102,502,287 (1) The weighted average interest rate for the Wells Fargo Syndication debt is 3.63 %. The 4.40 % and 3.88 % represents the weighted average interest rate for Other Affiliates debt for Regions Bank and First National Bank, respectively. (2) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. Wells Fargo Syndication In July 2021, the Nieri Group entities entered into a $150,000,000 Syndicated Credit Agreement (“Syndicated Line”) with Wells Fargo Bank, National Association (“Wells Fargo”). The Syndicated Line is a three-year revolving credit facility with a maturity date of July 2024, and an option to extend the maturity date for one year that can be exercised upon approval from Wells Fargo. The Syndicated Line also includes a $2,000,000 letter of credit as a sub-facility subjected to the same terms and conditions as the Syndicated Line. The Company used the proceeds from the Syndicated Line to repay all syndication group participants’ outstanding construction line balances. The syndication group consisted of Wells Fargo Bank, Regions Bank, Texas Capital Bank, Truist Bank and First National Bank. The remaining availability on the Syndicated Line was $32,044,028, as of December 31, 2022 and $50,627,362 as of December 31, 2021. The Company pays a fee ranging between 15 and 30 basis points per annum depending on the unused amount of the Syndicated Line. The fee is computed on a daily basis and paid quarterly in arrears. The Syndication Agreement contains financial covenants, including (a) a minimum tangible net worth of no less than the sum of (x) $65 million and (y) 25% of positive after-tax income, as of December 31, 2022 (which amount is subject to increase over time based on earnings), (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.75 to 1.00 for any fiscal quarter, (c) a minimum debt service coverage ratio to be less than 2.50 to 1.00 for any fiscal quarter, and (d) a minimum liquidity amount of not less than $15,000,000 at all times and unrestricted cash of not less than $7,500,000 at all times. The Nieri Group was in compliance with all debt covenants as of December 31, 2022, and 2021. The interest rates on the borrowings under the Syndicated Line vary based on the Nieri Group’s leverage ratio and may be based on the greater of either LIBOR plus an applicable margin (ranging from 275 basis points to 350 basis points) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or the base rate plus the aforementioned applicable margin. The interest rate on borrowings under the Syndicated Line may be based on the LIBOR rate and if the LIBOR rate is no longer available, the agreement contemplates transitioning to an alternative widely available market rate agreeable between parties. The amounts in Other Affiliates debt are unrelated to the operations of the Company, and therefore, an equal amount is included in Net due to and due from shareholders and other affiliates on the Balance Sheets. For the years ended December 31, 2022, 2021, and 2020, Other Affiliates borrowed $10,851,187, $10,025,865, $13,259,394, respectively and repaid $918,453, $5,624,330, and $7,499,472, respectively. These amounts are recorded on the Statements of Cash Flows, financing activities section, with borrowings presented as Proceeds from other affiliate debt and repayments as Repayments of other affiliate debt. For the years ended December 31, 2022, 2021, and 2020, the Company capitalized $141,245, $1,264,403, $337,500, of deferred loan costs, respectively. The Company recognized $404,146, $421,186, and $408,674, respectively, of amortized deferred loan costs within Other income (expense), net for the years ended December 31, 2022, 2021, and 2020, respectively. Outstanding deferred loan costs related to the Company’s Homebuilding debt were $711,060 and $973,961 as of December 31, 2022 and 2021, respectively, and are included in Prepaid expenses and other assets on the Balance Sheets. Other Debt The Company enters into retail installment contracts with unrelated third parties. The maturity date of the borrowings was in August 2022 and the amount was repaid in full. |
Related party transactions_2
Related party transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Related party transactions | ||
Related Party Transactions | Note 8 — Related party transactions Prior to the Business Combination, Legacy UHG transacted with Other Affiliates that were owned by the shareholders of GSH. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 - Nature of operations and basis of presentation). Post Business Combination, the Company continues to transact with these parties, however, they are no longer considered affiliates of the Company. Land Development Affiliates and Other Affiliates of Legacy UHG (post Business Combination) meet the definition of related parties of the Company as defined in ASC 850-10-20. Prior to the Business Combination, Legacy UHG maintained the cash management and treasury function for its Other Affiliates. Cash receipts from customers and cash disbursements made to vendors were recorded through one centralized bank account. Legacy UHG recorded a Due from Other Affiliate when cash was disbursed, generally to a vendor, on behalf of an affiliate. Conversely, Legacy UHG recorded a Due to Other Affiliate when cash was received from a customer on behalf of an affiliate. The balances were settled through equity upon the consummation of the Business Combination. The below table summarizes Legacy UHG transactions with the Land Development and Other Affiliates for the three months ended March 31, 2023 and 2022. Three Months ended March 31, 2023 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (384,349) $ — $ (384,349) Other activities (225,392) (422,342) (647,734) Total financing cash flows $ (609,741) $ (422,342) $ (1,032,083) Non-cash activities Settlement of co-obligor debt to other affiliates $ 8,340,545 $ — $ 8,340,545 Release of guarantor from GSH to shareholder 2,841,034 — 2,841,034 Credit for earnest money deposits 2,521,626 — 2,521,626 Total non-cash activity $ 13,703,205 $ — $ 13,703,205 Three Months ended March 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (7,642,371) $ (360,831) $ (8,003,202) Other activities (407,782) (70,476) (478,258) Cash transfer — (10,000,000) (10,000,000) Total financing cash flows $ (8,050,153) $ (10,431,307) $ (18,481,460) Non-cash activities Acquisition of developed lots 4,624,810 — 4,624,810 Total non-cash activity $ 4,624,810 $ — $ 4,624,810 Land development expense — Represents costs that were paid for by Legacy UHG that relate to the Land Development Affiliates’ operations. The Land Development Affiliates acquire raw parcels of land and develop them so that Legacy UHG can build houses on the land. Other activities — Represent other transactions with Legacy UHG’s Other Affiliates. This includes, predominately, rent expense incurred for leased model homes and payment of real estate taxes. Settlement of co-obligor debt to other affiliates — The amount represents the settlement of Wells Fargo debt associated with Other Affiliates. Release of guarantor from GSH to shareholder — The amount represents that Legacy UHG was released as a co-obligor from the Anderson Brothers debt associated with Other Affiliates. Credit for earnest money deposits — The amount represents credit received from Legacy UHG affiliate in relation to lot deposits that Legacy UHG paid on behalf of the affiliate. Cash transfer — A direct cash contribution to Other Affiliates from Legacy UHG. Legacy UHG transferred cash to a related party. This cash transfer is in anticipation of separating the homebuilding operations from land development operations. Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Once the Land Development Affiliates of Legacy UHG have developed the raw parcels of land, they transfer the land to Legacy UHG in a non-cash transaction. The transfer amount is derived from the costs incurred to develop the land. Leases In addition to the transactions above, Legacy UHG has entered into three separate operating lease agreements with a related party. The terms of the leases, including rent expense and future minimum payments, are described in Note 11 - Commitments and contingencies . Other The Company shares office spaces with a related party and certain employees of the Company provide services to the same related party, as such, the Company is allocating certain shared costs to the related party in line with a predetermined methodology based on headcount. During the three months ended March 31, 2023, the Company allocated overhead costs to the related party in the amount of $185,812 and was charged for street maintenance in the amount of $59,825 by the same related party. The remaining balance outstanding as of March 31, 2023 is $125,987 and is presented on the Condensed Consolidated Balance Sheet. | Note 6 — Related party transactions Distributions and net transfer to shareholders and other affiliates Before the carve-out, the Company’s financial information was included in the financial statements and accounting records of GSH. The following transactions consisting of distributions and net transfer to shareholders and other affiliates summarizes the activity between the Company and shareholders and Other Affiliates before the carve-out. Shareholders’ and Other Affiliates’ net investment reflects transactions that occurred between the Company and the Shareholders, and the Company and Other Affiliates, that were not settled in cash. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 — Nature of operations and basis of presentation). net transfer to shareholders’ and other affiliates’ net investment for the years ended December 31, 2022, 2021, and 2020 are as follows: 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. General Corporate Allocations — General Financing Activities — Related party transactions The Company transacts with Other Affiliates that are owned by the shareholders of the Company as discussed above. The Company operates and maintains the cash management and treasury function for the Other Affiliates. Cash receipts from customers and cash disbursements made to vendors are recorded through one centralized bank account. The Company records a Due from Other Affiliate when cash is disbursed, generally to a vendor, on behalf of an affiliate. Conversely, the Company records a Due to Other Affiliate when cash is received from a customer on behalf of an affiliate. As of December 31, 2022 and 2021, the Company recorded a Due from Other Affiliates of $72,739,572 and $48,004,261, respectively, and a Due to Other Affiliates of $31,420,651 and $30,975,951, respectively. These balances are presented net as a contra-account against Shareholders’ and other affiliates’ net investment, as the settlement of these balances is not expected in cash. As of December 31, 2022, the Company recorded a Due from related party of $1,437,235 as an asset on the Balance Sheet as the Company is reasonably certain that this amount will be collected because both parties have entered into a binding construction contract and agreed on the expected contract price. The below table summarizes the transactions with the Land Development and Other Affiliates for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 Land development expense Other activities Cash transfer — Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Model home sales Transfer of constructed model homes to related parties Contribution of fixed assets Sale-leaseback transaction In connection with these transactions, GSH simultaneously entered into individual lease agreements for all 19 model homes sold, whereby GSH is the lessee. The Company is responsible for paying the operating expenses associated with the model homes while under lease. Nine of the 19 individual leases had a lease term greater than twelve months. In connection with these nine leases, the Company recognized an operating lease right-of-use-asset and a corresponding operating As the leases associated with the transactions do not commence until 2023, the Company did not pay rent or recognize lease expense associated with the leases during the year ended December 31, 2022. Rent expense will be paid monthly, consistent with the lease contract. Other - Leases In addition to the transactions above, the Company has entered into three separate operating lease agreements with one related party. The terms of the lease, including rent expense and future minimum payments, are described in Note 9 - Commitments and contingencies |
Lot purchase agreement deposi_4
Lot purchase agreement deposits | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Lot purchase agreement deposits | ||
Lot purchase agreement deposits | Note 9 — Lot purchase agreement deposits The Company does not engage in the land development business. The Company’s strategy is to acquire developed lots through related parties and unrelated third party land developers pursuant to lot purchase agreements. Most lot purchase agreements require the Company to pay a nonrefundable cash deposit of at least 10% of the agreed-upon fixed purchase price of the developed lots. In exchange for the deposit, the Company receives the right to purchase the finished developed lot at a preestablished price. Such contracts enable the Company to defer acquiring portions of properties owned by third parties until the Company determines whether and when to complete such acquisition, which may serve to reduce financial risks associated with long-term land holdings. Prior to the Business Combination, when Legacy UHG was acquiring lots through Land Development Affiliates, it did not have to pay deposits as the land development operations were owned by the shareholders of GSH. As such, the table below as of December 31, 2022, does not include lot purchase agreement deposits with related parties, and it consists of unrelated third party lot purchase agreement deposits only. Post Business Combination, the Company continues to purchase lots from the former Land Development Affiliates of Legacy UHG, however, as the Company is no longer owned by the shareholders of GSH, the Company must pay lot purchase agreement deposits to acquire lots. As such, as of March 31, 2023 all interests in lot purchase agreements, including with related parties, is recorded within Lot purchase agreement deposits on the Condensed Consolidated Balance Sheet and presented in the table below. The following table provides a summary of the Company’s interest in lot purchase agreements as of March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 Lot purchase agreement deposits $ 8,113,303 $ 3,804,436 Remaining purchase price 205,808,168 65,451,928 Total contract value $ 213,921,471 $ 69,256,364 Out of the $8,113,303 lot purchase agreement deposits outstanding as of March 31, 2023, $4,595,626 are with related parties. The Company has the right to cancel or terminate the lot purchase agreement at any time for any reason. The legal obligation and economic loss resulting from a cancellation or termination is limited to the amount of the deposits paid. The cancellation or termination of a lot purchase agreement results in the Company recording a write-off of the nonrefundable deposit to Cost of sales. For the three months ended March 31, 2023 and 2022, the Company recorded $8,664 and $89,361 , respectively, to Cost of sales for the forfeited lot purchase agreement deposits. The deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be a variable interest in the respective third-party land developers. | Note 7 - Lot purchase agreement deposits As the carved-out entity, the Company does not engage in the land development business. In certain instances, the Company’s strategy is to acquire developed lots through unrelated third party land developers pursuant to lot purchase agreements. Most lot purchase agreements require the Company to pay a nonrefundable cash deposit of approximately 10% of the agreed-upon fixed purchase price of the developed lots. In exchange for the deposit, the Company receives the right to purchase the finished developed lot at a preestablished price. Such contracts enable the Company to defer acquiring portions of properties owned by third parties until the Company determines whether and when to complete such acquisition, which may serve to reduce financial risks associated with long-term land holdings. The following table provides a summary of the Company’s interest in lot purchase agreements as of December 31, 2022 and 2021: 2022 2021 Deposit and pre-acquisition costs $ 3,804,436 $ 2,946,001 Remaining purchase price 65,451,928 77,007,079 Total contract value $ 69,256,364 $ 79,953,080 The Company has the right to cancel or terminate the lot purchase agreement at any time for any reason. The legal obligation and economic loss resulting from a cancellation or termination is limited to the amount of the deposits paid. The cancellation or termination of a lot purchase agreement results in the Company recording a write-off of the nonrefundable deposit to Cost of sales. For the years ended December 31, 2022, 2021, and 2020, the Company recorded $0, $211,482, and $84,619, respectively, to Cost of sales for the forfeited lot purchase agreement deposits. As discussed in Note 2 — Summary of significant accounting policies |
Warranty reserves_2
Warranty reserves | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Warranty reserves | ||
Warranty reserves | Note 10 — Warranty reserves The Company establishes warranty reserves to provide for estimated future costs as a result of construction and product defects. Estimates are determined based on management’s judgment considering factors such as historical spend and projected cost of corrective action. The following table provides a summary of the activity related to warranty reserves, which are included in Other accrued expenses and liabilities on the accompanying Condensed Consolidated Balance Sheets as follows: Three Months Ended Year Ended March 31, 2023 December 31, 2022 Warranty reserves at beginning of the period $ 1,371,412 $ 1,275,594 Reserves provided 242,720 1,156,027 Payments for warranty costs and other (204,713) (1,060,209) Warranty reserves at end of the period $ 1,409,419 $ 1,371,412 | Note 8 — Warranty reserves The Company establishes warranty reserves to provide for estimated future costs as a result of construction and product defects. Estimates are determined based on management’s judgment considering factors such as historical spend and projected cost of corrective action. The following table provides a summary of the activity related to warranty reserves, which are included in Other accrued expenses and liabilities on the accompanying Balance Sheets as follows: 2022 2021 Warranty reserves at January 1 $ 1,275,594 $ 963,204 Reserves provided 1,156,027 1,206,142 Payments for warranty costs and other (1,060,209) (893,752) Warranty reserves at December 31 $ 1,371,412 $ 1,275,594 |
Commitments and contingencies_3
Commitments and contingencies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and contingencies | ||
Commitments and Contingencies | Note 11 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years , some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $201,439 and $159,679 within Selling, general, and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Operating lease expense included variable lease expense of $11,925 and $18,237 for the three months ended March 31, 2023 and 2022, respectively. The weighted-average discount rate for the operating leases entered into during the three months ended March 31, 2023 and 2022 was 5.54% and 3.16% and the weighted-average remaining lease term was 2.11 and 2.4 years, respectively. During the year ended December 31, 2022, Legacy UHG closed on 19 sale-leaseback transactions with related parties, whereby it is the lessee. Leases commenced on January 1, 2023. The Company is responsible for paying the operating expenses associated with the model homes while under lease. The rent expense associated with sale-leaseback agreements that mature in less than 12 months (and are excluded thus from the ROU asset and lease liability) is $68,625 for the three months ended March 31, 2023. The maturity of the contractual, undiscounted operating lease liabilities as of March 31, 2023 are as follows: Lease Payment 2023 $ 361,734 2024 292,992 2025 108,792 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 811,518 Interest on operating lease liabilities (43,236) Total present value of operating lease liabilities $ 768,282 The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $95,381 and $34,335 of rent expense related to the short-term leases within Selling, general and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Litigation The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these Condensed Consolidated Financial Statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of recent and current pending litigation involving the Company. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for in the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. The Company is a defendant in a claim involving construction defects associated with improper slope of a sewer line in and under the slab at the property causing damages, where the Company served as the general contractor for original construction of the residence. The Company was served with a summons and complaint in this matter on February 1, 2023. The Company has submitted this matter to the insurance carrier, and they have engaged a law firm. The Company’s assessment of liability at this time is unknown as it has been just served with the summons and complaint. According to the insurance carrier, there is no deductible for this claim. The Company believes the insurance will cover any amounts that may ultimately be determined to be owed, if any. The Company is involved in a litigation regarding a variance for a subdivision. The Company applied for a variance for a subdivision from the Horry County Supplemental Flood Zone freeboard requirement, which was granted by the Horry County Board of Construction Adjustments and Appeals in August 2022. The Horry County Board of Construction Adjustments and Appeals reconsidered the variance in September 2022 to allow county staff and the Company to reach a compromise on the freeboard requirement. County staff and the Company agreed to a reduction in the freeboard requirement to two feet rather than three, and the Board again approved the variance at its February 2023. Due to a lack of information on the possible impact to the county’s flood insurance rating, a vote on the amendment failed at the Horry County Council meeting later that month. Subsequently, Horry County filed an appeal of the Board’s decision to grant the variance. If the Horry County Council approves the amendment, the litigation will be moot. However, it the amendment does not get approved, the Company would have to build to the three-foot freeboard rather than the two-foot previously granted. The Company is of the opinion that such matter will be resolved without material effect on the Company’s financial condition or results of operations as the plaintiff is not seeking monetary damages and the Company is expecting the case to be dismissed in near future. The Company is a defendant in a claim regarding high levels of Volatile Organic Compound in a house in Anderson, South Carolina. The Company’s investigations into this matter have resulted in indoor air sampling and soil gas screening indicating that the subject lot, and potentially others in the area, have been impacted by historical industrial activities predating the construction of the houses. The Company is investigating the extent and degree to which these impacts may have impacted other homes and is working with South Carolina environmental regulators to determine if additional actions will be required. Potential costs or liabilities associated with this matter cannot be determined at this time. | Note 9 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $555,806 within Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. Operating lease expense included variable lease expense of $92,285 for the year ended December 31, 2022. The weighted-average discount rate for the operating leases entered into during the year ended December 31, 2022 was 4.90% and the weighted-average remaining lease term was 2.16 years. During the year ended December 31, 2022, the Company closed on 19 sale-leaseback transactions with related parties. For information on sale-leaseback transaction with related parties, see Note 6 — Related party transaction The maturity of the contractual, undiscounted operating lease liabilities as of December 31, 2022 are as follows: December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 Total rent expense for the year ended December 31, 2021 was $931,078. The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $94,386 and $344,016 of rent expense related to the short-term leases within selling, general and administrative expense on the Statements of Income for the year ended December 31, 2022, and 2021, respectively. Litigation The Company is considered to be the primary responsible party for claims and lawsuits brought against the Shareholders and Other Affiliates based on its financial resources. The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these financial statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of current pending litigation involving the Company. The Company is a defendant in a claim involving residential construction defects associated with the premature deterioration of sloped land behind neighboring homes, where the Company served as the general contractor for original construction of the residence in 2013. The Company asserts the slope failure that has caused damage to the structural integrity of the plaintiff’s homes is the result of the plaintiff’s next-door neighbor who voluntarily cleared vegetation from the rear of their home thereby causing the erosion of soil and resulting damages. In 2022, the matter was settled, and the case was dismissed for an immaterial amount. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. |
Stock compensation
Stock compensation | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-based compensation | ||
