Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 13, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39936 | |
Entity Registrant Name | United Homes Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 85-3460766 | |
Entity Address, Address Line One | 917 Chapin Road | |
Entity Address, City or Town | Chapin | |
Entity Address, State or Province | SC | |
Entity Address, Postal Zip Code | 29036 | |
City Area Code | 844 | |
Local Phone Number | 766-4663 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001830188 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Class A Common Shares | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A Common Shares | |
Trading Symbol | UHG | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 11,382,296 | |
Class B Common Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 36,973,877 | |
Warrants, each whole warrant exercisable for one Class A Common Share, each at an exercise price of $11.50 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one Class A Common Share, each at an exercise price of $11.50 per share | |
Trading Symbol | UHGWW | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | |
ASSETS | |||
Cash and cash equivalents | $ 81,243,705 | $ 12,238,835 | |
Accounts receivable, net | 1,917,322 | 1,976,334 | |
Inventories: | |||
Homes under construction and finished homes | 108,821,016 | 163,997,487 | |
Developed lots | 23,725,065 | 16,205,448 | |
Due from related party | 77,333 | 1,437,235 | |
Related party note receivable | 628,832 | 0 | |
Income tax receivable | 4,742,415 | 0 | |
Lot purchase agreement deposits | 24,605,584 | 3,804,436 | |
Investment in joint venture | 1,116,491 | 186,086 | |
Property and equipment, net | 643,354 | 1,385,698 | |
Operating right-of-use assets | 719,595 | 1,001,277 | |
Prepaid expenses and other assets | 8,582,333 | 6,112,044 | |
Total Assets | 256,823,045 | 208,344,880 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accounts payable | 27,313,718 | 22,077,240 | |
Homebuilding debt and other affiliate debt | 62,196,208 | 120,797,006 | |
Operating lease liabilities | 723,269 | 1,001,277 | |
Other accrued expenses and liabilities | 4,947,404 | 5,465,321 | |
Deferred tax liability | 798,276 | 0 | |
Derivative liabilities | 58,541,934 | 0 | |
Convertible note payable | 67,574,708 | 0 | |
Total Liabilities | 222,095,517 | 149,340,844 | |
Commitments and contingencies (Note 12) | |||
Preferred Stock, $0.0001 par value; 40,000,000 shares authorized; none issued or outstanding. | 0 | 0 | |
Additional paid-in capital | [1] | 1,783,014 | 1,422,630 |
Retained Earnings | [1] | 32,939,680 | 57,577,672 |
Total Stockholders' equity | [1] | 34,727,528 | 59,004,036 |
Total Liabilities and Stockholders' equity | 256,823,045 | 208,344,880 | |
Class A common stock | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Common stock | [1] | 1,137 | 37 |
Class B common stock | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Common stock | [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 | Sep. 30, 2023 | Dec. 31, 2022 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Preferred stock, authorized (in shares) | 40,000,000 | 40,000,000 | |
Preferred stock, issued (in shares) | 0 | 0 | |
Preferred stock, outstanding (in shares) | 0 | 0 | |
Class A common stock | |||
Common stock, par value (in dollars per share) | [1] | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | [1] | 350,000,000 | 350,000,000 |
Common stock, issued (in shares) | [1] | 11,382,296 | 373,473 |
Common stock, outstanding (in shares) | [1] | 11,382,296 | 373,473 |
Class B common stock | |||
Common stock, par value (in dollars per share) | [1] | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | [1] | 60,000,000 | 60,000,000 |
Common stock, issued (in shares) | [1] | 36,973,877 | 36,973,877 |
Common stock, outstanding (in shares) | [1] | 36,973,877 | 36,973,877 |
[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 STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||||
Income Statement [Abstract] | |||||||
Revenue, net of sales discounts | $ 87,728,091 | $ 111,046,233 | $ 304,646,422 | $ 361,951,774 | |||
Cost of sales | 70,317,796 | 82,107,334 | 246,540,874 | 264,730,624 | |||
Gross profit | 17,410,295 | 28,938,899 | 58,105,548 | 97,221,150 | |||