Stock compensation | Note 13 — Share-based compensation Equity Incentive Plans In January 2022, the Board of Directors of GSH approved and adopted the Great Southern Homes, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan is administered by a committee appointed by the Board of Directors and has reserved 3,000 common shares to be issued as equity-based awards to directors and employees of GSH. The number of awards reserved is subject to change based on certain corporate events or changes in GSH’s capital structure and the shares vest ratably over four years . The 2022 Plan defines awards to include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. Effective as of March 30, 2023, in connection with the Business Combination, the Company’s board of directors adopted the United Homes Group, Inc. 2023 Equity Incentive Plan (the “2023 Plan”) at which time the 2022 Plan was terminated. The outstanding options prior to the Business Combination were cancelled in exchange of substantially equivalent options to acquire shares of Common Stock of the Company based on the conversion ratio for the UHG common shares in the Business Combination. No further grants can be made under the 2022 Plan. The 2023 Plan provides that the number of shares reserved and available for issuance under the 2023 Plan will automatically increase each January 1, beginning on January 1, 2024, by 4% of the number of outstanding shares of Common Stock on the immediately preceding December 31, or such lesser amount as determined by the Company’s board of directors. Each replacement stock option is subject to the same terms and conditions as were applicable under the 2022 Plan. The Company concluded that the replacement stock options issued in connection with the Business Combination did not require accounting for effects of the modification under ASC 718 as it was concluded that a) the fair value of the replacement award is the same as the fair value of the original award immediately before the original award was replaced, b) there were no changes in the vesting terms, and c) the classification of awards did not change. As of March 31, 2023, the Company had only issued incentive and non-qualified stock options. The following table summarizes the activity relating to the Company’s stock options. The below stock option figures are presented giving effect to a retroactive application of the Business Combination which resulted in a replacement of the previous 2022 Plan stock options with the 2023 Plan, as described above, at an Exchange Ratio of approximately 373.47 . In addition, the exercise price for each replacement stock option was also adjusted using the Exchange Ratio. Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2022 870,567 $ 2.81 Granted — 2.81 Forfeited (85,555) 2.81 Outstanding, March 31, 2023 785,012 $ 2.81 Options exercisable at March 31, 2023 197,912 $ 2.81 The aggregate intrinsic value of the stock options outstanding was $10,561,716 and $7,460,132 as of March 31, 2023 and December 31, 2022 respectively. The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the price of the option. The Company recognizes stock compensation expense resulting from the equity-based awards over the requisite service period. Stock compensation expense is recorded based on the estimated fair value of the equity ‑ based award on the grant date using the Black ‑ Scholes valuation model. Stock compensation expense is recognized in the Selling, general and administrative expense line item in the Condensed Consolidated Statements of Operations. Total stock compensation expense included in the Condensed Consolidated Statements of Operations for the three-months period ended March 31, 2023 and 2022 was $51,079 and $41,422, respectively. As of March 31, 2023, there was unrecognized stock compensation expense related to non-vested stock option arrangements totaling $602,264 . The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 2.81 years. Prior to the Business Combination, Legacy UHG’s common stock was not publicly traded, it estimated the fair value of common stock based on the combination of the three methods: (i) the discounted cash flow method of the income approach; (ii) the guideline company method of the market approach; and (iii) the subject transaction method of the market approach. Legacy UHG considers numerous objective and subjective factors to determine the fair value of the Company’s common stock. The factors considered include, but are not limited to: (i) the results of periodic independent third-party valuations; (ii) nature of the business and history of the enterprise from its inception; (iii) the economic outlook in general and for the specific industry; (iv) the book value of the stock and financial condition of the business; (v) earning and dividend paying capacity of the business; (vi) the market prices of stocks of corporations engaged in the same or similar lines of business having their stock actively traded in a free and open market, either on an exchange or over-the-counter. The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock options granted during the year ended December 31, 2022 adjusted by the Exchange Ratio, the fair value of stock options immediately before the original award was replaced and the fair value of stock options replaced on the replacement date. Inputs March 30, 2023 January 19, 2022 Risk-free interest rate 3.77 % 1.82 % Expected volatility 40 % 35 % Expected dividend yield — % — % Expected life (in years) 5.10 6.25 Fair value of options $ 10.41 $ 1.06 Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury zero coupon bond issued in effect at the time of the grant for the periods corresponding with the expected term of the stock option. Expected Volatility — The expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected term of the options. Expected Dividend Yield — The dividend yield is based on the history and expectation of dividend payouts. The Company does not expect to pay cash dividends to shareholders during the term of options, therefore the expected dividend yield is determined to be zero. Expected Life — The expected term represents the period the options granted are expected to be outstanding in years. As Legacy UHG does not have sufficient historical experience for determining the expected term, the expected term has been derived based on the SAB 107 simplified method for awards that qualify as plain-vanilla options. Certain stock options issued under the 2023 Plan are issued to individuals who are not employees of the Company and who are not providing goods or services to the Company. These options are recognized in accordance with ASC 815 as a derivative liability and marked to market at each reporting period end. The derivative liability of stock options amounts to $2,111,948 and is included within Derivative liability on the Condensed Consolidated Balance Sheet as of March 31, 2023. Unrealized loss on the derivative liability of stock options amounts to $922,263 and is included as Change in fair value of derivative liability within the Condensed Consolidated Statement of Operations for the three-months period ended March 31, 2023. Stock warrants In January 2022, Legacy UHG granted an option to non-employee directors to purchase 1,867,368 stock warrants for $150,000 . Each warrant represents one non-voting common share. The warrants are exercisable at $4.05 per warrant, which represents an out-of-the-money strike price. The warrants can be exercised for 10 years starting from July 1, 2022. Using the Black-Scholes valuation model, the Company determined the aggregate fair value of these warrants to be approximately $1,376,800 as of the grant date. Because there is no continued service requirement for the warrant holders, the Company recorded a one-time stock compensation expense in the amount of $1,226,800 within the Selling, general and administrative expense line item in the Condensed Consolidated Statement of Operations for the year ended December 31, 2022. The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock warrants granted during the year ended December 31, 2022. There were no warrants granted during the three month period ended March 31, 2023. Inputs December 31, 2022 Risk-free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 0.7 The methodology for determining the inputs is consistent with the input methodology for stock options as described above. In March 2022, the option holders purchased the warrants in exchange for $150,000 cash consideration. This amount was recorded directly to Additional Paid-in Capital in the Company’s Condensed Consolidated Balance Sheet. The outstanding stock warrants prior to the Business Combination were converted into warrants to acquire a number of shares of Common Stock of the Company based on the Exchange Ratio for the UHG common shares in the Business Combination. The above stock warrants figures are presented giving effect to a retroactive application of the Business Combination which resulted in a conversion of the warrants at an Exchange Ratio of approximately 373.47 :1. In addition, the exercise price for each converted stock warrant was also adjusted using the Exchange Ratio. Each converted stock warrant is subject to the same terms and conditions as were applicable prior to the conversion. As of March 31, 2023, no warrants have been exercised. The Earnout Shares issuable to holders of equity stock options as of the Closing Date are accounted for as equity classified stock compensation and do not have a requisite service period. During the three months ended March 31, 2023, the Company recognized a one-time stock-based compensation expense related to the Earnout of $4.4 million, which is excluded from the above stock-based compensation expense table. See Note 14 - Earnout Shares for the assumptions and inputs used in the valuation of the Earnout Shares. | Note 10 — Stock compensation Stock options In January 2022, the Board of Directors of GSH approved and adopted the Great Southern Homes, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan is administered by a committee appointed by the Board of Directors and has reserved 3,000 common shares to be issued as equity-based awards to directors and employees of GSH. The number of awards reserved is subject to change based on certain corporate events or changes in GSH’s capital structure and the shares vest ratably over four years. The 2022 Plan defines awards to include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. As of December 31, 2022, GSH had only issued incentive and non-qualified stock options. The following table summarizes the GSH stock options that were specifically granted to directors and employees of Homebuilding for the year ended December 31, 2022: Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2021 — $ — Granted 2,524 1,049.60 Forfeited (193) 1,049.60 Outstanding, December 31, 2022 2,331 $ 1,049.60 Options exercisable at December 31, 2022 — $ — The aggregate intrinsic value of the stock options outstanding was $7,460,132 as of December 31, 2022. The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the price of the option. GSH recognizes stock compensation expense resulting from the equity-based awards over the requisite service period. Stock compensation expense is recorded based on the estimated fair value of the equity-based award on the grant date using the Black-Scholes valuation model. Stock compensation expense is recognized in the Selling, general and administrative expense line item in the statement of income. Stock compensation expense included in the carve-out statement of income for the year ended December 31, 2022 was $195,830. As of December 31, 2022, there was unrecognized stock compensation expense related to non-vested stock option arrangements totaling $608,826. The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 3 years. As GSH’s common stock is not publicly traded, it estimates the fair value of common stock based on the combination of the three methods: (i) the discounted cash flow method of the income approach; (ii) the guideline company method of the market approach; and (iii) the subject transaction method of the market approach. GSH considers numerous objective and subjective factors to determine the fair value of the Company’s common stock. The factors considered include, but are not limited to: (i) the results of periodic independent third-party valuations; (ii) nature of the business and history of the enterprise from its inception; (iii) the economic outlook in general and for the specific industry; (iv) the book value of the stock and financial condition of the business; (v) earning and dividend paying capacity of the business; (vi) the market prices of stocks of corporations engaged in the same or similar lines of business having their stock actively traded in a free and open market, either on an exchange or over-the-counter. The following assumptions were used in the Black-Scholes valuation model to determine the estimated fair value of the stock options granted during the year ended December 31, 2022: Inputs December 31, 2022 Risk free interest rate 1.82 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.25 Fair value of options $ 394.7 Risk-Free Interest Rate Expected Volatility Expected Dividend Yield Expected Life Stock warrants In January 2022, GSH granted an option to non-employee directors to purchase 5,000 stock warrants for $150,000. Each warrant represents one non-voting common share. The warrants are exercisable at $1,512 per warrant, which represents an out-of-the-money strike price. The warrants can be exercised for 10 years starting from July 1, 2022. Using the Black-Scholes valuation model, GSH determined the aggregate fair value of these warrants to be approximately $1,376,800 as of the grant date. Because there is no continued service requirement for the warrant holders, the Company recorded a one-time stock compensation expense in the amount of $1,226,800 within the Selling, general and administrative expense line item in the Statement of income for the year ended December 31, 2022. The following assumptions were used in the Black-Scholes valuation model to determine the estimated fair value of the stock warrants granted during the year ended December 31, 2022: Inputs December 31, 2022 Risk free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 275.4 The methodology for determining the inputs is consistent with the input methodology for stock options as described above. In March 2022, the option holders purchased the warrants in exchange for $150,000 cash consideration. This amount was recorded directly to Shareholders’ and other affiliates’ net investment in the Company’s Balance sheet. As of December 31, 2022, no warrants have been exercised. |
Employee benefit plan_2
Employee benefit plan | 12 Months Ended |
Dec. 31, 2022 | |
Employee benefit plan | |
Employee benefit plan | Note 11 — Employee benefit plan Before January 1, 2021, GSH sponsored a Simple Individual Retirement Account (“IRA”) Retirement Plan. The plan covered all employees of the Company who earned at least $5,000 in the prior year and who are expected to earn at least $5,000 in the current year. The Company matched employee contributions up to 3% of compensation for employees participating in the plan up to the maximum amount allowed by the Internal Revenue Code. Administrative costs for the plan were paid by the Company. Effective January 1, 2021, GSH sponsored an elective safe harbor 401(k) contribution plan covering substantially all employees who have completed three Total contributions paid to the plans for the Company’s employees for the years ended December 31, 2022, 2021, and 2020 were approximately $174,184, $150,090, and $93,160, respectively. These amounts are recorded in Selling, general and administrative expenses on the Statements of Income. |
Paycheck Protection Program loa
Paycheck Protection Program loan | 12 Months Ended |
Dec. 31, 2022 | |
Paycheck Protection Program loan | |
Paycheck Protection Program loan | Note 12 — Paycheck Protection Program loan In May 2020, GSH received loan proceeds in the amount of $1,693,800 under the Paycheck Protection Program (“PPP”). The PPP established as part of the Coronavirus Aid, Relief, and Economic Security Act and administered by the Small Business Administration (the “SBA”), provided for loans to qualifying business for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest were forgivable after 24 weeks as long as the borrower used the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintained its payroll levels. The amount of loan forgiveness would be reduced if the borrower terminated employees or reduced salaries during the 24-week period. Any unforgiven portion of a PPP loan was payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP loan. In December 2020, GSH received notice from the SBA of loan forgiveness for the principal balance of $1,693,800 and accrued interest of $9,688. The Company accounted for the forgiveness as an extinguishment of debt. The gain on extinguishment was recognized as income within Other income (expense), net on the statement of income for the year ended December 31, 2020. |
Earnings per Share
Earnings per Share | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Net (Loss) Earnings Per Share | ||
Earnings per Share | Note 18 — Net (Loss) Earnings Per Share The Company computes basic net (loss) earnings per share using net (loss) income attributable to Company common stockholders and the weighted average number of common shares outstanding during each period. The weighted average number of shares of common stock outstanding prior to the Business Combination have been retroactively adjusted by the Exchange Ratio to give effect to the reverse recapitalization treatment of the Business Combination. The equity structure of the Company for the three months ended March 31, 2023 reflects the equity structure of DHHC, including the equity interests issued by DHHC to effect the business combination. The following table sets forth the computation of the Company’s basic and diluted net (loss) profit per share: March 31, 2023 March 31, 2022 Numerator Net (loss) income $ (204,504,328) $ 17,017,928 Denominator Weighted-average number of common shares outstanding - basic 37,575,074 37,347,350 Effect of dilutive securities — — Weighted-average number of common shares outstanding - diluted 37,575,074 37,347,350 Net (loss) earnings per common share: Basic $ (5.44) $ 0.46 Diluted $ (5.44) $ 0.46 The following table summarizes potentially dilutive outstanding securities for the three months ended March 31, 2023 and 2022 that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive. March 31, 2023 March 31, 2022 Stock warrants 1,867,368 1,867,368 Private placement warrants 2,966,664 — Public warrants 8,625,000 — Stock options 899,295 944,262 Convertible notes 8,000,000 — Total anti-dilutive features 22,358,327 2,811,630 The Company’s 21,886,378 Earnout Shares are excluded from the anti-dilutive table above as of March 31, 2023, as the underlying shares remain contingently issuable as the Earnout Triggering Events have not been satisfied. | Note 13 — Earnings per Share Earnings per share was calculated based on the 100,000 weighted average number of common shares issued and outstanding by GSH for the years ended December 31, 2022, 2021, and 2020. 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 The following table summarizes potentially dilutive outstanding securities for the years ended December 31, 2022, 2021 and 2020 that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive. December 31, 2022 December 31, 2021 December 31, 2020 Warrants 3,090 — — Stock Options 1,376 — — Total anti-dilutive features 4,466 — — |
Subsequent events_2
Subsequent events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent events | ||
Subsequent Events | Note 19 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of March 31, 2023 through the date the Condensed Consolidated Financial Statements were available to be issued. On April 28, 2023, a warrant holder of the stock warrants described in Note 13 — Share-based compensation exercised their warrants. The Company issued 748,020 UHG Class A Common Shares through a cashless exercise of the warrants in accordance with the conversion terms of the underlying agreement. | Note 14 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of December 31, 2022 through March 17, 2023, which is the date the financial statements were available to be issued. During this period, the Company has not identified any subsequent events that require recognition or disclosure, except for the ones noted below. On February 27, 2023, the Company paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, the Company was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Proposed Business Combination discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of the date when financial statements were available to be issued. |
Summary of significant accou_10
Summary of significant accounting policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Summary of significant accounting policies | ||
Use of Estimates | Use of Estimates — The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates made by the Company include corporate expense allocation, useful lives of depreciable assets, revenue recognition associated with contracts recognized over time, capitalized interest, warranty reserves, share-based compensation, valuation of earnout liability, valuation of convertible note and valuation of stock warrants. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. | Use of Estimates — |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. | |
Accounts Receivable | Accounts Receivable — | |
Inventories and Cost of Sales | Inventories and Cost of Sales — The carrying value of inventory is stated at cost unless events and circumstances indicate the carrying value may not be recoverable. Inventory consists of developed lots, homes under construction, and finished homes. — Developed lots - This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. As of March 31, 2023 and December 31, 2022, the amount of developed lots included in inventory was $21,189,983 and $16,205,448 , respectively. Developed lots purchased at fair value from third parties was $15,815,143 and $10,052,179 as of March 31, 2023 and December 31, 2022, respectively, which is included in Developed Lots on the Condensed Consolidated Balance Sheets. — Homes under construction - At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. As of March 31, 2023 and December 31, 2022, the amount of inventory related to homes under construction included in homes under construction and finished homes was $88,872,575 and $141,863,561 , respectively. — Finished homes - This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. As of March 31, 2023 and December 31, 2022, the amount of inventory related to finished homes included in homes under construction and finished homes was $40,078,317 and $22,133,926 , respectively. | Inventories and Cost of Sales — — Developed lots — This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. For the years ended December 31, 2022 and 2021, the amount of developed lots included in inventory was $16,205,448 and $17,025,273, respectively. Developed lots purchased at fair value from third parties was $10,052,179 and $9,445,580 as of December 31, 2022 and December 31, 2021, respectively, which is included in Developed Lots on the Balance Sheets. — Homes under construction — At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. For the years ended December 31, 2022 and 2021, the amount of inventory related to homes under construction included in homes under construction and finished homes was $141,863,561 and $110,224,757, respectively. — Finished homes — This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the amount of inventory related to finished homes included in homes under construction and finished homes was $22,133,926 and $12,775,442, respectively. Upon settlement, costs associated with units sold are expensed to Cost of sales based on a specific identification basis. Costs of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home. In addition, the Company receives rebates with certain suppliers for the use of their product. The Company records the receipt of the rebate as a reduction in Cost of sales based on a specific identification basis. At the time of closing, the Company performs an analysis to accrue for costs that were incurred as part of the construction of the home but unpaid at the time of closing. The costs are recorded in Cost of sales in the Statements of Income. |
Lot Purchase Agreement Deposits | Lot Purchase Agreement Deposits — Note 7 — Lot purchase agreement deposits Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes the Land Developers under the variable interest model to determine if such interest in Land Developers is considered a variable interest, and, if so, whether the Land Developers are required to be consolidated in the Company’s financial statements. Management determines whether the Land Developers are considered variable interest entities (“VIEs”) at the time management becomes involved with Land Developers. The Company invests in less than half of the fair value of the Land Developers’ assets. The Company does not have any specific performance obligations to purchase a certain number or any of the lots or guarantee any of the Land Developers’ financial or other liabilities. The Company is not involved in the design or creation of these entities. As such, the deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be variable interests in the respective Land Developers. | |
Property and Equipment | Property and Equipment — Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years Normal repairs and maintenance costs are expensed as incurred, whereas significant improvements which materially increase the value or extend the useful life of an asset are capitalized and depreciated over the remaining estimated useful life of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts. Any gain or loss on the sale or retirement of the depreciable asset is recognized as Other income (expense) on the Statements of Income. | |
Long-Lived Assets | Long-Lived Assets — Inventory impairment exists if the carrying amount of the asset is not recoverable from the sale prices expected from future home sales. The Company reviews the performance and outlook of its inventories for indicators of potential impairment on a community level. Any calculated impairments are recorded immediately in Cost of sales. Recoverability for Property and equipment is measured by the expected undiscounted future cash flows of the assets compared to the carrying amounts of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions and appraisal. There were no triggering events or impairments recorded for all years presented. | |
Deferred Loan Costs | Deferred Loan Costs — Note 5 — Homebuilding debt and other affiliate debt | |
Earnings per Share | Earnings per Share — Note 13 — Earnings per share | |
Investment in Joint Venture | Investment in Joint Venture The Company accounts for its investment in the Joint Venture under the equity method of accounting, as it determined that the Company has the ability to exercise significant influence over the venture, but does not have control. Under the equity method, the investment in the unconsolidated joint venture is recorded initially at cost, as Investment in Joint Venture, and subsequently adjusted for equity in earnings, cash contributions, less distributions and impairments. The Joint Venture commenced operations in June 2022. Equity in earnings from the investment in the Joint Venture for the period from the commencement of operations through December 31, 2022 was $137,086, increasing the investment in Joint Venture as of December 31, 2022 to $186,086. There were no additional capital contributions and distributions for the year ended December 31, 2022 aside from the initial contribution of $49,000. Additionally, there were no impairment losses related to the Company’s investment in the Joint Venture recognized during the year ended December 31, 2022. | |
Share-Based Compensation | Share-Based Compensation Note 1 — Nature of operations and basis of presentation Stock option awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant. GSH accounts for forfeitures when they occur. Stock warrant awards do not contain a service condition and are expensed on the grant date. The fair value of share-based awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black-Scholes option pricing model. This model requires the input of highly subjective assumptions, including the option’s expected term and stock price volatility. See Note 10 — Stock compensation . | |
Transaction costs | Transaction costs — Note 1 — Nature of operations and basis of presentation | |
Leases | Leases — Leases (Topic 842) Leases operating The Company determines if an arrangement is, or contains, a lease at inception. Leases are recognized when the contract provides the Company the right to use an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease ROU assets and operating lease liabilities in the Balance Sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As most of the Company’s leases do not provide an explicit borrowing rate, management uses the Company’s incremental borrowing rate based on information available at the commencement date, or at the date of transition for leases transitioned to Topic 842 on January 1, 2022, in determining the present value of the lease payments. In determining the incremental borrowing rate, the Company considered the lease term, credit risk of the lessee and the lease, the size of the lease payments, the current economic environment affecting the lessee and the lease, and the collateralized nature of the lease. The ROU assets also include any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. The Company elected the practical expedient to combine lease and non-lease components when accounting for ROU assets and lease liabilities of all asset classes. Variable lease costs represent additional expenses incurred by the Company that are not included in the lease payment. Variable lease costs include maintenance charges, taxes, insurance, and other similar costs, and are recorded within Selling, general and administrative expense on the statement of income for the year ended December 31, 2022. The Company has elected not to recognize leases with an initial term of 12 months or less (“short-term leases”) on the Balance Sheet. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. Unless otherwise noted, GSH accounts for sale-leaseback transactions at their contractually stated terms. As the leases do not provide an explicit borrowing rate, management used the Company’s incremental borrowing rate based on information available as of the lease commencement date. Refer to Note 6 - Related party transactions | |
Revenue Recognition | Revenue Recognition - The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers . For the three months ended March 31, 2023 and 2022, revenue recognized at a point in time from speculative homes totaled $92,389,410 , and $104,450,041 respectively. For the three months ended March 31, 2023 and 2022, revenue recognized over time from land owned by customers totaled $2,437,292 , and $3,986,819 , respectively. | Revenue Recognition — Performance obligations are generally satisfied at a point in time, when the control of the home is transferred to the customer. Control is considered to be transferred to the customer at the time of closing when the title and possession of the home are received by the homebuyer. The Company generally requires initial cash deposits from the homebuyer at the time the sales contract is executed which is held by an unrelated third-party escrow agent. The remaining consideration to which the Company is entitled to is received at the time of closing through an escrow agent, typically within five days or less of the closing date. For the years ended December 31, 2022, 2021 and 2020, revenue recognized at a point in time from speculative homes totaled $456,792,005 In some contracts, the Company is contracted to construct a home or homes on underlying land the customer controls. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts using the input method based on costs incurred as compared to total estimated project costs. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. For the years ended December 31, 2022, 2021, and 2020, revenue recognized over time from land owned by customers totaled $20,253,944, $13,176,752, and $9,213,106, respectively. For homes with revenue recognized over time, a large portion of the Company’s contracts with these customers and the related performance obligations have an original expected duration of one year or less. As a result, the Company elected the practical expedient and does not disclose the value of unsatisfied performance obligations for these contracts. The Company periodically bills these customers over the term of the project and performs a quarterly analysis between billings and revenue recognized. The Company records a contract asset when work performed by the Company is greater than the amount billed. Conversely, the Company records deferred revenue when the amount billed is greater than the work performed. As of December 31, 2022 and 2021, the Company recorded a contract asset of $611,343 and $1,361,590, respectively, which is included in Prepaid expense and other assets on the Balance Sheets. As of December 31, 2022 and 2021, the Company recorded deferred revenue of $305,701 and $957,926, respectively, which is included in Other accrued expenses and liabilities on the Balance Sheets. Substantially all deferred revenue is recognized in revenue within twelve months of being received from customers. The Company frequently performs reviews of all contracts to estimate profitability in the future. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total estimated loss at the time it is fully determinable. For the years ended December 31, 2022, 2021, and 2020, the Company did not recognize a loss on any contracts. Concurrent with the recognition of revenues in our Statements of Income, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. Homebuilding revenues include forfeited deposits, which occur when home sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits were considered insignificant for all years presented. The Company determined that costs to obtain a contract include sales commission paid to agents and brokers for selling services to attract home buyers into sales agreements. The contract term is typically the closing date when the title and consideration are exchanged. The Company adopted the practical expedient associated with ASC 606 to recognize the incremental costs of obtaining a contract as an expense when incurred, i.e., when the amortization period of the asset that the Company otherwise would have recognized is one year or less. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. The Company recognized revenue of $5,188,716 on the Statement of income for the year ended December 31, 2022. Refer to Note 6 - Related party transactions |
Backlog | Backlog — | |
Advertising | Advertising — The Company expenses advertising and marketing costs as incurred and includes such costs within Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2023 and 2022, the Company incurred $490,980 , and $452,765 , respectively, in advertising and marketing costs. | Advertising — |
Warranties | Warranties — cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, and consultations with engineers. The warranty accrual is periodically evaluated for adequacy and any accrual adjustments are made on a per unit basis if deemed necessary. | |
Income Taxes | Income Taxes — Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than not” that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positive and negative, is evaluated. The Company recognizes interest and penalties related to the underpayment of income taxes, including those resulting from the late filing of tax returns within the provision for income taxes in the Condensed Consolidated Statements of Operations. The Company analyzes its tax filing positions in the U.S. federal, state, and local tax jurisdictions where the Company is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is enacted or new information becomes available. Prior to the Business Combination, Legacy UHG was included in the tax filing of the shareholders of GSH, which was taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code. Individual shareholders were liable for income taxes on their respective shares of GSH’s taxable income. No income tax liability nor income tax was allocated to Legacy UHG as of December 31, 2022 or for the three months ended March 31, 2023, nor was there any recorded liability for uncertain tax positions. | Income Taxes — |
Fair Value Measurements | Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt | |
Reporting Segment | Segment Information — The Company determines its chief operating decision maker (“CODM”) based on the person responsible for making resource allocation decisions. Operating segments are components of the business for which the CODM regularly reviews discrete financial information. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. | Reporting Segment |
Recent Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements - In June 2016, FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASC 326 significantly changes the way impairment of financial assets is recognized by requiring companies to immediately recognize estimated credit losses expected to occur over the remaining life of many financial assets. The immediate recognition of the estimated credit losses generally will result in an earlier recognition of allowance for credit losses on loans and other financial instruments. The Company adopted this ASU effective January 1, 2023. The adoption of ASC 326 did not have a significant impact on the Company’s Condensed Consolidated Financial Statements. | Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. |
Summary of significant accou_11
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of significant accounting policies | |
Schedule of estimated useful life of each asset group | Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years |
Capitalized interest (Tables)_2
Capitalized interest (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Capitalized interest | ||
Summary of capitalized interest activity | Three Months Ended March 31, 2023 2022 Capitalized interest at January 1: $ 1,250,460 $ 1,190,318 Interest cost capitalized 2,237,900 837,780 Interest cost expensed (2,386,832) (957,900) Capitalized interest at March 31: $ 1,101,528 $ 1,070,198 | 2022 2021 Capitalized interest at January 1: $ 1,190,318 $ 812,874 Interest cost capitalized 5,515,372 3,400,879 Interest cost expensed (5,455,230) (3,023,435) Capitalized interest at December 31: $ 1,250,460 $ 1,190,318 |
Property and equipment (Table_2
Property and equipment (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Property and equipment | ||
Schedule of components of property and equipment | Asset Group March 31, 2023 December 31, 2022 Furniture and fixtures $ 738,361 $ 688,487 Leasehold improvements 380,187 380,187 Machinery and equipment 164,258 1,037,231 Office equipment 175,130 165,774 Vehicles 361,755 750,950 Total Property and equipment $ 1,819,691 $ 3,022,629 Less: Accumulated depreciation (1,143,283) (1,636,931) Property and equipment, net $ 676,408 $ 1,385,698 | Asset Group 2022 2021 Furniture and fixtures $ 688,487 $ 580,065 Leasehold improvements 380,187 380,187 Machinery and equipment 1,037,231 985,699 Office equipment 165,774 154,043 Vehicles 750,950 790,519 Total Property and equipment 3,022,629 2,890,513 Less: Accumulated depreciation (1,636,931) (1,300,160) Property and equipment, net $ 1,385,698 $ 1,590,353 |
Homebuilding debt and other a_6
Homebuilding debt and other affiliate debt (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Homebuilding debt and other affiliate debt | ||
Summary of debt | March 31, 2023 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Wells Fargo Bank 7.63 % $ 39,982,270 Regions Bank 7.63 % 25,499,203 Texas Capital Bank 7.63 % 18,211,439 Truist Bank 7.63 % 18,195,498 First National Bank 7.63 % 7,284,576 Total debt on contracts $ 109,172,986 December 31, 2022 Homebuilding Weighted Debt - Wells average Fargo interest rate Syndication Other Affiliates (1) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 (1) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. | 2022 Homebuilding Weighted Debt – Wells average Fargo interest rate Syndication Other Affiliates (2) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 2021 Homebuilding Weighted Debt – Wells average Fargo Homebuilding interest rate (1) Syndication Debt – Other Other Affiliates (2) Total Wells Fargo Bank 3.63 % $ 36,453,801 $ — $ — $ 36,453,801 Regions Bank 3.63%/ 4.40 % 23,189,545 — 918,453 24,107,998 Texas Capital Bank 3.63 % 16,561,385 — — 16,561,385 Truist Bank 3.63 % 16,543,353 — — 16,543,353 First National Bank 3.63%/ 3.88 % 6,624,554 — 21,160 6,645,714 Anderson Brothers 4.25 % — 439,200 1,608,300 2,047,500 Other debt — % — 142,536 — 142,536 Total debt on contracts $ 99,372,638 $ 581,736 $ 2,547,913 $ 102,502,287 (1) The weighted average interest rate for the Wells Fargo Syndication debt is 3.63 %. The 4.40 % and 3.88 % represents the weighted average interest rate for Other Affiliates debt for Regions Bank and First National Bank, respectively. (2) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. |
Related party transactions (T_2
Related party transactions (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Related party transactions | ||
Schedule of components of the distributions and net transfer to shareholders' and other affiliates' net investment | 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. | |
Schedule of related party transactions | Three Months ended March 31, 2023 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (384,349) $ — $ (384,349) Other activities (225,392) (422,342) (647,734) Total financing cash flows $ (609,741) $ (422,342) $ (1,032,083) Non-cash activities Settlement of co-obligor debt to other affiliates $ 8,340,545 $ — $ 8,340,545 Release of guarantor from GSH to shareholder 2,841,034 — 2,841,034 Credit for earnest money deposits 2,521,626 — 2,521,626 Total non-cash activity $ 13,703,205 $ — $ 13,703,205 Three Months ended March 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (7,642,371) $ (360,831) $ (8,003,202) Other activities (407,782) (70,476) (478,258) Cash transfer — (10,000,000) (10,000,000) Total financing cash flows $ (8,050,153) $ (10,431,307) $ (18,481,460) Non-cash activities Acquisition of developed lots 4,624,810 — 4,624,810 Total non-cash activity $ 4,624,810 $ — $ 4,624,810 | Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 |
Lot purchase agreement deposi_5
Lot purchase agreement deposits (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Lot purchase agreement deposits | ||
Summary of the interest in lot purchase agreements | March 31, 2023 December 31, 2022 Lot purchase agreement deposits $ 8,113,303 $ 3,804,436 Remaining purchase price 205,808,168 65,451,928 Total contract value $ 213,921,471 $ 69,256,364 | 2022 2021 Deposit and pre-acquisition costs $ 3,804,436 $ 2,946,001 Remaining purchase price 65,451,928 77,007,079 Total contract value $ 69,256,364 $ 79,953,080 |
Warranty reserves (Tables)_2
Warranty reserves (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Warranty reserves | ||
Summary of the activity related to warranty reserves | Three Months Ended Year Ended March 31, 2023 December 31, 2022 Warranty reserves at beginning of the period $ 1,371,412 $ 1,275,594 Reserves provided 242,720 1,156,027 Payments for warranty costs and other (204,713) (1,060,209) Warranty reserves at end of the period $ 1,409,419 $ 1,371,412 | 2022 2021 Warranty reserves at January 1 $ 1,275,594 $ 963,204 Reserves provided 1,156,027 1,206,142 Payments for warranty costs and other (1,060,209) (893,752) Warranty reserves at December 31 $ 1,371,412 $ 1,275,594 |
Commitments and contingencies_4
Commitments and contingencies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and contingencies | ||
Schedule of the maturity of the contractual, undiscounted operating lease liabilities | The maturity of the contractual, undiscounted operating lease liabilities as of March 31, 2023 are as follows: Lease Payment 2023 $ 361,734 2024 292,992 2025 108,792 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 811,518 Interest on operating lease liabilities (43,236) Total present value of operating lease liabilities $ 768,282 | December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 |
Stock compensation (Tables)
Stock compensation (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Stock compensation | ||
Summary of stock options granted | Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2021 — $ — Granted 2,524 1,049.60 Forfeited (193) 1,049.60 Outstanding, December 31, 2022 2,331 $ 1,049.60 Options exercisable at December 31, 2022 — $ — | |
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk-free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 0.7 | |
Stock Options | ||
Stock compensation | ||
Summary of stock options granted | Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2022 870,567 $ 2.81 Granted — 2.81 Forfeited (85,555) 2.81 Outstanding, March 31, 2023 785,012 $ 2.81 Options exercisable at March 31, 2023 197,912 $ 2.81 | |
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk free interest rate 1.82 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.25 Fair value of options $ 394.7 | |
Stock warrants | ||
Stock compensation | ||
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 275.4 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Net (Loss) Earnings Per Share | ||
Schedule of reconciliation of net income (loss) per share of common stock | March 31, 2023 March 31, 2022 Numerator Net (loss) income $ (204,504,328) $ 17,017,928 Denominator Weighted-average number of common shares outstanding - basic 37,575,074 37,347,350 Effect of dilutive securities — — Weighted-average number of common shares outstanding - diluted 37,575,074 37,347,350 Net (loss) earnings per common share: Basic $ (5.44) $ 0.46 Diluted $ (5.44) $ 0.46 | 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 |
Summary of potentially dilutive outstanding securities | March 31, 2023 March 31, 2022 Stock warrants 1,867,368 1,867,368 Private placement warrants 2,966,664 — Public warrants 8,625,000 — Stock options 899,295 944,262 Convertible notes 8,000,000 — Total anti-dilutive features 22,358,327 2,811,630 | December 31, 2022 December 31, 2021 December 31, 2020 Warrants 3,090 — — Stock Options 1,376 — — Total anti-dilutive features 4,466 — — |
Summary of significant accou_12
Summary of significant accounting policies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2021 | |
Summary of significant accounting policies | |||
Period of receiving home closing proceeds (in days) | 5 days | ||
Deposits in transit | $ 0 | $ 981,251 | |
Federal deposit insurance coverage | 250,000 | ||
Allowance for doubtful accounts | 0 | 0 | |
Inventories and Cost of Sales | |||
Developed lots included in inventory | 16,205,448 | $ 21,189,983 | 17,025,273 |
Developed lots purchased at fair value from third parties | 10,052,179 | 15,815,143 | 9,445,580 |
Homes under construction | 141,863,561 | 88,872,575 | 110,224,757 |
Finished homes | $ 22,133,926 | $ 40,078,317 | $ 12,775,442 |
Summary of significant accou_13
Summary of significant accounting policies - Property and equipment, Long-lived assets (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Property and Equipment | |
Long-lived asset impairments recorded | $ 0 |
Furniture And Fixtures | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Furniture And Fixtures | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Leasehold Improvements | |
Property and Equipment | |
Estimated useful life | 40 years |
Equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Office Equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Office Equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Vehicles | |
Property and Equipment | |
Estimated useful life | 5 years |
Summary of significant accou_14
Summary of significant accounting policies - Joint Venture (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Feb. 04, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Schedule of Equity Method Investments | |||
Equity in net earnings from investment in joint venture | $ 245,808 | $ 137,086 | |
Investment value | $ 431,894 | 186,086 | |
Impairment losses | 0 | ||
Homeowners Mortgage, LLC | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 49% | ||
Initial capital contribution | $ 49,000 | ||
Equity in net earnings from investment in joint venture | 137,086 | ||
Investment value | $ 186,086 |
Summary of significant accou_15
Summary of significant accounting policies - SBC, Transaction costs, Leases (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item | Mar. 31, 2023 USD ($) | Jan. 01, 2022 USD ($) | |
Summary of significant accounting policies | |||
Number of award types | item | 2 | ||
Transaction costs | $ 2,491,459 | ||
Operating right-of-use assets | 1,001,277 | $ 768,282 | $ 1,149,832 |
Operating lease liabilities | $ 1,001,277 | $ 768,282 | $ 1,149,832 |
Summary of significant accou_16
Summary of significant accounting policies - Revenue recognition, Backlog (Details) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) item | Dec. 31, 2020 USD ($) | |
Disaggregation of Revenue | |||||
Number of performance obligations | item | 1 | ||||
Period of receiving home closing proceeds (in days) | 5 days | ||||
Revenue | $ 94,826,702 | $ 108,436,860 | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 |
Contract asset included in Prepaid expense and other assets | 611,343 | 1,361,590 | |||
Contract liability included in Other accrued expenses | 305,701 | 957,926 | |||
Loss on contracts recognized | $ 0 | $ 0 | $ 0 | ||
Number of units in backlog | item | 276 | 800 | |||
Backlog revenue | $ 86,000,000 | $ 210,000,000 | |||
Backlog cancellation rate | 17.50% | 14.20% | 11.40% | ||
Sale Leaseback Of Model Homes | |||||
Disaggregation of Revenue | |||||
Revenue | $ 5,188,716 | ||||
Contract asset included in Prepaid expense and other assets | 435,264 | ||||
Contract liability included in Other accrued expenses | 435,264 | ||||
Transferred at Point in Time | |||||
Disaggregation of Revenue | |||||
Revenue | 92,389,410 | 104,450,041 | $ 419,714,758 | $ 318,041,199 | |
Transferred over Time | |||||
Disaggregation of Revenue | |||||
Revenue | $ 2,437,292 | $ 3,986,819 | $ 20,253,944 | $ 13,176,752 | $ 9,213,106 |
Summary of significant accou_17
Summary of significant accounting policies - Advertising, Warranties, Income taxes, Segments (Details) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Summary of significant accounting policies | |||||
Marketing and Advertising Expense | $ 490,980 | $ 452,765 | $ 2,709,488 | $ 1,831,526 | $ 1,926,172 |
Standard Product Warranty Disclosure | |||||
Warranty period, original installation of the material and workmanship | 1 year | ||||
Warranty period, certain systems such as plumbing, electrical and HVAC | 2 years | ||||
Warranty period, structural integrity of the home | 10 years | ||||
Costs to homebuyers for repairs under warranty | $ 0 | ||||
Income Tax Disclosure | |||||
Income tax expense | $ (2,021,265) | 0 | 0 | 0 | |
Income tax liability | 0 | 0 | 0 | ||
Liability for uncertain tax positions | $ 0 | $ 0 | $ 0 | ||
Segment Reporting | |||||
Number of reporting segments | segment | 1 | ||||
Number of operating segments | segment | 1 |
Capitalized interest (Details_2
Capitalized interest (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||||
Capitalized interest, beginning of period | $ 1,250,460 | $ 1,190,318 | $ 1,190,318 | $ 812,874 |
Interest cost capitalized | 2,237,900 | 837,780 | 5,515,372 | 3,400,879 |
Interest cost expensed | (2,386,832) | (957,900) | (5,455,230) | (3,023,435) |
Capitalized interest, end of period | $ 1,101,528 | $ 1,070,198 | $ 1,250,460 | $ 1,190,318 |
Property and equipment (Detai_2
Property and equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | |||||
Property and equipment | $ 1,819,691 | $ 3,022,629 | $ 2,890,513 | ||
Less: accumulated depreciation | (1,143,283) | (1,636,931) | (1,300,160) | ||
Property and equipment, net | 676,408 | 1,385,698 | 1,590,353 | ||
Depreciation expense | 93,942 | $ 86,829 | 355,566 | 358,587 | $ 182,786 |
Furniture And Fixtures | |||||
Property and Equipment | |||||
Property and equipment | 738,361 | 688,487 | 580,065 | ||
Leasehold Improvements | |||||
Property and Equipment | |||||
Property and equipment | 380,187 | 380,187 | 380,187 | ||
Equipment | |||||
Property and Equipment | |||||
Property and equipment | 164,258 | 1,037,231 | 985,699 | ||
Office Equipment | |||||
Property and Equipment | |||||
Property and equipment | 175,130 | 165,774 | 154,043 | ||
Vehicles | |||||
Property and Equipment | |||||
Property and equipment | $ 361,755 | $ 750,950 | $ 790,519 |
Homebuilding debt and other a_7
Homebuilding debt and other affiliate debt (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 120,797,006 | $ 102,502,287 | |
Homebuilding Debt - Wells Fargo Syndication | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 109,172,986 | 109,752,200 | 99,372,638 |
Homebuilding Debt - Other | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | 581,736 | ||
Other Affiliates Debt | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 11,044,806 | $ 2,547,913 | |
Wells Fargo Bank | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 7.63% | 4.98% | 3.63% |
Debt on contracts | $ 43,198,852 | $ 36,453,801 | |
Wells Fargo Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 39,982,270 | 34,995,080 | 36,453,801 |
Wells Fargo Bank | Other Affiliates Debt | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 8,203,772 | ||
Regions Bank | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 7.63% | 4.98% | |
Debt on contracts | $ 27,550,618 | $ 24,107,998 | |
Regions Bank | Maximum | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 4.40% | ||
Regions Bank | Minimum | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 3.63% | ||
Regions Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 25,499,203 | $ 27,550,618 | $ 23,189,545 |
Regions Bank | Other Affiliates Debt | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 918,453 | ||
Texas Capital Bank | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 7.63% | 4.98% | 3.63% |
Debt on contracts | $ 19,676,552 | $ 16,561,385 | |
Texas Capital Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 18,211,439 | $ 19,676,552 | $ 16,561,385 |
Truist Bank | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 7.63% | 4.98% | 3.63% |
Debt on contracts | $ 19,659,329 | $ 16,543,353 | |
Truist Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 18,195,498 | $ 19,659,329 | 16,543,353 |
First National Bank | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 7.63% | 4.98% | |
Debt on contracts | $ 7,870,621 | $ 6,645,714 | |
First National Bank | Maximum | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 3.88% | 3.88% | |
First National Bank | Minimum | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 3.63% | ||
First National Bank | Homebuilding Debt - Wells Fargo Syndication | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 7,284,576 | $ 7,870,621 | $ 6,624,554 |
First National Bank | Other Affiliates Debt | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 21,160 | ||
Anderson Brothers | |||
Line of Credit Facility [Line Items] | |||
Weighted average interest rate | 4.74% | 4.25% | |
Debt on contracts | $ 2,841,034 | $ 2,047,500 | |
Anderson Brothers | Homebuilding Debt - Other | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | 439,200 | ||