Selling, general and administrative expense | 13,629,713 | 13,266,455 | 46,652,432 | 38,892,250 | |||
Net income from operations | 3,780,582 | 15,672,444 | 11,453,116 | 58,328,900 | |||
Other (expense) income, net | (1,199,140) | 49,513 | (3,291,755) | 312,991 | |||
Equity in net earnings (losses) from investment in joint venture | 293,923 | (49,000) | 930,405 | (49,000) | |||
Change in fair value of derivative liabilities | 149,703,161 | 0 | 184,981,652 | 0 | |||
Income before taxes | 152,578,526 | 15,672,957 | 194,073,418 | 58,592,891 | |||
Income tax expense | (1,735,839) | 0 | (2,372,300) | 0 | |||
Net income | $ 150,842,687 | [1] | $ 15,672,957 | [1] | $ 191,701,118 | $ 58,592,891 | |
Net earnings per common share: | |||||||
Basic (in dollars per share) | $ 3.12 | $ 0.42 | $ 4.29 | $ 1.68 | |||
Diluted (in dollars per share) | $ 2.35 | $ 0.40 | $ 3.61 | $ 1.66 | |||
Basic and diluted weighted-average number of shares | |||||||
Basic (in shares) | [2] | 48,356,057 | 37,347,350 | 44,723,915 | 34,884,887 | ||
Diluted (in shares) | [2] | 64,806,024 | 38,709,652 | 54,155,557 | 35,371,321 | ||
[1]The shares of the Company’s common stock, prior to the Business Combination (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately 373.47 (“Exchange Ratio”) established in the Business Combination.[2]Retroactively restated for the three and nine months ended September 30, 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 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Total | Previously Reported | Additional paid-in capital | Additional paid-in capital Previously Reported | Retained earnings | Retained earnings Previously Reported | Shareholders' and other affiliates' net investment | Shareholders' and other affiliates' net investment Previously Reported | Net Due To and Due From Shareholders and Other Affiliates | Net Due To and Due From Shareholders and Other Affiliates Previously Reported | Class A common stock Common stock | Class A common stock Common stock Previously Reported | Class B common stock Common stock | Class B common stock Common stock Previously Reported | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Retroactive application of recapitalization (in shares) | [1] | 373,473 | 36,973,877 | ||||||||||||
Retroactive application of recapitalization | [1] | $ 0 | $ 66,554,678 | $ (83,586,722) | $ 17,028,310 | $ 37 | $ 3,697 | ||||||||
Beginning balance (in shares) at Dec. 31, 2021 | [1] | 373,473 | 0 | 36,973,877 | 0 | ||||||||||
Beginning balance at Dec. 31, 2021 | [1] | 66,558,412 | $ 66,558,412 | $ 0 | 66,554,678 | $ 0 | 0 | $ 83,586,722 | 0 | $ (17,028,310) | $ 37 | $ 0 | $ 3,697 | $ 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Distributions and net transfer to shareholders and other affiliates | [1] | (20,766,162) | (20,766,162) | ||||||||||||
Stock-based compensation expense | [1] | 1,268,222 | $ 1,268,222 | ||||||||||||
Net income (loss) | [1] | 17,017,928 | 17,017,928 | ||||||||||||
Ending balance at Mar. 31, 2022 | [1] | 64,078,400 | 1,268,222 | 62,806,444 | 0 | 0 | $ 37 | $ 3,697 | |||||||
Ending balance (in shares) at Mar. 31, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | [1] | 373,473 | 0 | 36,973,877 | 0 | ||||||||||
Beginning balance at Dec. 31, 2021 | [1] | 66,558,412 | $ 66,558,412 | $ 0 | 66,554,678 | $ 0 | 0 | $ 83,586,722 | 0 | $ (17,028,310) | $ 37 | $ 0 | $ 3,697 | $ 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) | 58,592,891 | ||||||||||||||
Ending balance at Sep. 30, 2022 | [1] | 51,711,964 | 1,372,626 | 50,335,604 | 0 | 0 | $ 37 | $ 3,697 | |||||||
Ending balance (in shares) at Sep. 30, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Beginning balance (in shares) at Mar. 31, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Beginning balance at Mar. 31, 2022 | [1] | 64,078,400 | 1,268,222 | 62,806,444 | 0 | 0 | $ 37 | $ 3,697 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Distributions and net transfer to shareholders and other affiliates | [1] | (24,415,179) | (24,415,179) | ||||||||||||
Stock-based compensation expense | [1] | 53,288 | 53,288 | ||||||||||||
Net income (loss) | [1] | 25,902,006 | 25,902,006 | ||||||||||||
Ending balance at Jun. 30, 2022 | [1] | 65,618,515 | 1,321,510 | 64,293,271 | 0 | 0 | $ 37 | $ 3,697 | |||||||
Ending balance (in shares) at Jun. 30, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Distributions and net transfer to shareholders and other affiliates | [1] | (29,630,624) | (29,630,624) | ||||||||||||
Stock-based compensation expense | [1] | 51,116 | 51,116 | ||||||||||||
Net income (loss) | [1] | 15,672,957 | 15,672,957 | ||||||||||||
Ending balance at Sep. 30, 2022 | [1] | 51,711,964 | 1,372,626 | 50,335,604 | $ 0 | $ 0 | $ 37 | $ 3,697 | |||||||
Ending balance (in shares) at Sep. 30, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Beginning balance at Dec. 31, 2022 | [1] | 59,004,036 | 1,422,630 | 57,577,672 | $ 37 | $ 3,697 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Distributions and net transfer to shareholders and other affiliates | [1] | (4,193,093) | (4,193,093) | ||||||||||||
Stock-based compensation expense | [1] | 51,079 | 51,079 | ||||||||||||
Forfeiture of private placement warrants | [1] | 890,001 | 890,001 | ||||||||||||
Issuance of common stock upon the reverse recapitalization, net of transaction costs (in shares) | [1] | 8,492,537 | |||||||||||||
Issuance of common stock upon the reverse recapitalization, net of transaction costs | [1] | 17,870,584 | 17,869,735 | $ 849 | |||||||||||
Issuance of common stock related to PIPE Investment (in shares) | [1] | 1,333,963 | |||||||||||||
Issuance of common stock related to PIPE Investment | [1] | 9,501,915 | 9,501,782 | $ 133 | |||||||||||
Issuance of common stock related to lock-up agreement (in shares) | [1] | 421,100 | |||||||||||||
Issuance of common stock related to lock-up agreement | [1] | 4,236 | 4,194 | $ 42 | |||||||||||
Recognition of derivative liability related to earnout | [1] | (242,211,404) | (242,211,404) | ||||||||||||
Recognition of derivative liability related equity incentive plan | [1] | (1,189,685) | (1,189,685) | ||||||||||||
Earnout stock-based compensation expense for UHG employee options | [1] | 4,448,077 | 4,448,077 | ||||||||||||
Transaction costs related to reverse recapitalization | [1] | (2,932,426) | (2,932,426) | ||||||||||||
Reclassification of negative APIC | [1] | 0 | 212,146,017 | (212,146,017) | |||||||||||
Net income (loss) | [1] | (204,504,328) | (204,504,328) | ||||||||||||
Ending balance at Mar. 31, 2023 | [1] | (363,261,008) | 0 | (363,265,766) | $ 1,061 | $ 3,697 | |||||||||
Ending balance (in shares) at Mar. 31, 2023 | [1] | 10,621,073 | 36,973,877 | ||||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | [1] | 373,473 | 36,973,877 | ||||||||||||
Beginning balance at Dec. 31, 2022 | [1] | $ 59,004,036 | 1,422,630 | 57,577,672 | $ 37 | $ 3,697 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Exercise of stock options (in shares) | 2,054 | ||||||||||||||
Net income (loss) | $ 191,701,118 | ||||||||||||||
Ending balance at Sep. 30, 2023 | [1] | 34,727,528 | 1,783,014 | 32,939,680 | $ 1,137 | $ 3,697 | |||||||||
Ending balance (in shares) at Sep. 30, 2023 | [1] | 11,382,296 | 36,973,877 | ||||||||||||
Beginning balance (in shares) at Mar. 31, 2023 | [1] | 10,621,073 | 36,973,877 | ||||||||||||
Beginning balance at Mar. 31, 2023 | [1] | (363,261,008) | 0 | (363,265,766) | $ 1,061 | $ 3,697 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Stock-based compensation expense | [1] | 410,530 | 410,530 | ||||||||||||
Transaction costs related to reverse recapitalization | [1] | (257,721) | (257,721) | ||||||||||||
Exercise of stock options (in shares) | [1] | 12,643 | |||||||||||||
Exercise of stock options | [1] | 132,412 | 132,411 | $ 1 | |||||||||||
Forfeiture of stock options under the 2023 Plan | [1] | 479,742 | 479,742 | ||||||||||||
Exercise of stock warrants (in shares) | [1] | 748,020 | |||||||||||||
Exercise of stock warrants | [1] | 0 | (75) | $ 75 | |||||||||||
Net income (loss) | [1] | 245,362,759 | 245,362,759 | ||||||||||||
Ending balance at Jun. 30, 2023 | [1] | (117,133,286) | 764,887 | (117,903,007) | $ 1,137 | $ 3,697 | |||||||||
Ending balance (in shares) at Jun. 30, 2023 | [1] | 11,381,736 | 36,973,877 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Stock-based compensation expense | [1] | 1,106,014 | 1,106,014 | ||||||||||||
Recognition of derivative liability related equity incentive plan | [1] | (89,454) | (89,454) | ||||||||||||
Exercise of stock options (in shares) | [1] | 560 | |||||||||||||