Anderson Brothers | Other Affiliates Debt | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 2,841,034 | 1,608,300 | |
Other Debt | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | 142,536 | ||
Other Debt | Homebuilding Debt - Other | |||
Line of Credit Facility [Line Items] | |||
Debt on contracts | $ 142,536 |
Homebuilding debt and other a_8
Homebuilding debt and other affiliate debt - Activity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Jul. 31, 2021 | Mar. 31, 2023 | Mar. 30, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Line of Credit Facility [Line Items] | ||||||||
Proceeds from other affiliate debt | $ 136,773 | $ 2,154,624 | $ 10,851,187 | $ 10,025,865 | $ 13,259,394 | |||
Repayment of promissory note - related party | 918,453 | 5,624,330 | 7,499,472 | |||||
Amortization of deferred loan costs | 120,988 | 85,782 | 404,146 | 421,186 | 408,674 | |||
Wells Fargo Bank | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Borrowing capacity | $ 150,000,000 | |||||||
Credit facility term | 3 years | |||||||
Extension period | 1 year | |||||||
Remaining availability | $ 40,827,014 | 40,827,014 | 32,044,028 | 50,627,362 | ||||
Minimum tangible net worth, dollar component | $ 70,000,000 | $ 65,000,000 | $ 65,000,000 | |||||
Minimum tangible net worth, income component as percent of after-tax income | 25% | 25% | ||||||
Minimum liquidity | 15,000,000% | 15,000,000% | ||||||
Minimum cash amount | 7,500,000% | 7,500,000% | ||||||
Deferred loan costs capitalized | $ 469,585 | $ 141,245 | 1,264,403 | 337,500 | ||||
Amortization of deferred loan costs | 120,988 | 85,782 | $ 404,146 | 421,186 | 408,674 | |||
Outstanding deferred loan costs | $ 1,059,657 | 888,179 | ||||||
Wells Fargo Bank | Maximum | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unused amount fee, as a percent | 30% | 30% | ||||||
Maximum leverage ratio | 2.50% | 2.75% | 2.75% | |||||
Minimum debt service coverage | 2.50% | 2.50% | ||||||
Applicable margin | 350% | 350% | ||||||
Wells Fargo Bank | Minimum | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unused amount fee, as a percent | 15% | 15% | ||||||
Maximum leverage ratio | 1% | 1% | 1% | |||||
Minimum debt service coverage | 1% | 1% | ||||||
Applicable margin | 275% | 275% | ||||||
Wells Fargo Bank | Letter of Credit | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Borrowing capacity | $ 2,000,000 | |||||||
Wells Fargo Bank | Homebuilding Debt - Other | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Outstanding deferred loan costs | $ 711,060 | 973,961 | ||||||
Wells Fargo Bank | Other Affiliates Debt | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Proceeds from other affiliate debt | $ 136,773 | $ 2,154,624 | 10,851,187 | 10,025,865 | 13,259,394 | |||
Repayment of promissory note - related party | $ 918,453 | $ 5,624,330 | $ 7,499,472 |
Related party transactions (D_2
Related party transactions (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2023 | |
Related Party Transactions | ||||
General corporate allocations | $ (6,590,564) | $ (2,867,929) | $ (1,733,849) | |
General financing activities | (46,162,495) | (30,655,681) | (20,596,420) | |
Distributions and net transfer to shareholders and other affiliates, including stock compensation | (52,753,059) | (33,523,610) | (22,330,269) | |
Stock compensation | 1,422,630 | |||
Due from related party | 1,437,235 | $ 125,987 | ||
Shareholders And Other Affiliates | ||||
Related Party Transactions | ||||
Stock compensation | 1,422,630 | |||
Reallocation of selling, general and administrative expenses | 6,299,064 | 2,592,429 | 1,561,349 | |
Lot purchase agreement deposits paid (received) | 291,500 | 275,500 | $ 172,500 | |
Due from related party | 1,437,235 | |||
Other Affiliates | ||||
Related Party Transactions | ||||
Due to shareholders and other affiliates presented as equity | 31,420,651 | 30,975,951 | ||
Due from shareholders and other affiliates presented as equity | $ 72,739,572 | $ 48,004,261 |
Related party transactions - _2
Related party transactions - Transactions with Land Development and Other Affiliates (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows from Financing Activities: | |||||
Repayment of cash transfer | $ 7,300,000 | ||||
Total financing cash flows | (37,816,087) | $ (28,497,772) | $ (18,579,633) | ||
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | $ (4,624,810) | 13,504,316 | 33,170,761 | 19,541,090 | |
Contribution of fixed assets | 344,511 | ||||
Total non-cash activity | $ (320,147,937) | (5,774,642) | 16,525,253 | 39,983,799 | 21,952,201 |
Shareholders And Other Affiliates | |||||
Cash Flows from Financing Activities: | |||||
Land development expense | (384,349) | (8,003,202) | (44,113,503) | (30,308,528) | (23,087,743) |
Model home sales | 6,039,243 | 3,266,711 | |||
Other activities | (647,734) | (478,258) | 8,997,416 | (4,228,487) | 1,241,399 |
Cash transfer, net of repayment | (2,700,000) | ||||
Total financing cash flows | (1,032,083) | (18,481,460) | (37,816,087) | (28,497,772) | (18,579,633) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 4,624,810 | 13,504,316 | 33,170,761 | 19,541,090 | |
Transfer of constructed model homes to related parties | (1,517,030) | (3,690,084) | |||
Contribution of fixed assets | 344,511 | ||||
Total non-cash activity | 13,703,205 | 4,624,810 | 13,504,316 | 31,998,242 | 15,851,006 |
Other Affiliates | |||||
Cash Flows from Financing Activities: | |||||
Land development expense | (360,831) | (665,777) | (76,762) | (96,903) | |
Model home sales | 6,039,243 | 3,266,711 | |||
Other activities | (422,342) | (70,476) | 197,818 | (3,537,447) | 791,117 |
Cash transfer, net of repayment | (2,700,000) | ||||
Total financing cash flows | (422,342) | (10,431,307) | (3,167,959) | 2,425,034 | 3,960,925 |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | (219,999) | 656,500 | |||
Transfer of constructed model homes to related parties | (1,517,030) | (3,690,084) | |||
Contribution of fixed assets | 344,511 | ||||
Total non-cash activity | (1,392,518) | (3,033,584) | |||
Land Development Affiliates [Member] | |||||
Cash Flows from Financing Activities: | |||||
Land development expense | (384,349) | (7,642,371) | (43,447,726) | (30,231,766) | (22,990,840) |
Other activities | (225,392) | (407,782) | 8,799,598 | (691,040) | 450,282 |
Total financing cash flows | (609,741) | (8,050,153) | (34,648,128) | (30,922,806) | (22,540,558) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 4,624,810 | 13,504,316 | 33,390,760 | 18,884,590 | |
Total non-cash activity | $ 13,703,205 | $ 4,624,810 | $ 13,504,316 | $ 33,390,760 | $ 18,884,590 |
Related party transactions - _3
Related party transactions - Sale-leaseback, other, leases (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) lease | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) item lease | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Related Party Transactions | ||||||
Revenue, net of sales discounts | $ 94,826,702 | $ 108,436,860 | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 | |
Cost of sales | $ 78,048,929 | $ 81,164,960 | $ 358,238,703 | 332,274,788 | $ 260,115,893 | |
Number of units in sale-leaseback | lease | 19 | 19 | ||||
Contract asset included in Prepaid expense and other assets | $ 611,343 | $ 611,343 | 1,361,590 | |||
Contract liability included in Other accrued expenses | 305,701 | 305,701 | $ 957,926 | |||
Sale Leaseback Of Model Homes | ||||||
Related Party Transactions | ||||||
Revenue, net of sales discounts | 5,188,716 | |||||
Cost of sales | 4,508,819 | |||||
Contract asset included in Prepaid expense and other assets | 435,264 | 435,264 | ||||
Contract liability included in Other accrued expenses | 435,264 | $ 435,264 | ||||
Unspecified Related Party | Sale Leaseback Of Model Homes | ||||||
Related Party Transactions | ||||||
Number of units in sale-leaseback with lease terms greater than 12 months | item | 9 | |||||
Revenue recognized | 2,507,216 | |||||
Costs recognized | $ 2,093,635 | |||||
Chief Executive Officer | Sale Leaseback Of Model Homes | ||||||
Related Party Transactions | ||||||
Number of units in sale-leaseback | item | 19 | |||||
Number of lease agreements | item | 19 |
Lot purchase agreement deposi_6
Lot purchase agreement deposits (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lot purchase agreement deposits | |||||
Cash deposit percentage | 10% | 10% | |||
Deposit and pre-acquisition costs | $ 8,113,303 | $ 3,804,436 | $ 3,804,436 | $ 2,946,001 | |
Remaining purchase price | 205,808,168 | 65,451,928 | 65,451,928 | 77,007,079 | |
Total contract value | 213,921,471 | 69,256,364 | 69,256,364 | 79,953,080 | |
Forfeited lot purchase agreement deposits | $ 8,664 | $ 89,361 | $ 0 | $ 211,482 | $ 84,619 |
Warranty reserves (Details)_2
Warranty reserves (Details) - Other accrued expenses and liabilities - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of the activity related to warranty reserve | ||||
Warranty reserves at beginning of the period | $ 1,371,412 | $ 1,275,594 | $ 1,275,594 | $ 963,204 |
Reserves provided | 242,720 | 1,156,027 | 1,156,027 | 1,206,142 |
Payments for warranty costs and other | (204,713) | (1,060,209) | (1,060,209) | (893,752) |
Warranty reserves at end of the period | $ 1,409,419 | $ 1,371,412 | $ 1,371,412 | $ 1,275,594 |
Commitments and contingencies_5
Commitments and contingencies (Details) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 USD ($) lease | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) lease | Dec. 31, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Commitments and contingencies | |||||
Remaining lease term | 5 years | 5 years | |||
Operating lease expense | $ 201,439 | $ 159,679 | $ 555,806 | ||
Variable lease expense | $ 11,925 | $ 18,237 | $ 92,285 | ||
Discount rate | 4.90% | ||||
Weighted-average remaining lease term | 2 years 1 month 9 days | 2 years 4 months 24 days | 2 years 1 month 28 days | ||
Number of units in sale-leaseback | lease | 19 | 19 | |||
Maturity of the contractual, undiscounted operating lease liabilities | |||||
2023 | $ 578,280 | ||||
2024 | $ 292,992 | 305,400 | |||
2025 | 108,792 | 121,200 | |||
2026 | 48,000 | 48,000 | |||
Total undiscounted operating lease liabilities | 811,518 | 1,052,880 | |||
Interest on operating lease liabilities | (43,236) | (51,603) | |||
Total present value of operating lease liabilities | 768,282 | 1,001,277 | $ 1,149,832 | ||
Total rent expense | 68,625 | $ 931,078 | |||
Rent expense related to the short-term leases | $ 95,381 | $ 34,335 | $ 94,386 | $ 344,016 |
Stock compensation - Options (D
Stock compensation - Options (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Mar. 30, 2023 | Jan. 19, 2022 | Jan. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Stock options | ||||||
Stock options outstanding, at beginning of period | 870,567 | |||||
Forfeited, Stock options | (85,555) | |||||
Stock options outstanding, at end of period | 785,012 | 870,567 | ||||
Stock options exercisable | 197,912 | |||||
Weighted-Average Per share Exercise Price | ||||||
Exercise price, at beginning of period | $ 2.81 | |||||
Granted, exercise price | 2.81 | |||||
Forfeited, exercise price | 2.81 | |||||
Exercise price, at end of period | 2.81 | $ 2.81 | ||||
Exercisable, exercise price | $ 2.81 | |||||
Stock compensation expense | $ 4,400,000 | |||||
Stock Options | ||||||
Stock compensation | ||||||
Number of shares reserved for issuance as equity-based awards | 3,000 | |||||
Vesting period | 4 years | |||||
Stock options | ||||||
Stock options outstanding, at beginning of period | 2,331 | |||||
Granted, Stock options | 2,524 | |||||
Forfeited, Stock options | (193) | |||||
Stock options outstanding, at end of period | 2,331 | |||||
Weighted-Average Per share Exercise Price | ||||||
Exercise price, at beginning of period | $ 1,049.60 | |||||
Granted, exercise price | $ 1,049.60 | |||||
Forfeited, exercise price | 1,049.60 | |||||
Exercise price, at end of period | $ 1,049.60 | |||||
Aggregate intrinsic value of stock options outstanding | $ 10,561,716 | $ 7,460,132 | ||||
Stock compensation expense | 51,079 | $ 41,422 | 195,830 | |||
Unrecognized stock compensation expense | $ 602,264 | $ 608,826 | ||||
Period for recognition | 2 years 9 months 21 days | 3 years | ||||
Estimated fair value of the stock options | ||||||
Risk-free interest rate | 3.77% | 1.82% | 1.82% | |||
Expected volatility | 40% | 35% | 35% | |||
Expected life (in years) | 5 years 1 month 6 days | 6 years 3 months | 6 years 3 months | |||
Fair value | $ 394.7 |
Stock compensation - Warrants (
Stock compensation - Warrants (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Jan. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Stock compensation | ||||
Number of shares issuable per warrant | 1 | |||
Warrants exercisable | $ 2.81 | |||
Stock compensation expense | $ 4,400,000 | |||
Stock warrants | ||||
Stock compensation | ||||
Granted, Stock options | 5,000 | |||
Warrant purchase price | $ 150,000 | $ 150,000 | ||
Number of shares issuable per warrant | 1 | |||
Warrants exercisable | $ 1,512 | |||
Exercise period | 10 years | |||
Aggregate fair value as of grant date | $ 1,376,800 | |||
Stock compensation expense | $ 1,226,800 | |||
Estimated fair value of the stock warrants | ||||
Risk-free interest rate | 1.78% | |||
Expected volatility | 35% | |||
Expected life (in years) | 6 years 4 months 24 days | |||
Fair value | $ 275.4 | |||
Warrants exercised | 0 |
Employee benefit plan (Detail_2
Employee benefit plan (Details) - USD ($) | 12 Months Ended | |||
Jan. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee benefit plan | ||||
Maximum employer match, as a percent of employee compensation | 4% | |||
Contributions paid | $ 174,184 | $ 150,090 | $ 93,160 | |
Simple Individual Retirement Account ("IRA") Retirement Plan | ||||
Employee benefit plan | ||||
Minimum earnings to participate, prior year | $ 5,000 | |||
Minimum earnings to participate, current year | $ 5,000 | |||
Employer match, as percentage of employee compensation | 3% | |||
harbor 401(k) contribution plan | ||||
Employee benefit plan | ||||
Consecutive service period to participate | 3 months | |||
Service period for full vesting | 6 years | |||
harbor 401(k) contribution plan | First base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 3% | |||
harbor 401(k) contribution plan | Next base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 2% | |||
Maximum employer match, as a percent of employee compensation | 4% | |||
harbor 401(k) contribution plan | Maximum | First base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 100% | |||
harbor 401(k) contribution plan | Minimum | First base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 50% |
Paycheck Protection Program l_2
Paycheck Protection Program loan (Details) - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Paycheck Protection Program loan | ||
Original principal amount | $ 1,693,800 | |
Accrued interest | $ 9,688 | |
Paycheck Protection Program loan | ||
Paycheck Protection Program loan | ||
Original principal amount | $ 1,693,800 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
Net (Loss) Earnings Per Share | |||||||
Allocation of net income - basic | $ (204,504,328) | $ 17,017,928 | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 | ||
Weighted-average number of common shares outstanding - basic | 37,575,074 | [1] | 37,347,350 | [1] | 100,000 | 100,000 | 100,000 |
Effect of dilutive securities | $ 2,960 | ||||||
Weighted-average number of common shares outstanding - diluted | 37,575,074 | [1] | 37,347,350 | [1] | 102,960 | 100,000 | 100,000 |
Basic earnings per share | $ (5.44) | $ 0.46 | $ 694.89 | $ 624.13 | $ 389.76 | ||
Diluted earnings per share | $ (5.44) | $ 0.46 | $ 674.92 | $ 624.13 | $ 389.76 | ||
[1] Retroactively restated for the three months ending March 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
Earnings per Share - anti-dilut
Earnings per Share - anti-dilutive - (Details) - shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Earnings per Share | |||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | 22,358,327 | 2,811,630 | 4,466 |
Stock Options | |||
Earnings per Share | |||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | 899,295 | 944,262 | 1,376 |
Warrants | |||
Earnings per Share | |||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | 3,090 |
Subsequent events (Details)_2
Subsequent events (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Feb. 27, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Events | ||||||
Repayment of debt | $ 40,579,214 | $ 22,226,052 | $ 170,810,631 | $ 262,064,474 | $ 210,255,229 | |
Subsequent Event | Other Affiliates Debt | Wells Fargo Bank | ||||||
Subsequent Events | ||||||
Repayment of debt | $ 8,340,545 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |||
Current assets: | ||||||
Total Assets | $ 283,767,861 | $ 208,344,880 | $ 202,259,985 | |||
Current liabilities: | ||||||
Total Liabilities | 647,028,869 | 149,340,844 | 135,701,573 | |||
Commitments and Contingencies | ||||||
Stockholders' Deficit: | ||||||
Preferred stock, $0.0001 par value 10,000,000 shares authorized none issued or outstanding | ||||||
Additional paid-in capital | [1] | 1,422,630 | ||||
Accumulated deficit | [1] | (363,265,766) | 57,577,672 | |||
Total Stockholders' equity | (363,261,008) | [1] | 59,004,036 | [1] | 66,558,412 | |
Total Liabilities and Stockholders' equity | 283,767,861 | 208,344,880 | 202,259,985 | |||
Class A common stock | ||||||
Stockholders' Deficit: | ||||||
Common stock value | [1] | 1,061 | 37 | |||
Class B common stock | ||||||
Stockholders' Deficit: | ||||||
Common stock value | [1] | $ 3,697 | 3,697 | |||
DiamondHead Holdings Corp. | ||||||
Current assets: | ||||||
Cash | 36,682 | 252,601 | ||||
Prepaid expenses | 20,016 | 240,075 | ||||
Total current assets | 56,698 | 492,676 | ||||
Investments held in Trust Account | 349,152,086 | 345,020,717 | ||||
Total Assets | 349,208,784 | 345,513,393 | ||||
Current liabilities: | ||||||
Accounts payable | 100,302 | 54,391 | ||||
Accrued expenses | 3,660,287 | 120,000 | ||||
Income tax payable | 481,430 | |||||
Franchise tax payable | 114,645 | |||||
Notes payable - related party | 204,110 | |||||
Total current liabilities | 4,446,129 | 289,036 | ||||
Deferred underwriting commissions | 12,075,000 | |||||
Warranty liabilities | 1,531,000 | 8,794,330 | ||||
Total Liabilities | 5,977,129 | 21,158,366 | ||||
Commitments and Contingencies | ||||||
Stockholders' Deficit: | ||||||
Preferred stock, $0.0001 par value 10,000,000 shares authorized none issued or outstanding | ||||||
Accumulated deficit | (5,355,239) | (20,645,836) | ||||
Total Stockholders' equity | (5,354,376) | (20,644,973) | ||||
Total Liabilities and Stockholders' equity | 349,208,784 | 345,513,393 | ||||
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | ||||||
Current liabilities: | ||||||
Class A common stock subject to possible redemption, $0.0001 par value; 34,500,000 shares at $10.10 and $10.00 per share redemption value at December 31, 2022 and December 31, 2021, respectively | 348,586,031 | 345,000,000 | ||||
DiamondHead Holdings Corp. | Class B common stock | ||||||
Stockholders' Deficit: | ||||||
Common stock value | $ 863 | $ 863 | ||||
[1] Retroactively restated as of December 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement | ||
Preferred stock, par value, (per share) | $ 0.0001 | |
Preferred stock, shares authorized | 40,000,000 | |
Preferred stock, shares issued | 0 | |
Preferred stock, shares outstanding | 0 | |
Class A common stock | ||
Statement | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized | 350,000,000 | |
Common stock, shares issued | 10,621,073 | |
Common stock, shares outstanding | 10,621,073 | |
Class B common stock | ||
Statement | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized | 60,000,000 | |
Common stock, shares issued | 36,973,877 | |
Common stock, shares outstanding | 36,973,877 | |
DiamondHead Holdings Corp. | ||
Statement | ||
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
DiamondHead Holdings Corp. | Class A common stock | ||
Statement | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | ||
Statement | ||
Class A common stock subject to possible redemption, par value, (in dollars per share) | $ 0.0001 | $ 0.0001 |
Class A common stock subject to possible redemption, outstanding (in shares) | 34,500,000 | 34,500,000 |
Class A common stock subject to possible redemption, redemption value per share | $ 10.10 | $ 10 |
DiamondHead Holdings Corp. | Class A common stock not subject to possible redemption | ||
Statement | ||
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
DiamondHead Holdings Corp. | Class B common stock | ||
Statement | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 8,625,000 | 8,625,000 |
Common stock, shares outstanding | 8,625,000 | 8,625,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Statement | ||
Net income from operations | $ 69,121,516 | $ 62,155,352 |
Income tax expense | 0 | 0 |
Net Income | $ 69,489,294 | $ 62,413,011 |
Basic | 100,000 | 100,000 |
Diluted | 102,960 | 100,000 |
Basic | $ 694.89 | $ 624.13 |
Diluted | $ 674.92 | $ 624.13 |
DiamondHead Holdings Corp. | ||
Statement | ||
General and administrative expenses | $ 4,324,075 | $ 1,030,906 |
Franchise tax expense | 200,000 | 200,000 |
Net income from operations | (4,524,075) | (1,230,906) |
Change in fair value of derivative warrant liabilities | 7,263,330 | 4,367,500 |
Financing costs - derivative warrant liabilities | (449,070) | |
Income from investments held in Trust Account | 5,049,912 | 20,717 |
Gain from settlement of deferred underwriting commissions on public warrants | 271,688 | |
Interest expense - related party | (4,110) | |
(Loss) income before taxes | 8,056,745 | 2,708,241 |
Income tax expense | 983,430 | |
Net Income | $ 7,073,315 | $ 2,708,241 |
DiamondHead Holdings Corp. | Class A common stock | ||
Statement | ||
Basic | 34,500,000 | 31,947,945 |
Diluted | 34,500,000 | 31,947,945 |
Basic | $ 0.16 | $ 0.07 |
Diluted | $ 0.16 | $ 0.07 |
DiamondHead Holdings Corp. | Class B common stock | ||
Statement | ||
Basic | 8,625,000 | 8,541,781 |
Diluted | 8,625,000 | 8,625,000 |
Basic | $ 0.16 | $ 0.07 |
Diluted | $ 0.16 | $ 0.07 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
DiamondHead Holdings Corp. | Class A common stock | Common Stock | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | $ 0 | $ 0 | $ 0 | $ 0 | |||
Balance at the beginning (in shares) | 0 | 0 | 0 | 0 | |||
Excess of cash received over fair value of private placement warrants | $ 0 | ||||||
Extinguishment of deferred underwriting commissions on public shares | $ 0 | ||||||
Reclassification from additional paid-in capital to retained earnings | 0 | ||||||
Remeasurement of Class A common stock subject to redemption | 0 | 0 | |||||
Net Income (Loss) | 0 | 0 | |||||
Balance at the end | $ 0 | $ 0 | $ 0 | ||||
Balance at the end (in shares) | 0 | 0 | 0 | ||||
DiamondHead Holdings Corp. | Class B common stock | Common Stock | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | $ 863 | $ 863 | $ 863 | $ 863 | |||
Balance at the beginning (in shares) | 8,625,000 | 8,625,000 | 8,625,000 | 8,625,000 | |||
Excess of cash received over fair value of private placement warrants | $ 0 | ||||||
Extinguishment of deferred underwriting commissions on public shares | $ 0 | ||||||
Reclassification from additional paid-in capital to retained earnings | 0 | ||||||
Remeasurement of Class A common stock subject to redemption | 0 | 0 | |||||
Net Income (Loss) | 0 | 0 | |||||
Balance at the end | $ 863 | $ 863 | $ 863 | ||||
Balance at the end (in shares) | 8,625,000 | 8,625,000 | 8,625,000 | ||||
DiamondHead Holdings Corp. | Additional Paid In Capital | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | $ 0 | $ 0 | $ 0 | $ 24,137 | |||
Excess of cash received over fair value of private placement warrants | 3,500,670 | ||||||
Extinguishment of deferred underwriting commissions on public shares | 11,803,313 | ||||||
Reclassification from additional paid-in capital to retained earnings | (11,803,313) | ||||||
Remeasurement of Class A common stock subject to redemption | 0 | (3,524,807) | |||||
Net Income (Loss) | 0 | 0 | |||||
Balance at the end | 0 | 0 | $ 24,137 | ||||
DiamondHead Holdings Corp. | Accumulated Deficit | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | (5,355,239) | (20,645,836) | (20,645,836) | (1,892) | |||
Excess of cash received over fair value of private placement warrants | 0 | ||||||
Extinguishment of deferred underwriting commissions on public shares | 0 | ||||||
Reclassification from additional paid-in capital to retained earnings | 11,803,313 | ||||||
Remeasurement of Class A common stock subject to redemption | (3,586,031) | (23,352,185) | |||||
Net Income (Loss) | 7,073,315 | 2,708,241 | |||||
Balance at the end | (5,355,239) | (20,645,836) | (1,892) | ||||
DiamondHead Holdings Corp. | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | (5,354,376) | (20,644,973) | (20,644,973) | 23,108 | |||
Excess of cash received over fair value of private placement warrants | 3,500,670 | ||||||
Extinguishment of deferred underwriting commissions on public shares | 11,803,313 | ||||||
Reclassification from additional paid-in capital to retained earnings | 0 | ||||||
Remeasurement of Class A common stock subject to redemption | (3,586,031) | (26,876,992) | |||||
Net Income (Loss) | 7,073,315 | 2,708,241 | |||||
Balance at the end | (5,354,376) | (20,644,973) | 23,108 | ||||
Class A common stock | Common Stock | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | 37 | 37 | |||||
Balance at the end | 37 | ||||||
Class B common stock | Common Stock | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | 3,697 | 3,697 | |||||
Balance at the end | 3,697 | ||||||
Accumulated Deficit | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||
Balance at the beginning | 66,554,678 | 66,554,678 | |||||
Net Income (Loss) | (204,504,328) | 17,017,928 | |||||
Balance at the end | 66,554,678 | ||||||
Balance at the beginning | 59,004,036 | [1] | 66,558,412 | 66,558,412 | |||
Net Income (Loss) | (204,504,328) | $ 17,017,928 | 69,489,294 | 62,413,011 | $ 38,976,374 | ||
Balance at the end | $ (363,261,008) | [1] | $ 59,004,036 | [1] | $ 66,558,412 | ||
[1] Retroactively restated as of December 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||||
Net income | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 | ||
Adjustments to reconcile net income to net cash used in operating activities: | |||||
Change in fair value of warrant liabilities | $ 2,723,333 | ||||
Net change in operating assets and liabilities: | |||||
Net cash flows provided by operating activities | 23,051,836 | $ 10,507,683 | 34,616,722 | 58,318,036 | 71,781,702 |
Cash Flows from Investing Activities | |||||
Net cash flows provided by (used in) investing activities | 6,871 | (68,295) | (206,877) | (394,054) | (785,294) |
Cash Flows from Financing Activities: | |||||
Proceeds from other affiliate debt | 136,773 | 2,154,624 | 10,851,187 | 10,025,865 | 13,259,394 |
Offering costs paid | (12,134,293) | ||||
Net cash flows provided by (used in) financing activities | 75,613,874 | (25,468,277) | (73,675,897) | (35,598,882) | (51,419,649) |
Net change in cash and cash equivalents | 98,672,581 | (15,028,889) | |||
Cash and cash equivalents, beginning of year | 12,238,835 | 51,504,887 | 51,504,887 | 29,179,787 | 9,603,028 |