Exercise of stock options | [1] | 1,567 | 1,567 | ||||||||||||
Net income (loss) | [1] | 150,842,687 | 150,842,687 | ||||||||||||
Ending balance at Sep. 30, 2023 | [1] | $ 34,727,528 | $ 1,783,014 | $ 32,939,680 | $ 1,137 | $ 3,697 | |||||||||
Ending balance (in shares) at Sep. 30, 2023 | [1] | 11,382,296 | 36,973,877 | ||||||||||||
[1]The shares of the Company’s common stock, prior to the Business Combination (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately 373.47 (“Exchange Ratio”) established in the Business Combination. |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) | 9 Months Ended |
Sep. 30, 2023 | |
Statement of Stockholders' Equity [Abstract] | |
Exchange ratio of business combination | 373.47 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 191,701,118 | $ 58,592,891 |
Adjustments to reconcile net income to net cash flows from operating activities: | ||
Bad debt expense | 87,786 | 0 |
Investment (earnings) losses in joint venture | (930,405) | 49,000 |
Depreciation | 154,474 | 264,884 |
(Gain) loss on sale of property and equipment | (1,892) | 6,967 |
Amortization of deferred financing costs | 694,219 | 283,157 |
Amortization of discount on convertible notes | 860,432 | 0 |
Non cash interest income | (26,002) | 0 |
Stock compensation expense | 6,015,700 | 1,372,626 |
Amortization of operating lease right-of-use assets | 627,120 | 396,628 |
Change in fair value of contingent earnout liability | (191,222,357) | 0 |
Change in fair value of warrant liabilities | 6,667,249 | 0 |
Change in fair value of equity incentive plan | (426,544) | 0 |
Deferred tax liability | 2,668,586 | 0 |
Net change in operating assets and liabilities: | ||
Accounts receivable | (28,774) | (1,856,760) |
Related party receivable | 1,359,902 | (1,437,235) |
Inventories | 48,838,741 | (46,974,166) |
Lot purchase agreement deposits | (17,882,022) | (664,490) |
Prepaid expenses and other assets | 460,845 | (505,383) |
Accounts payable | 2,456,057 | 7,086,580 |
Operating lease liabilities | (623,446) | (396,628) |
Income tax receivable | (5,444,286) | 0 |
Other accrued expenses and liabilities | (517,917) | 3,446,281 |
Net cash flows provided by operating activities | 45,488,584 | 19,664,352 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (59,229) | (116,420) |
Proceeds from the sale of property and equipment | 66,100 | 13,808 |
Proceeds from promissory note issued for sale of property and equipment | 62,190 | 0 |
Cash paid for acquisition | (2,166,516) | 0 |
Capital contribution in joint venture | 0 | (49,000) |
Net cash flows used in investing activities | (2,097,455) | (151,612) |
Cash flows from financing activities: | ||
Proceeds from homebuilding debt | 42,500,000 | 129,089,631 |
Repayments of homebuilding debt | (90,055,992) | (100,495,213) |
Proceeds from other affiliate debt | 136,773 | 9,456,206 |
Repayments of other affiliate debt | 0 | (918,453) |
Payment of deferred financing costs | (3,240,984) | 0 |
Repayments on equipment financing | 0 | (142,536) |
Distributions and net transfer to shareholders and other affiliates | (17,896,302) | (51,027,000) |
Changes in net due to and due from shareholders and other affiliates | 0 | (37,607,535) |
Proceeds from convertible note, net of transaction costs | 71,500,000 | 0 |
Proceeds from PIPE investment and lock up | 4,720,427 | 0 |
Proceeds from Business Combination, net of SPAC transaction costs | 30,336,068 | 0 |
Payment of equity issuance costs | (257,721) | 0 |
Payment of transaction costs | (12,134,293) | 0 |
Proceeds from exercise of employee stock options | 5,765 | 0 |
Net cash flows provided by (used in) financing activities | 25,613,741 | (51,644,900) |
Net change in cash and cash equivalents | 69,004,870 | (32,132,160) |
Cash and cash equivalents, beginning of year | 12,238,835 | 51,504,887 |
Cash and cash equivalents, end of year | 81,243,705 | 19,372,727 |
Supplemental cash flow information: | ||
Cash paid for interest | 12,265,939 | 2,969,521 |
Cash paid for income taxes | 5,299,436 | 0 |
Non-cash investing and financing activities: | ||
Additions of right-of-use lease assets and liabilities | 272,543 | 1,149,832 |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 0 | 13,822,570 |