Cash and cash equivalents, end of year | 110,911,416 | 36,475,998 | 12,238,835 | 51,504,887 | 29,179,787 |
DiamondHead Holdings Corp. | |||||
Cash flows from operating activities: | |||||
Net income | 7,073,315 | 2,708,241 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||
Change in fair value of warrant liabilities | (7,263,330) | (4,367,500) | |||
Financing costs - derivative warrant liabilities | 449,070 | ||||
Income from investments held in Trust Account | (5,049,912) | (20,717) | |||
Gain from settlement of deferred underwriting commissions on public warrants | (271,688) | ||||
Net change in operating assets and liabilities: | |||||
Prepaid expenses | 220,059 | (240,075) | |||
Accounts payable | 45,912 | 53,667 | |||
Accrued expenses | 3,610,287 | (86,250) | |||
Franchise tax payable | (114,645) | 113,477 | |||
Income tax payable | 481,430 | ||||
Accrued interest | 4,110 | ||||
Net cash flows provided by operating activities | (1,264,462) | (1,390,087) | |||
Cash Flows from Investing Activities | |||||
Cash deposited in Trust Account | (345,000,000) | ||||
Interest released from Trust Account for payment of income taxes | 918,543 | ||||
Net cash flows provided by (used in) investing activities | 918,543 | (345,000,000) | |||
Cash Flows from Financing Activities: | |||||
Proceeds from other affiliate debt | 200,000 | ||||
Repayment of note payable | (130,000) | ||||
Proceeds received from initial public offering, gross | 345,000,000 | ||||
Proceeds received from private placement | 8,900,000 | ||||
Offering costs paid | (70,000) | (7,143,422) | |||
Net cash flows provided by (used in) financing activities | 130,000 | 346,626,578 | |||
Net change in cash and cash equivalents | (215,919) | 236,491 | |||
Cash and cash equivalents, beginning of year | $ 36,682 | $ 252,601 | 252,601 | 16,110 | |
Cash and cash equivalents, end of year | 36,682 | 252,601 | $ 16,110 | ||
Supplemental disclosure of noncash financing activities: | |||||
Remeasurement of Class A common stock subject to possible redemption | 3,586,031 | ||||
Offering costs included in accrued expenses | 70,000 | ||||
Deferred underwriting commissions | $ 12,075,000 | ||||
Supplemental cash flow information: | |||||
Income taxes paid | $ 502,000 |
Description of Organization and
Description of Organization and Business Operations | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Description of Organization and Business Operations | Note 1 — Description of Organization and Business Operations DiamondHead Holdings Corp. (the “Company” or “DHHC”) is a blank check company incorporated in Delaware on October 7, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2022, the Company had not commenced any operations. All activity from the Company’s inception to December 31, 2022 relates to the Company’s formation and the Initial Public Offering (the “Initial Public Offering”) and since the closing of the Initial Public Offering (as described below), the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on investments held in trust from the proceeds of its Initial Public Offering and Private Placement described below, and from changes in the fair value of its derivative warrant liability. On September 10, 2022, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with Hestia Merger Sub, Inc., a South Carolina corporation and wholly-owned subsidiary of DHHC (“Merger Sub”), and Great Southern Homes, Inc., a South Carolina corporation (“GSH”), pursuant to which the Company expects to effect a business combination with GSH through the merger of Merger Sub with and into GSH (the “Merger”), with GSH surviving the Merger as a wholly-owned subsidiary of the Company. Upon the consummation of the transactions contemplated by the Business Combination Agreement (the “Transactions”), the Company expects to be renamed United Homes Group, Inc. The obligations of the Company, Merger Sub and GSH to consummate the Merger are subject to the satisfaction or waiver of certain closing conditions, which are further described in the Business Combination Agreement. The Company’s sponsor is DHP SPAC-II Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 25, 2021. On January 28, 2021, the Company consummated its Initial Public Offering of 34,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 4,500,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.6 million, of which approximately $12.1 million in deferred underwriting commissions (Note 6). On August 10, 2022, the underwriter from the Initial Public Offering resigned from its role in any Business Combination and waived its entitlement to the deferred underwriting commissions in the amount of $12.1 million. Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,933,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to our Sponsor and to certain qualified institutional buyers or institutional accredited investors, including certain funds and accounts managed by subsidiaries of BlackRock, Inc. and Millennium Management LLC (each, an “Anchor Investor”), generating proceeds of $8.9 million (Note 4). Upon the closing of the Initial Public Offering and the Private Placement, $345.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of 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 the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. The Company will provide its holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption have been recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor, officers and directors agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Sponsor agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. The Company will have 30 months from the closing of the Initial Public Offering, or July 28, 2023, to complete a Business Combination (the “Combination Period”). the Company filed If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period. The Sponsor agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of its affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter agreed to waive its right to its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period, and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00). In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets. This liability will not apply with respect to any claims (i) by a third party who executed a waiver of any and all rights to seek access to the trust account or (ii) under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Marcum LLP, the Company’s independent registered public accounting firm, will not execute agreements with the Company waiving claims to the monies held in the Trust Account. Proposed Business Combination On September 10, 2022, the Company entered into the GSH Business Combination Agreement with Merger Sub and GSH, pursuant to which the Company expects to effect a business combination with GSH through the merger of Merger Sub with and into GSH (the “Merger”), with GSH surviving the Merger as a wholly-owned subsidiary of the Company. Upon the consummation of the GSH Business Combination, the Company expects to be renamed United Homes Group, Inc. The obligations of the Company, Merger Sub and GSH to consummate the Merger are subject to the satisfaction or waiver of certain closing conditions, which are further described in the GSH Business Combination Agreement. The Company cannot assure that the plans to complete the GSH Business Combination will be successful. Further, the Company may need to pursue third party financing, among other things, to satisfy the closing condition that at Closing, the amount of Closing DHHC Cash be equal to or exceed $125,000,000 (the “Minimum Cash Condition”). However, there can be no assurance that any third-party financing will be entered into in connection with the GSH Business Combination, and there can be no assurance that the Minimum Cash Condition will be satisfied. If the Minimum Cash Condition is not satisfied, amended or waived by GSH pursuant to the terms of the GSH Business Combination Agreement, then the GSH Business Combination would not be consummated. Trust Account Redemptions and Extension of Combination Period On January 25, 2023, the Company held a special meeting of stockholders at which such stockholders voted to extend the time the Company has to consummate an initial Business Combination from January 28, 2023 to July 28, 2023. In connection with such vote, the holders of an aggregate of 30,058,968 Public Shares exercised their right to redeem their shares for an aggregate of approximately $304 million in cash held in the Trust Account. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2 Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying consolidated financial statements of the Company include its wholly owned subsidiary in connection with the planned merger. There were no inter-company activities during the years ended on December 31, 2022 and 2021. Liquidity and Going Concern As of December 31, 2022, the Company had approximately $37,000 in cash and a working capital deficit of approximately $3.9 million (not taking into account tax obligations of approximately $481,000 that may be paid using investment income earned in Trust Account). The Company’s liquidity needs have been satisfied through a contribution of $25,000 from Sponsor to cover for certain offering costs in exchange for the issuance of the Founder Shares, a loan of up to $300,000 from the Sponsor pursuant to the Promissory Note (see Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Promissory Note was repaid on February 1, 2021. 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 the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans up to $1,500,000 (see Note 5). As of December 31, 2022 and 2021, there were no amounts outstanding under any Working Capital Loan. In October 2022, the Company issued unsecured promissory notes to two affiliates of the Sponsor for an aggregate principal amount of up to $400,000. As of December 31, 2022, there was an outstanding balance of $204,110 under these promissory notes including $4,110 of accrued but unpaid interest through December 31, 2022. In connection with management’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Consolidated Financial Statements-Going Concern,” management has determined that the existing liquidity condition, mandatory liquidation and subsequent dissolution raise substantial doubt about its ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate on or after July 28, 2023. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult because of the potential differences in accounting standards used. Risks and Uncertainties Various social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility could adversely affect the Company’s ability to complete a business combination. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a business combination and the value of the Company’s securities. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly - traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. Management continues to evaluate the impact of these types of risks and has concluded that while it is reasonably possible that these risks and uncertainties could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and 2021, the Company had no cash equivalents held outside the Trust Account. Investments Held in Trust Account The Company’s portfolio of investments is comprised of 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 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 the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from investments held in Trust Account in the accompanying consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using quoted market prices. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 and investments held in the Trust Account. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the consolidated balance sheets. Fair Value Measurements Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Derivative Warrant Liabilities The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480, and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised. Their re-measurement to fair value is recognized in the Company’s consolidated statements of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering were initially measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of and December 31, 2022 and 2021, the value of the Public Warrants is measured based on the listed market price of such warrants since being separately listed and traded. The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the consolidated statements of operations. Offering costs associated with the Class A common stock were charged against the carrying value of the Class A common stock upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Class A Common Stock Subject to Possible Redemption The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2022 and 2021, 34,500,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s consolidated balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. Subsequently, the Company recognizes changes in redemption value in the accompanying consolidated statements of changes in stockholders’ deficit. Income Taxes The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net (loss) income per common stock is calculated by dividing the net (loss) income by the weighted average shares of common stock outstanding for the respective period. The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement to purchase an aggregate of 14,558,333 shares of common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock. For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements. |
Initial Public Offering
Initial Public Offering | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Initial Public Offering | Note 3 — Initial Public Offering On January 28, 2021, the Company consummated its Initial Public Offering of 34,500,000 Units, including 4,500,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.6 million, of which approximately $12.1 million is included in deferred underwriting commissions. On August 10, 2022, the underwriter from the Initial Public Offering resigned from its role in any Business Combination and waived its entitlement to the deferred underwriting commissions in the amount of $12.1 million. Each Unit consists of one share of Class A common stock and one |
Private Placement
Private Placement | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Private Placement | Note 4 Private Placement Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 5,933,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant to the Sponsor and the Anchor Investors, generating proceeds of $8.9 million. Each Private Placement Warrant will be exercisable to purchase one share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Placement Warrants. |
Related Party Transactions_2_3
Related Party Transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Related Party Transactions | Note 8 — Related party transactions Prior to the Business Combination, Legacy UHG transacted with Other Affiliates that were owned by the shareholders of GSH. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 - Nature of operations and basis of presentation). Post Business Combination, the Company continues to transact with these parties, however, they are no longer considered affiliates of the Company. Land Development Affiliates and Other Affiliates of Legacy UHG (post Business Combination) meet the definition of related parties of the Company as defined in ASC 850-10-20. Prior to the Business Combination, Legacy UHG maintained the cash management and treasury function for its Other Affiliates. Cash receipts from customers and cash disbursements made to vendors were recorded through one centralized bank account. Legacy UHG recorded a Due from Other Affiliate when cash was disbursed, generally to a vendor, on behalf of an affiliate. Conversely, Legacy UHG recorded a Due to Other Affiliate when cash was received from a customer on behalf of an affiliate. The balances were settled through equity upon the consummation of the Business Combination. The below table summarizes Legacy UHG transactions with the Land Development and Other Affiliates for the three months ended March 31, 2023 and 2022. Three Months ended March 31, 2023 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (384,349) $ — $ (384,349) Other activities (225,392) (422,342) (647,734) Total financing cash flows $ (609,741) $ (422,342) $ (1,032,083) Non-cash activities Settlement of co-obligor debt to other affiliates $ 8,340,545 $ — $ 8,340,545 Release of guarantor from GSH to shareholder 2,841,034 — 2,841,034 Credit for earnest money deposits 2,521,626 — 2,521,626 Total non-cash activity $ 13,703,205 $ — $ 13,703,205 Three Months ended March 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (7,642,371) $ (360,831) $ (8,003,202) Other activities (407,782) (70,476) (478,258) Cash transfer — (10,000,000) (10,000,000) Total financing cash flows $ (8,050,153) $ (10,431,307) $ (18,481,460) Non-cash activities Acquisition of developed lots 4,624,810 — 4,624,810 Total non-cash activity $ 4,624,810 $ — $ 4,624,810 Land development expense — Represents costs that were paid for by Legacy UHG that relate to the Land Development Affiliates’ operations. The Land Development Affiliates acquire raw parcels of land and develop them so that Legacy UHG can build houses on the land. Other activities — Represent other transactions with Legacy UHG’s Other Affiliates. This includes, predominately, rent expense incurred for leased model homes and payment of real estate taxes. Settlement of co-obligor debt to other affiliates — The amount represents the settlement of Wells Fargo debt associated with Other Affiliates. Release of guarantor from GSH to shareholder — The amount represents that Legacy UHG was released as a co-obligor from the Anderson Brothers debt associated with Other Affiliates. Credit for earnest money deposits — The amount represents credit received from Legacy UHG affiliate in relation to lot deposits that Legacy UHG paid on behalf of the affiliate. Cash transfer — A direct cash contribution to Other Affiliates from Legacy UHG. Legacy UHG transferred cash to a related party. This cash transfer is in anticipation of separating the homebuilding operations from land development operations. Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Once the Land Development Affiliates of Legacy UHG have developed the raw parcels of land, they transfer the land to Legacy UHG in a non-cash transaction. The transfer amount is derived from the costs incurred to develop the land. Leases In addition to the transactions above, Legacy UHG has entered into three separate operating lease agreements with a related party. The terms of the leases, including rent expense and future minimum payments, are described in Note 11 - Commitments and contingencies . Other The Company shares office spaces with a related party and certain employees of the Company provide services to the same related party, as such, the Company is allocating certain shared costs to the related party in line with a predetermined methodology based on headcount. During the three months ended March 31, 2023, the Company allocated overhead costs to the related party in the amount of $185,812 and was charged for street maintenance in the amount of $59,825 by the same related party. The remaining balance outstanding as of March 31, 2023 is $125,987 and is presented on the Condensed Consolidated Balance Sheet. | Note 6 — Related party transactions Distributions and net transfer to shareholders and other affiliates Before the carve-out, the Company’s financial information was included in the financial statements and accounting records of GSH. The following transactions consisting of distributions and net transfer to shareholders and other affiliates summarizes the activity between the Company and shareholders and Other Affiliates before the carve-out. Shareholders’ and Other Affiliates’ net investment reflects transactions that occurred between the Company and the Shareholders, and the Company and Other Affiliates, that were not settled in cash. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 — Nature of operations and basis of presentation). net transfer to shareholders’ and other affiliates’ net investment for the years ended December 31, 2022, 2021, and 2020 are as follows: 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. General Corporate Allocations — General Financing Activities — Related party transactions The Company transacts with Other Affiliates that are owned by the shareholders of the Company as discussed above. The Company operates and maintains the cash management and treasury function for the Other Affiliates. Cash receipts from customers and cash disbursements made to vendors are recorded through one centralized bank account. The Company records a Due from Other Affiliate when cash is disbursed, generally to a vendor, on behalf of an affiliate. Conversely, the Company records a Due to Other Affiliate when cash is received from a customer on behalf of an affiliate. As of December 31, 2022 and 2021, the Company recorded a Due from Other Affiliates of $72,739,572 and $48,004,261, respectively, and a Due to Other Affiliates of $31,420,651 and $30,975,951, respectively. These balances are presented net as a contra-account against Shareholders’ and other affiliates’ net investment, as the settlement of these balances is not expected in cash. As of December 31, 2022, the Company recorded a Due from related party of $1,437,235 as an asset on the Balance Sheet as the Company is reasonably certain that this amount will be collected because both parties have entered into a binding construction contract and agreed on the expected contract price. The below table summarizes the transactions with the Land Development and Other Affiliates for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 Land development expense Other activities Cash transfer — Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Model home sales Transfer of constructed model homes to related parties Contribution of fixed assets Sale-leaseback transaction In connection with these transactions, GSH simultaneously entered into individual lease agreements for all 19 model homes sold, whereby GSH is the lessee. The Company is responsible for paying the operating expenses associated with the model homes while under lease. Nine of the 19 individual leases had a lease term greater than twelve months. In connection with these nine leases, the Company recognized an operating lease right-of-use-asset and a corresponding operating As the leases associated with the transactions do not commence until 2023, the Company did not pay rent or recognize lease expense associated with the leases during the year ended December 31, 2022. Rent expense will be paid monthly, consistent with the lease contract. Other - Leases In addition to the transactions above, the Company has entered into three separate operating lease agreements with one related party. The terms of the lease, including rent expense and future minimum payments, are described in Note 9 - Commitments and contingencies |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Related Party Transactions | Note 5 — Related Party Transactions Founder Shares On October 21, 2020, the Sponsor paid $25,000 on behalf of the Company to cover certain offering costs in exchange for issuance of 8,625,000 shares of the Company’s Class B common stock (the “Founder Shares”). Additionally, upon consummation of the Business Combination, the Sponsor has agreed to transfer an aggregate of 1,250,625 Founder Shares to the Anchor Investors for the same price originally paid for such shares. The Founder Shares will automatically convert into Class A common stock upon consummation of a Business Combination on a one-for-one basis, subject to certain adjustments, as described in Note 8. The Founder Shares included an aggregate of up 1,125,000 shares subject to forfeiture to the extent that the underwriter’s option to purchase additional units was not exercised in full, so that the Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On January 28, 2021, the underwriters fully exercised the over-allotment option; thus, these 1,125,000 Founder Shares were no longer subject to forfeiture. The Sponsor and the Anchor Investors agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Promissory Note — Related Party On October 21, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering (the “Promissory Note”). The Promissory Note was non-interest bearing and due upon the completion of the Initial Public Offering. As of December 31, 2020, the Company borrowed $130,000 under the Promissory Note. On February 1, 2021, the Company repaid the Promissory Note in full. Subsequent to repayment, the facility is no longer available to the Company. On October 18, 2022, the Company issued unsecured promissory notes to two affiliates of the Sponsor for an aggregate principal amount of up to $400,000. The promissory notes bear interest on the outstanding principal balance at 10% per annum, are not convertible and are repayable in full upon the earlier of: (i) April 28, 2023 or (ii) the date on which the Company closes the Proposed Business Combination. As of December 31, 2022, there was an aggregate outstanding balance of $204,110 under the promissory notes including $4,110 of accrued but unpaid interest through December 31, 2022. Related Party Loans 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 the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of December 31, 2022 and 2021, the Company had no borrowings under the Working Capital Loans. Administrative Support Agreement The Company agreed, commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support. The Sponsor has not received any reimbursement of these fees through December 31, 2022. Sponsor Support Agreement In connection with the execution of the Business Combination Agreement, the Sponsor entered into a sponsor support agreement (the “Sponsor Support Agreement”) with the Company and GSH, pursuant to which the Sponsor agreed to, among other things, (i) vote at any meeting of the shareholders of the Company all of its Class B common stock, (the “Sponsor Shares”) and any securities acquired after the execution of the Sponsor Support Agreement, in favor of each Transaction Proposal (as defined in the Business Combination Agreement), (ii) be bound by certain other covenants and agreements related to the Transactions and (iii) be bound by certain transfer and redemption restrictions with respect to such Sponsor Shares, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. The Sponsor has also agreed, subject to certain exceptions, not to transfer approximately 2.1 million Sponsor Earn Out Shares (as defined in the Sponsor Support Agreement) until such shares are released under the Sponsor Support Agreement. Pursuant to the Sponsor Support Agreement, Sponsor Earnout Shares will be released in three tranches upon the occurrence of the following milestones during the period commencing on the 90th day following the date (the “Closing Date”) on which the closing of the Merger (the “Closing”) occurs and ending on the fifth anniversary of the Closing Date: (i) a one-time issuance of 7,500,000 Earnout Shares on the first date on which the volume weighted average price of DHHC Shares over any 20 trading days within the preceding 30 consecutive trading day period (as adjusted, the “VWAP Price”) is greater than or equal to $12.50 (“Triggering Event I”); (ii) a one-time issuance of 7,500,000 Earn Out Shares on the first date on which the VWAP Price is greater than or equal to $15.00 (“Triggering Event II”); and (iii) a one-time issuance of 5,000,000 Earn Out Shares on the first date on which the VWAP Price is greater than or equal to $17.50 (“Triggering Event III”, together with Triggering Event I and Triggering Event II, the “Earn-Out Milestones”). Any such Sponsor Earnout Shares not vested prior to the fifth anniversary of the Closing Date will be deemed to be forfeited. The Sponsor has also agreed that in the event that Closing DHHC Cash (as defined in the Business Combination Agreement) is less than $100,000,000, up to 1.0 million Sponsor Shares will be designated as Sponsor Earnout Shares, subject to the same release conditions set forth in the preceding paragraph. In addition, members of the Sponsor have made a commitment to purchase and not redeem an aggregate of 2.5 million Public Shares. The Sponsor has also agreed, pursuant to the terms of the Sponsor Support Agreement, to forfeit approximately 1.8 million Sponsor Shares and approximately 50% of its Private Placement Warrants. Financing Commitment Letter In connection with the execution of the Business Combination Agreement, we entered into a financing commitment letter (the “Financing Commitment Letter”) with the Sponsor, David T. Hamamoto, our Co-Chief Executive Officer and Chairman and an affiliate of our Sponsor, and Antara Capital, an affiliate of our Sponsor, pursuant to which David T. Hamamoto and Antara Capital (collectively, the “Investors”) will commit to, or cause their respective affiliates to, purchase and not redeem at least in the aggregate 2.5 million DHHC Class A Common Shares. Specifically, the Investors have agreed, among other things, severally, and not jointly, subject to certain terms and conditions, (i) to purchase (in open market transactions or otherwise), or to cause one or more of its controlled affiliates to purchase, and beneficially own no less than 1,250,000 DHHC Class A Common Shares, no later than the date that is five (5) In the event an Investor fails to make the committed purchase, the defaulting investor will automatically forfeit 1,250,000 DHHC Class B Common Shares it is entitled to receive in connection with the Closing for the benefit of the non-defaulting Investor or its designated controlled affiliates. |
Commitments and Contingencies_6
Commitments and Contingencies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Commitments and Contingencies | Note 11 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years , some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $201,439 and $159,679 within Selling, general, and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Operating lease expense included variable lease expense of $11,925 and $18,237 for the three months ended March 31, 2023 and 2022, respectively. The weighted-average discount rate for the operating leases entered into during the three months ended March 31, 2023 and 2022 was 5.54% and 3.16% and the weighted-average remaining lease term was 2.11 and 2.4 years, respectively. During the year ended December 31, 2022, Legacy UHG closed on 19 sale-leaseback transactions with related parties, whereby it is the lessee. Leases commenced on January 1, 2023. The Company is responsible for paying the operating expenses associated with the model homes while under lease. The rent expense associated with sale-leaseback agreements that mature in less than 12 months (and are excluded thus from the ROU asset and lease liability) is $68,625 for the three months ended March 31, 2023. The maturity of the contractual, undiscounted operating lease liabilities as of March 31, 2023 are as follows: Lease Payment 2023 $ 361,734 2024 292,992 2025 108,792 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 811,518 Interest on operating lease liabilities (43,236) Total present value of operating lease liabilities $ 768,282 The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $95,381 and $34,335 of rent expense related to the short-term leases within Selling, general and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively. Litigation The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these Condensed Consolidated Financial Statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of recent and current pending litigation involving the Company. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for in the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. The Company is a defendant in a claim involving construction defects associated with improper slope of a sewer line in and under the slab at the property causing damages, where the Company served as the general contractor for original construction of the residence. The Company was served with a summons and complaint in this matter on February 1, 2023. The Company has submitted this matter to the insurance carrier, and they have engaged a law firm. The Company’s assessment of liability at this time is unknown as it has been just served with the summons and complaint. According to the insurance carrier, there is no deductible for this claim. The Company believes the insurance will cover any amounts that may ultimately be determined to be owed, if any. The Company is involved in a litigation regarding a variance for a subdivision. The Company applied for a variance for a subdivision from the Horry County Supplemental Flood Zone freeboard requirement, which was granted by the Horry County Board of Construction Adjustments and Appeals in August 2022. The Horry County Board of Construction Adjustments and Appeals reconsidered the variance in September 2022 to allow county staff and the Company to reach a compromise on the freeboard requirement. County staff and the Company agreed to a reduction in the freeboard requirement to two feet rather than three, and the Board again approved the variance at its February 2023. Due to a lack of information on the possible impact to the county’s flood insurance rating, a vote on the amendment failed at the Horry County Council meeting later that month. Subsequently, Horry County filed an appeal of the Board’s decision to grant the variance. If the Horry County Council approves the amendment, the litigation will be moot. However, it the amendment does not get approved, the Company would have to build to the three-foot freeboard rather than the two-foot previously granted. The Company is of the opinion that such matter will be resolved without material effect on the Company’s financial condition or results of operations as the plaintiff is not seeking monetary damages and the Company is expecting the case to be dismissed in near future. The Company is a defendant in a claim regarding high levels of Volatile Organic Compound in a house in Anderson, South Carolina. The Company’s investigations into this matter have resulted in indoor air sampling and soil gas screening indicating that the subject lot, and potentially others in the area, have been impacted by historical industrial activities predating the construction of the houses. The Company is investigating the extent and degree to which these impacts may have impacted other homes and is working with South Carolina environmental regulators to determine if additional actions will be required. Potential costs or liabilities associated with this matter cannot be determined at this time. | Note 9 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $555,806 within Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. Operating lease expense included variable lease expense of $92,285 for the year ended December 31, 2022. The weighted-average discount rate for the operating leases entered into during the year ended December 31, 2022 was 4.90% and the weighted-average remaining lease term was 2.16 years. During the year ended December 31, 2022, the Company closed on 19 sale-leaseback transactions with related parties. For information on sale-leaseback transaction with related parties, see Note 6 — Related party transaction The maturity of the contractual, undiscounted operating lease liabilities as of December 31, 2022 are as follows: December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 Total rent expense for the year ended December 31, 2021 was $931,078. The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $94,386 and $344,016 of rent expense related to the short-term leases within selling, general and administrative expense on the Statements of Income for the year ended December 31, 2022, and 2021, respectively. Litigation The Company is considered to be the primary responsible party for claims and lawsuits brought against the Shareholders and Other Affiliates based on its financial resources. The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these financial statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of current pending litigation involving the Company. The Company is a defendant in a claim involving residential construction defects associated with the premature deterioration of sloped land behind neighboring homes, where the Company served as the general contractor for original construction of the residence in 2013. The Company asserts the slope failure that has caused damage to the structural integrity of the plaintiff’s homes is the result of the plaintiff’s next-door neighbor who voluntarily cleared vegetation from the rear of their home thereby causing the erosion of soil and resulting damages. In 2022, the matter was settled, and the case was dismissed for an immaterial amount. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Commitments and Contingencies | Note 6 — Commitments and Contingencies Registration Rights The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of working capital loans and upon conversion of the Founder Shares) were entitled to registration rights pursuant to a registration rights agreement signed upon the effective date of Initial Public Offering, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities were entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Amended and Restated Registration Rights Agreement The Business Combination Agreement contemplates that, upon completion of the Merger, the Company (which expects to be named United Homes Group, Inc. at that time), the Sponsor, certain securityholders of the Company and certain former stockholders of GSH will enter into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”). Pursuant to the A&R Registration Rights Agreement, among other things, UHG agrees to file a shelf registration statement with respect to the registrable securities under the A&R Registration Rights Agreement within 45 days of the Closing. Up to two times in any 12-month period, certain legacy DHHC securityholders and legacy GSH stockholders may request to sell all or any portion of their registrable securities in an underwritten offering that is registered pursuant to the shelf registration statement, so long as the total offering price is reasonably expected to exceed $10,000,000. The combined company will also provide customary “demand” and “piggyback” registration rights. The A&R Registration Rights Agreement will provide that UHG will pay certain expenses relating to such registrations and indemnify the securityholders against certain liabilities. Further, each securityholder party to the A&R Registration Rights Agreements agrees not to transfer any of their registrable securities subject to lock-up transfer restrictions (as described in the A&R Registration Rights Agreement) until the end of the applicable Lock-Up Period (as defined in the A&R Registration Rights Agreement) subject to certain customary exceptions described therein. Underwriting Agreement The Company granted the underwriter a 45-day option from the date of Initial Public Offering to purchase up to 4,500,000 additional Units at the Initial Public Offering price less the underwriting discounts and commissions. On January 28, 2021, the underwriters fully exercised the over-allotment option. The underwriter was entitled to a cash underwriting discount of $0.20 per Unit, or $6.9 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, the underwriter was entitled to a deferred fee of $0.35 per Unit, or approximately $12.1 million in the aggregate. Effective as of August 10, 2022, the underwriter from the Initial Public Offering resigned and withdrew from its role in any Business Combination and waived its entitlement to the deferred underwriting commissions in the amount of approximately $12.1 million. The Company recognized approximately $11.8 million of the commissions waiver as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ deficit for the year ended December 31, 2022, as this portion represents an extinguishment of deferred underwriting commissions on Public Shares which was originally recognized directly in accumulated deficit. The remaining balance of approximately $272,000 is recognized as a gain from settlement of deferred underwriting commissions on public warrants in the consolidated statements of operations, which represents the original amount expensed in the Company’s initial public offering. Contingent Fee Arrangement The Company has entered into certain engagement letters with Zelman Partners LLC (“Zelman”) for financial advice and assistance in connection with its search for a prospective initial business combination. Pursuant to the engagement letters, the Company agreed to pay Zelman a transaction fee in cash of $4,500,000 plus, in the Company’s sole discretion, an additional transaction fee of between $0 to $1,000,000 (collectively, the “Transaction Fees”). The Transaction Fees were contingent upon the closing of a Business Combination and therefore not included as liabilities on the consolidated balance sheets. Additionally, if the Company or any of its affiliates enters into an agreement with respect to the acquisition of all or a portion of a target company in the homebuilding industry (the “Agreement”) and (i) such Agreement is terminated prior to consummation of such acquisition or the acquisition is otherwise not consummated and (ii) the Company receives a payment or other consideration (the “Payment”) at any time related to such termination or non-consummation, the Company agrees to pay to Zelman a transaction fee of the lesser of (i) the Transaction Fee that would have been payable had the sale been consummated and (ii) 25% of such Payment in cash if and when such Payment is made to the Company. |
Derivative Warrant Liabilities
Derivative Warrant Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Derivative Warrant Liabilities | Note 7 - Derivative Warrant Liabilities As of December 31, 2022 and 2021, the Company had 8,625,000 Public Warrants and 5,933,333 Private Placement Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. The Company agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company will use its best efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. The Company will use its reasonable best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. Redemptions of Warrants When the Price Per Share of Class A Common Stock Equals or Exceeds $18.00 — ● in whole and not in part; ● at a price of $0.01 per warrant; ● upon not less than 30 days ’ prior written notice of redemption to each warrant holder; and if, and only if, closing price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00 — ● in whole and not in part; ● at $0.10 per warrant upon a minimum of 30 days ’ prior written notice of redemption provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption and receive that number of shares to be determined by reference to the table below, based on the redemption date and the “fair market value” of our Class A common stock except as otherwise described below; ● if, and only if, the closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days within the 30 -trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders; and ● if the closing price of the Class A common stock for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. If the Company calls the Public Warrants for redemption for cash, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis”, as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless. In addition, if the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at a Newly Issued Price of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to our initial stockholders or their respective affiliates, without taking into account any Founder Shares held by them, as applicable, prior to such issuance), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price. The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees (except as set forth under “Redemption of Warrants when the Price per Share of Class A Common Stock Equals or Exceeds $10.00”). If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. |
Class A Common Stock Subject to
Class A Common Stock Subject to Possible Redemption | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Class A Common Stock Subject to Possible Redemption | Note 8 — Class A Common Stock Subject to Possible Redemption The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 300,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 34,500,000 shares of Class A common stock outstanding, which were all subject to possible redemption and are classified outside of permanent equity in the consolidated balance sheets. The Class A common stock subject to possible redemption reflected on the consolidated balance sheets is reconciled on the following table: Class A common stock subject to possible redemption at December 31, 2020 $ — Gross Proceeds 345,000,000 Less: Proceeds allocated to Public Warrants (7,762,500) Class A common stock issuance costs (19,114,492) Plus: Accretion of carrying value to redemption value 26,876,992 Class A common stock subject to possible redemption at December 31, 2021 345,000,000 Increase in redemption value of Class A common stock subject to redemption 3,586,031 Class A common stock subject to possible redemption at December 31, 2022 $ 348,586,031 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Stockholders' Equity (Deficit) | Note 9 — Stockholders’ Equity (Deficit) Preferred Stock — Class A Common Stock — Class B Common Stock — Holders of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, except as required by law. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination). Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Fair Value Measurements | Note 4 — Fair Value Measurement Certain assets and liabilities measured and reported at fair value under GAAP are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. Categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgments about assumptions that market participants would use in pricing the asset or liability. Due to the short-term nature of the Company’s Cash and cash equivalents, Accounts receivable, Lot deposits, and Accounts payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 7 - Homebuilding debt and other affiliate debt for additional detail on the determination of these instruments’ interest rate. As the reference rate of the Homebuilding debt and other affiliate debt at any point in time is reflective of the current interest rate environment the Company operates in, the carrying amount of these instruments approximates their fair value. The Convertible note payable is presented on the Condensed Consolidated Balance Sheet at its amortized cost and not at fair value. As of March 31, 2023, the fair value of the convertible note is $193,100,000 . See Note 12 - Convertible Note for further details on how the fair value was estimated. All other financial instruments except for Derivative private placement warrants liability, Contingent earnout liability, Derivative stock option liability and Convertible note payable are valued either based on recent trades of securities in active markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. The estimated fair value of the Derivative private placement warrants liability, Contingent earnout liability, Derivative stock option liability and Convertible note payable is determined using Level 3 inputs. The models and significant assumptions used in preparing the valuations are disclosed in Note 15 - Warrant liability and Note 14 - Earnout Shares respectively. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and indicates the fair value hierarchy of the valuation. There were no assets or liabilities that are measured at fair value as of December 31, 2022. Fair Value Measurements as of March 31, 2023 Level 1 Level 2 Level 3 Total Contingent earnout liability $ — $ — $ 445,630,296 $ 445,630,296 Derivative private placement warrant liability — — 949,332 949,332 Derivative public warrant liability 2,415,000 — — 2,415,000 Derivative stock option liability $ — $ — $ 2,111,948 $ 2,111,948 Total Derivative Liability $ 2,415,000 $ — $ 448,691,576 $ 451,106,576 Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. There were no transfers to/from levels during the three months period ended March 31, 2023 and the year ended December 31, 2022. The change in the fair value of Level 3 liabilities as of March 31, 2023: Derivative private Derivative Contingent placement stock earnout warrant option liability liability liability Liability at January 1, 2023 $ — $ — $ — Recognition 242,211,404 625,370 1,189,685 Forfeitures — (890,001) — Change in fair value 203,418,892 1,213,963 922,263 Liability at March 31, 2023 $ 445,630,296 $ 949,332 $ 2,111,948 | |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Fair Value Measurements | Note 10 — Fair Value Measurements The following tables presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy: Fair Value Measured as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Investments held in Trust Account – Money Market Funds $ 349,152,086 $ — $ — $ 349,152,086 Liabilities: Derivative public warrant liabilities $ 905,630 $ — $ — $ 905,630 Derivative private warrant liabilities $ — $ — $ 625,370 $ 625,370 Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets Investments held in Trust Account – Money Market Funds $ 345,020,717 $ — $ — $ 345,020,717 Liabilities: Derivative public warrant liabilities $ 5,175,000 $ — $ — $ 5,175,000 Derivative private warrant liabilities $ — $ — $ 3,619,330 $ 3,619,330 Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to a Level 1 measurement in March 2021, when the Public Warrants were separately listed and traded in an active market. There were no other transfers to/from levels during the years ended December 31, 2022 and 2021. Level 1 assets include investments in mutual funds invested in government securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments. Prior to being publicly traded, the fair value of the Public Warrants issued in connection with the Initial Public Offering were measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of December 31, 2022 and 2021, the value of the Public Warrants was measured based on the trading price since the warrants were separately listed and traded. For the years ended December 31, 2022 and 2021, the Company recognized a gain of approximately $7.3 million and $4.4 million, respectively, resulting from a decrease in the fair value of liabilities, presented as change in fair value of derivative warrant liabilities on the accompanying consolidated statements of operations. The estimated fair value of the Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation and a Black-Scholes model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on the historical volatility of an index of companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates: As of December 31, As of December 31, 2022 2021 Exercise price $ 11.50 $ 11.50 Stock Price $ 10.05 $ 9.74 Option term (in years) 5.00 4.82 Volatility 40 % 12 % Risk-free interest rate 4.1 % 1.3 % The change in the fair value of the derivative warrant liabilities measured utilizing Level 1 and Level 3 inputs for the years ended December 31, 2022 and 2021, is summarized as follows: Derivative warrant liabilities at January 1, 2022 – Level 3 $ 3,619,330 Change in fair value of derivative warrant liabilities – Level 3 (2,993,960) Derivative warrant liabilities at December 31, 2022 – Level 3 $ 625,370 Derivative warrant liabilities at January 1, 2021 – Level 3 $ — Issuance of Derivative Warrants – Level 3 13,161,830 Transfer of Public Warrants to Level 1 (7,762,500) Change in fair value of derivative warrant liabilities – Level 3 (1,780,000) Derivative warrant liabilities at December 31, 2021 – Level 3 $ 3,619,330 |
Income Taxes_2
Income Taxes | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Income Taxes | Note 16 — Income taxes For the three months ended March 31, 2023, the Company recognized income tax benefit of $2,021,265 , from which $821,811 is in connection with continuing operations for the post transaction two-day period ended March 31, 2023. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year and this rate is applied to the results for the year-to-date period, and then adjusted for any discrete period items. The Company’s estimated annual effective tax rate for the three months ended March 31, 2023 is 25.3% . This differs from the federal statutory rate of 21% primarily due to state income tax expense and non-deductible expenses. The company has determined that changes in fair value of derivative liabilities, as well as offsetting tax adjustments, will be treated as discrete items in the period incurred. Great Southern Homes, Inc., a consolidated subsidiary of the Company, had a change in tax status from an S Corporation to a C Corporation during the current period. In connection with its change in status to a taxable entity, it recorded an income tax benefit of $1,199,454 in order to establish various deferred tax assets, primarily attributable to timing differences in revenue recognition. This benefit is treated as a discrete item. Only income recognized during the period in which Great Southern Homes, Inc. was a taxable entity is included in the calculation of the consolidated estimated annual effective tax rate for the three months ended March 31, 2023. | |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Income Taxes | Note 11 — Income Taxes The Company’s taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative expenses are generally considered start-up costs and are not currently deductible. The income tax provision consists of the following for the years ended December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Current Federal $ 983,430 $ — State — — Deferred Federal (74,706) (254,139) State — — Valuation allowance 74,706 254,139 Income tax provision $ 983,430 $ — The Company’s net deferred tax assets were as follows as of December 31, 2022 and 2021: As of December 31, 2022 As of December 31, 2021 Deferred tax assets: Start-up/Organization costs $ 328,845 $ 216,490 Net operating loss carryforwards — 37,649 Total deferred tax assets 328,845 254,139 Valuation allowance (328,845) (254,139) Deferred tax asset, net of allowance $ — $ — In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ending December 31, 2022 and 2021, the change in valuation allowance was $74,706 and $254,139, respectively. A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the year ended December 31, 2022 and 2021 is as follows: December 31, 2022 December 31, 2021 Statutory federal income tax rate 21.0 % 21.0 % Statutory state rate, net of federal benefit 0.0 % — % Financing costs — 3.5 % Change in fair value of derivative warrant liabilities (18.9) % (33.9) % Merger costs 9.9 % 0.0 % Transaction costs allocated to derivative warrant liabilities 0.0 % 0.0 % Loss upon issuance of private placement warrants (0.7) % 0.0 % Change in valuation allowance 0.9 % 9.4 % Income tax rate 12.2 % 0.0 % |
Subsequent Events_2_3
Subsequent Events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Subsequent Events | Note 19 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of March 31, 2023 through the date the Condensed Consolidated Financial Statements were available to be issued. On April 28, 2023, a warrant holder of the stock warrants described in Note 13 — Share-based compensation exercised their warrants. The Company issued 748,020 UHG Class A Common Shares through a cashless exercise of the warrants in accordance with the conversion terms of the underlying agreement. | Note 14 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of December 31, 2022 through March 17, 2023, which is the date the financial statements were available to be issued. During this period, the Company has not identified any subsequent events that require recognition or disclosure, except for the ones noted below. On February 27, 2023, the Company paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, the Company was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Proposed Business Combination discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of the date when financial statements were available to be issued. |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Subsequent Events | Note 12 — Subsequent Events Management has evaluated subsequent events to determine if events or transactions occurring through the date the consolidated financial statements were issued. The Company did not identify any subsequent event, other than as described herein or below, that would have required adjustment or disclosure in the consolidated financial statements. On January 11, 2023, the Company received a letter (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Company is not in compliance with Nasdaq Listing Rule Section 5620(a) (the “Annual Meeting Rule”) which requires the Company to hold an annual meeting of stockholders within 12 months of the Company’s fiscal year end. The Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on Nasdaq. The Notice advises that the Company will have 45 calendar days to submit to Nasdaq a plan to regain compliance with the Annual Meeting Rule. On March 16, 2023, Nasdaq advised the Company of its determination to grant the Company an extension until June 29, 2023 to regain compliance with the Annual Meeting Rule by holding a special meeting of stockholders to approve the GSH Business Combination where the Company’s stockholders will also have the opportunity to discuss Company affairs and elect directors. The special meeting was held on March 23, 2023 and served as the Company’s annual meeting of stockholders for purposes of the Annual Meeting Rule. As such, the Company has regained compliance with the Annual Meeting Rule. As previously announced on March 22, 2023, the Company entered into a Convertible Note Purchase Agreement (the “Note Purchase Agreement”) among itself, GSH and a certain group of investors party thereto (the “PIPE Investors”). Pursuant to the Note Purchase Agreement, the Investors have agreed to purchase $80,000,000 in original principal amount of convertible promissory notes (the “Notes”) and 744,588 shares of Class A common stock in a private placement PIPE investment (the “PIPE Investment”) in connection with the GSH Business Combination. The aggregate gross amount of the PIPE Investment is approximately $75,000,000. The proceeds of the PIPE Investment are expected to be used by the Company to offset redemptions of the Company’s Class A common stock (see “Extension and Redemptions” below for details on redemptions of the Company’s Class A common stock), and may be used by DHHC to satisfy the Minimum Cash Condition. The closing of the Note Purchase Agreement is contingent upon the substantially concurrent consummation of the GSH Business Combination and subject to other customary closing conditions and terms set forth therein. On March 23, 2023, in connection with the Company’s efforts to raise funds to meet the Minimum Cash Condition, the Company entered into certain private placement transactions (collectively, the “Share Lock-Up Agreements”) with certain investors who purchased shares of the Company’s Class A common stock on the open market prior to March 16, 2023 (each a “Lock-Up Investor”), pursuant to which, and subject to and conditioned upon the satisfaction of the closing conditions set forth in the Share Lock-Up Agreements, the Company agreed to issue to each Lock-Up Investor 0.25 UHG Class A Common Shares for a purchase price of $0.01, for each share of the Company’s Class A common stock held by such Lock-Up Investor at the Closing. Also, on March 23, 2023, the Company and certain investors (“PIPE Investors”) entered into subscription agreements (collectively, the “PIPE Subscription Agreements”) providing for the purchase by the PIPE Investors at the effective time of the GSH Business Combination of (i) an aggregate of 471,500 shares of the Company’s Class A common stock at a price per share of $10.00, and (ii) for each share of the Company’s Class A common stock purchased by each PIPE Investor, the Company agreed to issue to the applicable PIPE Investor 0.25 UHG Class A Shares for a purchase price of $0.01 per share for gross proceeds to the Company of approximately $4.7 million. On March 23, 2023, the Company held a special meeting of its stockholders in lieu of the 2022 annual meeting of stockholders (the “Special Meeting”) in connection with the GSH Business Combination. At the Special Meeting, the GSH Business Combination Agreement was approved, and the stockholders holding 109,426 shares of Class A common stock (after giving effect to withdrawals of redemptions) exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $1.1 million (approximately $10.13 per share) will be removed from the Trust Account to pay such redeeming holders and approximately $43.9 million will remain in the Company’s Trust Account. On January 10 and February 9, 2023, the Company drew additional amounts of $100,000 from the unsecured promissory notes, respectively, which were issued to two affiliates of the Sponsor on October 18, 2022 (See Note 5). The total outstanding balance of the promissory notes was fully repaid on March 24, 2023. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Emerging Growth Company | Emerging Growth Company - The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is not an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. | |
Use of Estimates | Use of Estimates — The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates made by the Company include corporate expense allocation, useful lives of depreciable assets, revenue recognition associated with contracts recognized over time, capitalized interest, warranty reserves, share-based compensation, valuation of earnout liability, valuation of convertible note and valuation of stock warrants. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. | Use of Estimates — |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. | |
Fair Value Measurements | Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt | |
Deferred Loan Costs | Deferred Loan Costs — Note 5 — Homebuilding debt and other affiliate debt | |
Income Taxes | Income Taxes — Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than not” that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positive and negative, is evaluated. The Company recognizes interest and penalties related to the underpayment of income taxes, including those resulting from the late filing of tax returns within the provision for income taxes in the Condensed Consolidated Statements of Operations. The Company analyzes its tax filing positions in the U.S. federal, state, and local tax jurisdictions where the Company is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is enacted or new information becomes available. Prior to the Business Combination, Legacy UHG was included in the tax filing of the shareholders of GSH, which was taxed individually under the provision of Subchapter S and Subchapter K of the Internal Revenue Code. Individual shareholders were liable for income taxes on their respective shares of GSH’s taxable income. No income tax liability nor income tax was allocated to Legacy UHG as of December 31, 2022 or for the three months ended March 31, 2023, nor was there any recorded liability for uncertain tax positions. | Income Taxes — |
Earnings per Share | Earnings per Share — Note 13 — Earnings per share | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements - In June 2016, FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASC 326 significantly changes the way impairment of financial assets is recognized by requiring companies to immediately recognize estimated credit losses expected to occur over the remaining life of many financial assets. The immediate recognition of the estimated credit losses generally will result in an earlier recognition of allowance for credit losses on loans and other financial instruments. The Company adopted this ASU effective January 1, 2023. The adoption of ASC 326 did not have a significant impact on the Company’s Condensed Consolidated Financial Statements. | Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) from its creditors as a result of the shift away from LIBOR. The Company is currently evaluating the impact of the shift and this guidance on the financial statements and disclosures. |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Basis of Presentation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying consolidated financial statements of the Company include its wholly owned subsidiary in connection with the planned merger. There were no inter-company activities during the years ended on December 31, 2022 and 2021. | |
Liquidity and Going Concern | Liquidity and Going Concern As of December 31, 2022, the Company had approximately $37,000 in cash and a working capital deficit of approximately $3.9 million (not taking into account tax obligations of approximately $481,000 that may be paid using investment income earned in Trust Account). The Company’s liquidity needs have been satisfied through a contribution of $25,000 from Sponsor to cover for certain offering costs in exchange for the issuance of the Founder Shares, a loan of up to $300,000 from the Sponsor pursuant to the Promissory Note (see Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Promissory Note was repaid on February 1, 2021. 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 the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans up to $1,500,000 (see Note 5). As of December 31, 2022 and 2021, there were no amounts outstanding under any Working Capital Loan. In October 2022, the Company issued unsecured promissory notes to two affiliates of the Sponsor for an aggregate principal amount of up to $400,000. As of December 31, 2022, there was an outstanding balance of $204,110 under these promissory notes including $4,110 of accrued but unpaid interest through December 31, 2022. In connection with management’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Consolidated Financial Statements-Going Concern,” management has determined that the existing liquidity condition, mandatory liquidation and subsequent dissolution raise substantial doubt about its ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate on or after July 28, 2023. | |
Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult because of the potential differences in accounting standards used. | |
Risks and Uncertainties | Risks and Uncertainties Various social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility could adversely affect the Company’s ability to complete a business combination. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a business combination and the value of the Company’s securities. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly - traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. Management continues to evaluate the impact of these types of risks and has concluded that while it is reasonably possible that these risks and uncertainties could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and 2021, the Company had no cash equivalents held outside the Trust Account. | |
Investments Held in Trust Account | Investments Held in Trust Account The Company’s portfolio of investments is comprised of 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 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 the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from investments held in Trust Account in the accompanying consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using quoted market prices. | |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 and investments held in the Trust Account. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the consolidated balance sheets. | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. | |
Derivative Warrant Liabilities | Derivative Warrant Liabilities The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480, and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised. Their re-measurement to fair value is recognized in the Company’s consolidated statements of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering were initially measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of and December 31, 2022 and 2021, the value of the Public Warrants is measured based on the listed market price of such warrants since being separately listed and traded. The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. | |
Deferred Loan Costs | Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the consolidated statements of operations. Offering costs associated with the Class A common stock were charged against the carrying value of the Class A common stock upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. | |
Class A Common Stock Subject to Possible Redemption | Class A Common Stock Subject to Possible Redemption The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2022 and 2021, 34,500,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s consolidated balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. Subsequently, the Company recognizes changes in redemption value in the accompanying consolidated statements of changes in stockholders’ deficit. | |
Income Taxes | Income Taxes The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. | |
Earnings per Share | Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net (loss) income per common stock is calculated by dividing the net (loss) income by the weighted average shares of common stock outstanding for the respective period. The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement to purchase an aggregate of 14,558,333 shares of common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock. For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 | |
Recently Adopted Accounting Pronouncements | For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Schedule of reconciliation of net income (loss) per share of common stock | March 31, 2023 March 31, 2022 Numerator Net (loss) income $ (204,504,328) $ 17,017,928 Denominator Weighted-average number of common shares outstanding - basic 37,575,074 37,347,350 Effect of dilutive securities — — Weighted-average number of common shares outstanding - diluted 37,575,074 37,347,350 Net (loss) earnings per common share: Basic $ (5.44) $ 0.46 Diluted $ (5.44) $ 0.46 | 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Schedule of reconciliation of net income (loss) per share of common stock | For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 |
Class A Common Stock Subject _2
Class A Common Stock Subject to Possible Redemption (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Statement [Line Items] | |
Schedule of Class A ordinary shares subject to possible redemption reflected on the condensed balance sheet | The Class A common stock subject to possible redemption reflected on the consolidated balance sheets is reconciled on the following table: Class A common stock subject to possible redemption at December 31, 2020 $ — Gross Proceeds 345,000,000 Less: Proceeds allocated to Public Warrants (7,762,500) Class A common stock issuance costs (19,114,492) Plus: Accretion of carrying value to redemption value 26,876,992 Class A common stock subject to possible redemption at December 31, 2021 345,000,000 Increase in redemption value of Class A common stock subject to redemption 3,586,031 Class A common stock subject to possible redemption at December 31, 2022 $ 348,586,031 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Statement [Line Items] | ||
Schedule of quantitative information regarding Level 3 fair value measurements inputs | March 31, 2023 March 30, 2023 Risk-free interest rate 3.70 % 3.80 % Expected volatility 40 % 40 % Expected dividend yield — % — % | |
Schedule of change in the derivative fair value of the warrant liabilities | Derivative private Derivative Contingent placement stock earnout warrant option liability liability liability Liability at January 1, 2023 $ — $ — $ — Recognition 242,211,404 625,370 1,189,685 Forfeitures — (890,001) — Change in fair value 203,418,892 1,213,963 922,263 Liability at March 31, 2023 $ 445,630,296 $ 949,332 $ 2,111,948 | |
DiamondHead Holdings Corp. | ||
Statement [Line Items] | ||
Schedule of company's financial assets and liabilities that are measured at fair value on a recurring basis | Fair Value Measured as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Investments held in Trust Account – Money Market Funds $ 349,152,086 $ — $ — $ 349,152,086 Liabilities: Derivative public warrant liabilities $ 905,630 $ — $ — $ 905,630 Derivative private warrant liabilities $ — $ — $ 625,370 $ 625,370 Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets Investments held in Trust Account – Money Market Funds $ 345,020,717 $ — $ — $ 345,020,717 Liabilities: Derivative public warrant liabilities $ 5,175,000 $ — $ — $ 5,175,000 Derivative private warrant liabilities $ — $ — $ 3,619,330 $ 3,619,330 | |
Schedule of quantitative information regarding Level 3 fair value measurements inputs | As of December 31, As of December 31, 2022 2021 Exercise price $ 11.50 $ 11.50 Stock Price $ 10.05 $ 9.74 Option term (in years) 5.00 4.82 Volatility 40 % 12 % Risk-free interest rate 4.1 % 1.3 % | |
Schedule of change in the derivative fair value of the warrant liabilities | Derivative warrant liabilities at January 1, 2022 – Level 3 $ 3,619,330 Change in fair value of derivative warrant liabilities – Level 3 (2,993,960) Derivative warrant liabilities at December 31, 2022 – Level 3 $ 625,370 Derivative warrant liabilities at January 1, 2021 – Level 3 $ — Issuance of Derivative Warrants – Level 3 13,161,830 Transfer of Public Warrants to Level 1 (7,762,500) Change in fair value of derivative warrant liabilities – Level 3 (1,780,000) Derivative warrant liabilities at December 31, 2021 – Level 3 $ 3,619,330 |
Income Taxes (Tables)
Income Taxes (Tables) - DiamondHead Holdings Corp. | 12 Months Ended |
Dec. 31, 2022 | |
Statement [Line Items] | |
Schedule of income tax provision | December 31, 2022 December 31, 2021 Current Federal $ 983,430 $ — State — — Deferred Federal (74,706) (254,139) State — — Valuation allowance 74,706 254,139 Income tax provision $ 983,430 $ — |
Summary of net deferred tax assets | As of December 31, 2022 As of December 31, 2021 Deferred tax assets: Start-up/Organization costs $ 328,845 $ 216,490 Net operating loss carryforwards — 37,649 Total deferred tax assets 328,845 254,139 Valuation allowance (328,845) (254,139) Deferred tax asset, net of allowance $ — $ — |
Schedule of statutory federal income tax rate to the Company's effective tax rate | December 31, 2022 December 31, 2021 Statutory federal income tax rate 21.0 % 21.0 % Statutory state rate, net of federal benefit 0.0 % — % Financing costs — 3.5 % Change in fair value of derivative warrant liabilities (18.9) % (33.9) % Merger costs 9.9 % 0.0 % Transaction costs allocated to derivative warrant liabilities 0.0 % 0.0 % Loss upon issuance of private placement warrants (0.7) % 0.0 % Change in valuation allowance 0.9 % 9.4 % Income tax rate 12.2 % 0.0 % |
Description of Organization a_2
Description of Organization and Business Operations (Details) - DiamondHead Holdings Corp. | 12 Months Ended | ||||||
Jan. 25, 2023 USD ($) shares | Aug. 10, 2022 USD ($) | Jan. 28, 2021 USD ($) $ / shares shares | Oct. 07, 2020 item | Dec. 31, 2022 USD ($) M $ / shares | Dec. 31, 2021 USD ($) shares | Sep. 10, 2022 USD ($) | |
Description of Organization and Business Operations | |||||||
Condition for future business combination number of businesses minimum | item | 1 | ||||||
Sale of Units, net of underwriting discounts (in shares) | shares | 4,500,000 | ||||||
Proceeds received from initial public offering, gross | $ 345,000,000 | ||||||
Deferred underwriting commissions | $ 12,100,000 | 12,075,000 | |||||
Deferred underwriting commissions waived | $ 12,100,000 | ||||||
Investment of cash into Trust Account | $ 345,000,000 | ||||||
Maturity term of U.S. government securities | 185 days | ||||||
Condition for future business combination use of proceeds percentage | 80 | ||||||
Condition for future business combination threshold ownership percentage | 50 | ||||||
Redemption price per unit | $ / shares | $ 10 | ||||||
Condition for future business combination threshold net tangible assets | $ 5,000,001 | ||||||
Threshold percentage of public shares subject to redemption without company's prior written consent | 15% | ||||||
Obligation to redeem Public Shares if entity does not complete a Business Combination (as a percent) | 100% | ||||||
Months to complete acquisition | M | 30 | ||||||
Redemption period upon closure | 10 days | ||||||
Maximum allowed dissolution expenses | $ 100,000 | ||||||
Aggregate number of Public Shares, holders exercised their right to redeem shares | shares | 30,058,968 | ||||||
Aggregate redemption amount | $ 304,000,000 | ||||||
GSH Business Combination Agreement | |||||||
Description of Organization and Business Operations | |||||||
Minimum Cash Condition | $ 125,000,000 | ||||||
Private Placement Warrants | |||||||
Description of Organization and Business Operations | |||||||
Sale of Private Placement Warrants (in shares) | shares | 5,933,333 | ||||||
Initial Public Offering | |||||||
Description of Organization and Business Operations | |||||||
Sale of Units, net of underwriting discounts (in shares) | shares | 34,500,000 | ||||||
Purchase price | $ / shares | $ 10 | ||||||
Proceeds received from initial public offering, gross | $ 345,000,000 | ||||||
Offering costs incurred | 19,600,000 | ||||||
Deferred underwriting commissions | 12,100,000 | ||||||
Investment of cash into Trust Account | $ 345,000,000 | ||||||
Private Placement | Private Placement Warrants | |||||||
Description of Organization and Business Operations | |||||||
Sale of Private Placement Warrants (in shares) | shares | 5,933,333 | ||||||
Price of warrant | $ / shares | $ 1.50 | ||||||
Proceeds from issuance | $ 8,900,000 | ||||||
Over-allotment option | |||||||
Description of Organization and Business Operations | |||||||
Sale of Units, net of underwriting discounts (in shares) | shares | 4,500,000 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Oct. 18, 2022 USD ($) item | Oct. 31, 2022 USD ($) item | Mar. 31, 2023 USD ($) shares | Mar. 31, 2022 shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) | Oct. 21, 2020 USD ($) | |
Basis of Presentation and Summary of Significant Accounting Policies | ||||||||
Cash | $ 110,911,416 | $ 12,238,835 | $ 51,504,887 | |||||
Unrecognized tax benefits | $ 0 | 0 | $ 0 | |||||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | shares | 22,358,327 | 2,811,630 | 4,466 | |||||
Federal Depository Insurance Coverage | $ 250,000 | |||||||
DiamondHead Holdings Corp. | ||||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||||
Cash | 37,000 | |||||||
Working capital deficit | 3,900,000 | |||||||
Tax obligations that may be paid using investment income earned in Trust Account | 481,000 | |||||||
Working capital loan | 1,500,000 | |||||||
Working capital loans outstanding | 0 | 0 | ||||||
Notes payable - related party | 204,110 | |||||||
Cash equivalents | $ 0 | 0 | ||||||
Maturity term of U.S. government securities | 185 days | |||||||
Unrecognized tax benefits | $ 0 | $ 0 | ||||||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | shares | 14,558,333 | |||||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | ||||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | |||||||
Notes payable - related party | $ 204,110 | |||||||
Accrued interest | 4,110 | |||||||
DiamondHead Holdings Corp. | Sponsor | ||||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||||
Consideration received | 25,000 | |||||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | |||||||
DiamondHead Holdings Corp. | Sponsor | Promissory Note with Related Party | ||||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||||
Maximum borrowing capacity of related party promissory note | $ 400,000 | |||||||
Unsecured promissory notes issued, number of affiliates of the Sponsor | item | 2 | 2 | ||||||
Notes payable - related party | $ 400,000 | |||||||
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | ||||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||||
Class A ordinary shares, temporary equity | shares | 34,500,000 | 34,500,000 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Net Income Per Share of Common Stock (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
Numerator: | |||||||
Allocation of net income - basic | $ (204,504,328) | $ 17,017,928 | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 | ||
Denominator: | |||||||
Weighted-average number of common shares outstanding - basic | 37,575,074 | [1] | 37,347,350 | [1] | 100,000 | 100,000 | 100,000 |
Weighted-average number of common shares outstanding - diluted | 37,575,074 | [1] | 37,347,350 | [1] | 102,960 | 100,000 | 100,000 |
Basic earnings per share | $ (5.44) | $ 0.46 | $ 694.89 | $ 624.13 | $ 389.76 | ||
Diluted earnings per share | $ (5.44) | $ 0.46 | $ 674.92 | $ 624.13 | $ 389.76 | ||
DiamondHead Holdings Corp. | Class A common stock | |||||||
Numerator: | |||||||
Allocation of net income - basic | $ 5,658,652 | $ 2,136,906 | |||||
Allocation of net income - diluted | $ 5,658,652 | $ 2,132,523 | |||||
Denominator: | |||||||
Weighted-average number of common shares outstanding - basic | 34,500,000 | 31,947,945 | |||||
Weighted-average number of common shares outstanding - diluted | 34,500,000 | 31,947,945 | |||||
Basic earnings per share | $ 0.16 | $ 0.07 | |||||
Diluted earnings per share | $ 0.16 | $ 0.07 | |||||
DiamondHead Holdings Corp. | Class B common stock | |||||||
Numerator: | |||||||
Allocation of net income - basic | $ 1,414,663 | $ 571,335 | |||||
Allocation of net income - diluted | $ 1,414,663 | $ 575,718 | |||||
Denominator: | |||||||
Weighted-average number of common shares outstanding - basic | 8,625,000 | 8,541,781 | |||||
Weighted-average number of common shares outstanding - diluted | 8,625,000 | 8,625,000 | |||||
Basic earnings per share | $ 0.16 | $ 0.07 | |||||
Diluted earnings per share | $ 0.16 | $ 0.07 | |||||
[1] Retroactively restated for the three months ending March 31, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
Initial Public Offering (Detail
Initial Public Offering (Details) - USD ($) | 12 Months Ended | ||||
Aug. 10, 2022 | Jan. 28, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2023 | |
Initial Public Offering | |||||
Number of shares issuable per warrant | 1 | ||||
Exercise price of warrants | $ 11.50 | ||||
DiamondHead Holdings Corp. | |||||
Initial Public Offering | |||||
Number of units sold | 4,500,000 | ||||
Proceeds received from initial public offering, gross | $ 345,000,000 | ||||
Deferred underwriting commissions | $ 12,100,000 | $ 12,075,000 | |||
Deferred underwriting commissions waived | $ 12,100,000 | ||||
DiamondHead Holdings Corp. | Class A common stock | |||||
Initial Public Offering | |||||
Number of class A common stock in a unit | 1 | ||||
DiamondHead Holdings Corp. | Public Warrants | |||||
Initial Public Offering | |||||
Number of warrants in a unit | 0.25 | ||||
DiamondHead Holdings Corp. | Public Warrants | Class A common stock | |||||
Initial Public Offering | |||||
Number of shares issuable per warrant | 1 | ||||
Exercise price of warrants | $ 11.50 | ||||
DiamondHead Holdings Corp. | Initial Public Offering | |||||
Initial Public Offering | |||||
Number of units sold | 34,500,000 | ||||
Purchase price | $ 10 | ||||
Proceeds received from initial public offering, gross | $ 345,000,000 | ||||
Offering costs incurred | 19,600,000 | ||||
Deferred underwriting commissions | $ 12,100,000 | ||||
DiamondHead Holdings Corp. | Over-allotment option | |||||
Initial Public Offering | |||||
Number of units sold | 4,500,000 |
Private Placement (Details)
Private Placement (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 28, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Private placement | ||||
Number of shares issuable per warrant | 1 | |||
Exercise price of warrants | $ 11.50 | |||
DiamondHead Holdings Corp. | Private Placement Warrants | ||||
Private placement | ||||
Sale of Private Placement Warrants (in shares) | 5,933,333 | |||
DiamondHead Holdings Corp. | Private Placement Warrants | Class A common stock | ||||
Private placement | ||||
Number of shares issuable per warrant | 1 | |||
Exercise price of warrants | $ 11.50 | |||
DiamondHead Holdings Corp. | Private Placement | Private Placement Warrants | ||||
Private placement | ||||
Sale of Private Placement Warrants (in shares) | 5,933,333 | |||
Price of warrants | $ 1.50 | |||
Cash consideration for issuance of warrants | $ 8.9 |
Related Party Transactions - Fo
Related Party Transactions - Founder Shares (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Oct. 18, 2022 USD ($) item | Jan. 28, 2021 shares | Oct. 21, 2020 USD ($) D $ / shares shares | Oct. 31, 2022 USD ($) item | Mar. 31, 2023 shares | Dec. 31, 2022 USD ($) | Dec. 31, 2020 USD ($) shares | |
Related Party Transactions | |||||||
Issuance of Class B common stock to Sponsor | shares | 47,594,950 | ||||||
Class A common stock | |||||||
Related Party Transactions | |||||||
Issuance of Class B common stock to Sponsor | shares | 1,755,063 | ||||||
DiamondHead Holdings Corp. | |||||||
Related Party Transactions | |||||||
Aggregate outstanding balance | $ 204,110 | ||||||
DiamondHead Holdings Corp. | Class B common stock | |||||||
Related Party Transactions | |||||||
Shares subject to forfeiture | shares | 1,125,000 | ||||||
DiamondHead Holdings Corp. | Sponsor | |||||||
Related Party Transactions | |||||||
Consideration received | 25,000 | ||||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | ||||||
DiamondHead Holdings Corp. | Sponsor | Class B common stock | |||||||
Related Party Transactions | |||||||
Number of shares not subject to forfeiture | shares | 1,125,000 | ||||||
Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 150 days | ||||||
DiamondHead Holdings Corp. | Founder Shares | Class A common stock | |||||||
Related Party Transactions | |||||||
Share exchange ratio | 1 | ||||||
DiamondHead Holdings Corp. | Founder Shares | Class B common stock | |||||||
Related Party Transactions | |||||||
Number of shares not subject to forfeiture | shares | 1,125,000 | ||||||
DiamondHead Holdings Corp. | Founder Shares | Sponsor | Class B common stock | |||||||
Related Party Transactions | |||||||
Consideration received | $ 25,000 | ||||||
Issuance of Class B common stock to Sponsor | shares | 8,625,000 | ||||||
Shares subject to forfeiture | shares | 1,125,000 | ||||||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20% | ||||||
Restrictions on transfer period of time after business combination completion | 1 year | ||||||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12 | ||||||
Threshold trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | D | 20 | ||||||
Threshold consecutive trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | D | 30 | ||||||
DiamondHead Holdings Corp. | Founder Shares | Anchor Investors | Class B common stock | |||||||
Related Party Transactions | |||||||
Issuance of Class B common stock to Sponsor | shares | 1,250,625 | ||||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | |||||||
Related Party Transactions | |||||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | ||||||
Outstanding balance of related party note | $ 130,000 | ||||||
Aggregate outstanding balance | $ 204,110 | ||||||
Interest rate per annum | 10% | ||||||
Accrued interest | $ 4,110 | ||||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | Sponsor | |||||||
Related Party Transactions | |||||||
Maximum borrowing capacity of related party promissory note | $ 400,000 | ||||||
Unsecured promissory notes issued, number of affiliates of the Sponsor | item | 2 | 2 | |||||
Aggregate outstanding balance | $ 400,000 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2023 shares | Dec. 31, 2022 USD ($) D tranche $ / shares shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Oct. 31, 2022 USD ($) | Oct. 21, 2020 USD ($) | |
Related Party Transactions | ||||||
Repayment of promissory note - related party | $ | $ 918,453 | $ 5,624,330 | $ 7,499,472 | |||
Issuance of Class B common stock to Sponsor | 47,594,950 | |||||
Class A common stock | ||||||
Related Party Transactions | ||||||
Issuance of Class B common stock to Sponsor | 1,755,063 | |||||
DiamondHead Holdings Corp. | ||||||
Related Party Transactions | ||||||
Borrowing under Working Capital Loans | $ | 0 | 0 | ||||
Working capital loan | $ | 1,500,000 | |||||
DiamondHead Holdings Corp. | Sponsor | ||||||
Related Party Transactions | ||||||
Maximum borrowing capacity of related party promissory note | $ | 300,000 | |||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | ||||||
Related Party Transactions | ||||||
Maximum borrowing capacity of related party promissory note | $ | $ 300,000 | |||||
Outstanding balance of related party note | $ | $ 130,000 | |||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | Sponsor | ||||||
Related Party Transactions | ||||||
Maximum borrowing capacity of related party promissory note | $ | $ 400,000 | |||||
DiamondHead Holdings Corp. | Administrative Support Agreement | ||||||
Related Party Transactions | ||||||
Expenses per month | $ | $ 10,000 | |||||
DiamondHead Holdings Corp. | Related Party Loans | Working capital loans warrant | ||||||
Related Party Transactions | ||||||
Price of warrant | $ / shares | $ 1.50 | |||||
Borrowing under Working Capital Loans | $ | $ 0 | $ 0 | ||||
Working capital loan | $ | $ 1,500,000 | |||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | ||||||
Related Party Transactions | ||||||
Number of Sponsor Earn Out Shares that the Sponsor has agreed not to transfer | 2,100,000 | |||||
Number of tranches for issuance of Earn Out Shares | tranche | 3 | |||||
Earn-Out milestones, number of trading days for VWAP trigger | D | 20 | |||||
Earn-Out milestones, Number of consecutive trading days for VWAP trigger | D | 30 | |||||
Threshold closing balance of Cash to trigger conversion of Sponsor shares to Sponsor Earn Out Shares | $ | $ 100,000,000 | |||||
Maximum number of Sponsor shares that will be converted to Sponsor Earn Out shares | 1,000,000 | |||||
Aggregate shares committed by the holder to purchase and not redeem | 2,500,000 | |||||
Number of Sponsor Shares agreed to be forfeited | 1,800,000 | |||||
Percentage of Private Placement Warrants agreed to be forfeited by Sponsor | 50% | |||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | Triggering Event I | ||||||
Related Party Transactions | ||||||
Issuance of Class B common stock to Sponsor | 7,500,000 | |||||
Threshold VWAP Price for Earn-Out milestones | $ / shares | $ 12.50 | |||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | Triggering Event II | ||||||
Related Party Transactions | ||||||
Issuance of Class B common stock to Sponsor | 7,500,000 | |||||
Threshold VWAP Price for Earn-Out milestones | $ / shares | $ 15 | |||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | Triggering Event III | ||||||
Related Party Transactions | ||||||
Issuance of Class B common stock to Sponsor | 5,000,000 | |||||
Threshold VWAP Price for Earn-Out milestones | $ / shares | $ 17.50 | |||||
DiamondHead Holdings Corp. | Financing Commitment Letter | Class A common stock | ||||||
Related Party Transactions | ||||||
Number of Sponsor Shares agreed to be forfeited | 2,500,000 | |||||
Aggregate maximum shares committed by the holder to purchase and beneficially own, no later than five business days prior to the special meeting of stockholders | 1,250,000 | |||||
Specified period prior to special meeting of stockholders before which the aggregate maximum shares are committed to be purchased and beneficially owned | 5 days | |||||
DiamondHead Holdings Corp. | Financing Commitment Letter | Class B common stock | ||||||
Related Party Transactions | ||||||
Number of shares automatically forfeited, in the event an Investor fails to make the committed purchase | 1,250,000 |
Commitments and Contingencies_7
Commitments and Contingencies (Details) - DiamondHead Holdings Corp. | 12 Months Ended | |||
Aug. 10, 2022 USD ($) | Jan. 28, 2021 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) Transaction item | Dec. 31, 2021 USD ($) | |
Commitments and Contingencies | ||||
Maximum number of demands for registration of securities | item | 3 | |||
Granted term | 45 days | |||
Sale of Units, net of underwriting discounts (in shares) | shares | 4,500,000 | |||
Underwriting cash discount per unit | $ / shares | $ 0.20 | |||
Underwriter cash discount | $ 6,900,000 | |||
Deferred fee per unit | $ / shares | $ 0.35 | |||
Deferred underwriting commissions | $ 12,100,000 | $ 12,075,000 | ||
Deferred underwriting commissions waived | $ 12,100,000 | |||
Extinguishment of deferred underwriting commissions on public shares | $ 11,803,313 | |||
Gain from settlement of deferred underwriting commissions on public warrants | $ 271,688 | |||
Amended and Restated Registration Rights Agreement | ||||
Commitments and Contingencies | ||||
Number of days within Closing, a shelf registration statement is agreed to be filed | 45 days | |||
Number of times that the legacy stockholders may request to sell all or any portion of their registrable securities in an underwritten offering pursuant to business combination | Transaction | 2 | |||
Specified period within which the legacy stockholders may request to sell all or any portion of their registrable securities in an underwritten offering pursuant to business combination | 12 months | |||
Threshold total offering price considered for legacy stockholder's request to sell all or any portion of their registrable securities in an underwritten offering pursuant to business combination | $ 10,000,000 | |||
Engagement letters with Zelman Partners LLC | ||||
Commitments and Contingencies | ||||
Agreed transaction fee in cash | $ 4,500,000 | |||
Percentage of transaction fee on Payment in cash | 25% | |||
Engagement letters with Zelman Partners LLC | Minimum | ||||
Commitments and Contingencies | ||||
Additional transaction fee | $ 0 | |||
Engagement letters with Zelman Partners LLC | Maximum | ||||
Commitments and Contingencies | ||||
Additional transaction fee | $ 1,000,000 |
Derivative Warrant Liabilities
Derivative Warrant Liabilities (Details) - DiamondHead Holdings Corp. - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of significant accounting policies | ||
Threshold period for not to transfer, assign or sell any of their shares or warrants after the completion of the initial business combination | 30 days | |
Public Warrants | ||
Summary of significant accounting policies | ||
Sale of Private Placement Warrants (in shares) | 8,625,000 | |
Minimum threshold written notice period for redemption of public warrants | 30 days | |
Public Warrants exercisable term from the closing of the initial public offering | 12 months | |
Public Warrants expiration term | 5 years | |
Threshold period for filling registration statement after business combination | 15 days | |
Maximum threshold period for registration statement to become effective after business combination | 60 days | |
Stock price trigger for redemption of public warrants (in dollars per share) | $ 10 | |
Share price | $ 9.20 | |
Adjustment of exercise price of warrants based on market value and newly issued price (as a percent) | 115% | |
Private Placement Warrants | ||
Summary of significant accounting policies | ||
Sale of Private Placement Warrants (in shares) | 5,933,333 | |
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00 | Public Warrants | ||
Summary of significant accounting policies | ||
Stock price trigger for redemption of public warrants (in dollars per share) | $ 18 | |
Redemption price per public warrant (in dollars per share) | $ 0.01 | |
Redemption period | 30 days | |
Threshold trading days for redemption of public warrants | 20 days | |
Threshold consecutive trading days for redemption of public warrants | 30 days | |
Threshold number of business days before sending notice of redemption to warrant holders | 3 days | |
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00 | Public Warrants | ||
Summary of significant accounting policies | ||
Stock price trigger for redemption of public warrants (in dollars per share) | $ 10 | |
Redemption price per public warrant (in dollars per share) | $ 0.10 | |
Redemption period | 30 days | |
Threshold trading days for redemption of public warrants | 20 days | |
Threshold consecutive trading days for redemption of public warrants | 30 days |
Class A Common Stock Subject _3
Class A Common Stock Subject to Possible Redemption (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Mar. 31, 2023 $ / shares shares | |
Class A common stock | |||
Class A Common Stock Subject to Possible Redemption | |||
Common stock, shares authorized | shares | 350,000,000 | 350,000,000 | |
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
DiamondHead Holdings Corp. | |||
Class A Common Stock Subject to Possible Redemption | |||
Increase in redemption value of Class A common stock subject to redemption | $ 3,586,031 | $ 26,876,992 | |
DiamondHead Holdings Corp. | Class A common stock | |||
Class A Common Stock Subject to Possible Redemption | |||
Common stock, shares authorized | shares | 300,000,000 | 300,000,000 | |
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
Number of votes per share | Vote | 1 | ||
Class A common stock issuance costs | $ (19,114,492) | ||
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | |||
Class A Common Stock Subject to Possible Redemption | |||
Class A common stock subject to possible redemption, outstanding (in shares) | shares | 34,500,000 | 34,500,000 | |
Class A common stock subject to possible redemption | $ 348,586,031 | $ 345,000,000 | |
Gross Proceeds | 345,000,000 | ||
Proceeds allocated to Public Warrants | (7,762,500) | ||
Accretion of carrying value to redemption value | $ 26,876,992 | ||
Increase in redemption value of Class A common stock subject to redemption | $ 3,586,031 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Preferred Stock Shares (Details) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Statement [Line Items] | |||
Preferred shares, shares authorized | 40,000,000 | 40,000,000 | |
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 | |
Preferred shares, shares issued | 0 | 0 | |
Preferred shares, shares outstanding | 0 | 0 | |
DiamondHead Holdings Corp. | |||
Statement [Line Items] | |||
Preferred shares, shares authorized | 10,000,000 | 10,000,000 | |
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 | |
Preferred shares, shares issued | 0 | 0 | |
Preferred shares, shares outstanding | 0 | 0 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Common Stock Shares (Details) | 12 Months Ended | |||||
Jan. 28, 2021 shares | Dec. 31, 2022 Vote $ / shares shares | Mar. 31, 2023 $ / shares shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 shares | Oct. 21, 2020 shares | |
Class A common stock | ||||||
Stockholders' Equity (Deficit) | ||||||
Common shares, shares authorized | 350,000,000 | 350,000,000 | ||||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common shares, shares issued | 10,621,073 | 10,621,073 | ||||
Common stock, shares outstanding | 10,621,073 | 10,621,073 | ||||
Class B common stock | ||||||
Stockholders' Equity (Deficit) | ||||||
Common shares, shares authorized | 60,000,000 | 60,000,000 | ||||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common shares, shares issued | 36,973,877 | 36,973,877 | ||||
Common stock, shares outstanding | 36,973,877 | 36,973,877 | ||||
DiamondHead Holdings Corp. | Class A common stock | ||||||
Stockholders' Equity (Deficit) | ||||||
Common shares, shares authorized | 300,000,000 | 300,000,000 | ||||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common shares, votes per share | Vote | 1 | |||||
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | ||||||
Stockholders' Equity (Deficit) | ||||||
Class A common stock subject to possible redemption, issued (in shares) | 34,500,000 | 34,500,000 | ||||
Class A common stock subject to possible redemption, outstanding (in shares) | 34,500,000 | 34,500,000 | ||||
DiamondHead Holdings Corp. | Class B common stock | ||||||
Stockholders' Equity (Deficit) | ||||||
Common shares, shares authorized | 10,000,000 | 10,000,000 | ||||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common shares, votes per share | Vote | 1 | |||||
Common shares, shares issued | 8,625,000 | 8,625,000 | ||||
Common stock, shares outstanding | 8,625,000 | 8,625,000 | 8,625,000 | |||
Shares subject to forfeiture | 1,125,000 | |||||
Ratio to be applied to the stock in the conversion | 20 | |||||
DiamondHead Holdings Corp. | Class B common stock | Founder Shares | ||||||
Stockholders' Equity (Deficit) | ||||||
Number of shares not subject to forfeiture | 1,125,000 | |||||
DiamondHead Holdings Corp. | Class B common stock | Sponsor | ||||||
Stockholders' Equity (Deficit) | ||||||
Adjustment one of redemption price of stock based on market value and newly issued price (as a percent) | 20% | |||||
Number of shares not subject to forfeiture | 1,125,000 | |||||
DiamondHead Holdings Corp. | Class B common stock | Sponsor | Founder Shares | ||||||
Stockholders' Equity (Deficit) | ||||||
Shares subject to forfeiture | 1,125,000 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial assets and liabilities that are measured at fair value on a recurring basis (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 30, 2023 | |
Public Warrants | |||
Liabilities: | |||
Warranty liabilities | $ 2,600,000 | ||
Private Placement Warrants | |||
Liabilities: | |||
Warranty liabilities | $ 900,000 | ||
DiamondHead Holdings Corp. | |||
Assets: | |||
Investments held in Trust Account - Money Market Funds | $ 349,152,086 | $ 345,020,717 | |
Liabilities: | |||
Warranty liabilities | 1,531,000 | 8,794,330 | |
Change in fair value of derivative warrant liabilities | 7,300,000 | 4,400,000 | |
DiamondHead Holdings Corp. | Fair Value, Recurring [Member] | |||
Assets: | |||
Investments held in Trust Account - Money Market Funds | 349,152,086 | 345,020,717 | |
DiamondHead Holdings Corp. | Fair Value, Recurring [Member] | Public Warrants | |||
Liabilities: | |||
Warranty liabilities | 905,630 | 5,175,000 | |
DiamondHead Holdings Corp. | Fair Value, Recurring [Member] | Private Placement Warrants | |||
Liabilities: | |||
Warranty liabilities | 625,370 | 3,619,330 | |
DiamondHead Holdings Corp. | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | |||
Assets: | |||
Investments held in Trust Account - Money Market Funds | 349,152,086 | 345,020,717 | |
DiamondHead Holdings Corp. | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Public Warrants | |||
Liabilities: | |||
Warranty liabilities | 905,630 | 5,175,000 | |
DiamondHead Holdings Corp. | Fair Value, Inputs, Level 3 [Member] | |||
Liabilities: | |||
Change in fair value of derivative warrant liabilities | (2,993,960) | (1,780,000) | |
DiamondHead Holdings Corp. | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Private Placement Warrants | |||
Liabilities: | |||
Warranty liabilities | $ 625,370 | $ 3,619,330 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Fair Value Measurements Inputs (Details) | Mar. 31, 2023 Y $ / shares | Mar. 30, 2023 Y $ / shares | Dec. 31, 2022 $ / shares Y | Dec. 31, 2021 $ / shares Y |
Measurement Input, Share Price [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 20.80 | 12.68 | ||
Measurement Input, Expected Term [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | Y | 5 | 5 | ||
Measurement Input, Price Volatility [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 40 | 40 | ||
Measurement Input, Risk Free Interest Rate [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 3.69 | 3.75 | ||
DiamondHead Holdings Corp. | Measurement Input, Expected Dividend Rate [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 0 | |||
DiamondHead Holdings Corp. | Measurement Input, Exercise Price [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 11.50 | 11.50 | ||
DiamondHead Holdings Corp. | Measurement Input, Share Price [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 10.05 | 9.74 | ||
DiamondHead Holdings Corp. | Measurement Input, Expected Term [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | Y | 5 | 4.82 | ||
DiamondHead Holdings Corp. | Measurement Input, Price Volatility [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 0.40 | 0.12 | ||
DiamondHead Holdings Corp. | Measurement Input, Risk Free Interest Rate [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurements | ||||
Derivative liability, measurement input | 0.041 | 0.013 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in the Fair Value of the Warrant Liabilities (Details) - DiamondHead Holdings Corp. - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Change in fair value of derivative warrant liabilities | $ 7,300,000 | $ 4,400,000 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Transfer of Public Warrants to Level 1 | (7,762,500) | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Liability at January 1, 2023 | 3,619,330 | |
Issuance of Derivative Warrants | 13,161,830 | |
Change in fair value of derivative warrant liabilities | $ (2,993,960) | (1,780,000) |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value Adjustment of Warrants | |
Liability at March 31, 2023 | $ 625,370 | $ 3,619,330 |
Income Taxes - Income tax provi
Income Taxes - Income tax provision (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred | ||||
Income tax provision | $ (2,021,265) | $ 0 | $ 0 | $ 0 |
DiamondHead Holdings Corp. | ||||
Current | ||||
Federal | 983,430 | |||
Deferred | ||||
Federal | (74,706) | (254,139) | ||
Valuation allowance | 328,845 | $ 254,139 | ||
Income tax provision | $ 983,430 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (Details) - DiamondHead Holdings Corp. - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred tax assets: | ||
Start-up/Organization costs | $ 328,845 | $ 216,490 |
Net operating loss carryforwards | 37,649 | |
Total deferred tax assets | 328,845 | 254,139 |
Valuation allowance | (74,706) | (254,139) |
Deferred tax asset, net of allowance | 0 | 0 |
Change in valuation allowance | $ 74,706 | $ 254,139 |
Income Taxes - Summary of the s
Income Taxes - Summary of the statutory federal income tax rate to the Company's effective tax rate (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement [Line Items] | |||
Statutory federal income tax rate | 21% | ||
Income tax rate | 25.30% | ||
DiamondHead Holdings Corp. | |||
Statement [Line Items] | |||
Statutory federal income tax rate | 21% | 21% | |
Statutory state rate, net of federal benefit | 0% | ||
Financing costs | 3.50% | ||
Change in fair value of derivative warrant liabilities | (18.90%) | (33.90%) | |
Merger costs | 9.90% | (0.00%) | |
Transaction costs allocated to derivative warrant liabilities | 0% | 0% | |
Loss upon issuance of private placement warrants | (0.70%) | (0.00%) | |
Change in valuation allowance | 0.90% | 9.40% | |
Income tax rate | 12.20% | 0% |
Subsequent Events (Details)_2_3
Subsequent Events (Details) | 3 Months Ended | |||||||
Mar. 23, 2023 USD ($) $ / shares shares | Mar. 22, 2023 USD ($) shares | Feb. 09, 2023 USD ($) item | Jan. 10, 2023 USD ($) item | Mar. 31, 2023 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Subsequent Events | ||||||||
Principal amount | $ 1,693,800 | |||||||
Aggregate number of common stock issued | shares | 47,594,950 | |||||||
Gross proceeds | $ 4,700,000 | |||||||
Class A common stock | ||||||||
Subsequent Events | ||||||||
Aggregate number of common stock issued | shares | 1,755,063 | |||||||
DiamondHead Holdings Corp. | ||||||||
Subsequent Events | ||||||||
Investments held in Trust Account | $ 349,152,086 | $ 345,020,717 | ||||||
DiamondHead Holdings Corp. | Subsequent Event [Member] | ||||||||
Subsequent Events | ||||||||
Drew additional amounts | $ 100,000 | $ 100,000 | ||||||
Number of affiliates to whom promissory notes are issued | item | 2 | 2 | ||||||
DiamondHead Holdings Corp. | Subsequent Event [Member] | PIPE Investors | ||||||||
Subsequent Events | ||||||||
Principal amount | $ 80,000,000 | |||||||
DiamondHead Holdings Corp. | Subsequent Event [Member] | GSH Business Combination | ||||||||
Subsequent Events | ||||||||
Redeeming in trust account | $ 1,100,000 | |||||||
Redeeming in trust account per share | $ / shares | $ 10.13 | |||||||
Investments held in Trust Account | $ 43,900,000 | |||||||
DiamondHead Holdings Corp. | Subsequent Event [Member] | Class A common stock | PIPE Investors | ||||||||
Subsequent Events | ||||||||
Aggregate number of common stock issued | shares | 471,500 | 744,588 | ||||||
Purchase price per share | $ / shares | $ 10 | |||||||
Gross proceeds | $ 4,700,000 | $ 75,000,000 | ||||||
Number of UHG common stock shares issued | shares | 0.25 | |||||||
UHG shares price per share | $ / shares | $ 0.01 | |||||||
DiamondHead Holdings Corp. | Subsequent Event [Member] | Class A common stock | Lock-Up Investor | ||||||||
Subsequent Events | ||||||||
Number of UHG common stock shares issued | shares | 0.25 | |||||||
UHG shares price per share | $ / shares | $ 0.01 | |||||||
DiamondHead Holdings Corp. | Subsequent Event [Member] | Class A common stock | GSH Business Combination | ||||||||
Subsequent Events | ||||||||
Number of shares issued | shares | 109,426 |