Conversion of other affiliates debt to homebuilding debt | 0 | 1,414,681 |
Promissory note issued for sale of property and equipment | 665,020 | 0 |
Settlement of co-obligor debt to affiliates | 8,340,545 | 0 |
Release of guarantor from GSH to shareholder | 2,841,034 | 0 |
Noncash distribution to owners of Other Affiliates | 12,671,122 | 0 |
Earnest money receivable from Other Affiliates | 2,521,626 | 0 |
Recognition of previously capitalized deferred transaction costs | 2,932,426 | 0 |
Modification to existing lease | (40,968) | 0 |
Recognition of derivative liability related to earnout | 242,211,404 | 0 |
Recognition of derivative liability related to equity incentive plan | 1,279,139 | 0 |
Recognition of warrant liability upon Business Combination | 1,531,000 | 0 |
Forfeiture of private placement warrants upon Business Combination | (890,001) | 0 |
Issuance of common stock upon the reverse recapitalization | 39,933,707 | 0 |
Recognition of deferred tax asset upon Business Combination | 1,870,310 | 0 |
Recognition of income tax payable upon Business Combination | 701,871 | 0 |
Recognition of assumed assets and liabilities upon Business Combination, net | 3,588,110 | 0 |
Noncash exercise of stock warrants | 75 | 0 |
Noncash exercise of employee stock options | 128,214 | 0 |
Forfeiture of employee stock options | (479,742) | 0 |
Total non-cash financing activities | $ 320,077,435 | $ 16,387,083 |
Nature of operations and basis
Nature of operations and basis of presentation | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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” or the “Company”), a Delaware corporation, is a homebuilding business which operates with a land-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, North 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, the Condensed Consolidated Statements of Operations and Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022, and the Statement of Cash Flows for the nine months ended September 30, 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 (“GAAP”). The Statements of Changes in Stockholders’ Equity are 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 9 - 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 was 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. |
Merger and Reverse Recapitaliza
Merger and Reverse Recapitalization | 9 Months Ended |
Sep. 30, 2023 | |
Reverse Recapitalization [Abstract] | |
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 Sponsors (together, the “Earnout Holders”) are entitled to receive consideration in the form of common shares (“Earnout Shares”). The Company reserved 21,886,378 Earnout Shares for future issuance upon achievement of certain earnout conditions, of which 20,000,000 may be awarded to GSH Equity Holders and Employee Option Holders and 1,886,378 additional earnout shares may be awarded to the Sponsors . Refer to Note 15 - 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 15 - 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 13 - 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 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 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 cost, 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 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. |
Summary of significant accounti
Summary of significant accounting policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
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, notes, 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/A filed with the SEC on July 17, 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 Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying Condensed Consolidated Financial Statements as of September 30, 2023 and for the three and nine months ended September 30, 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 September 30, 2023, results of operations for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 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 note 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 and nine months ended September 30, 2023 and 2022 are not necessarily indicative of results to be expected for the year ended 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 September 30, 2023 and December 31, 2022, the amount of developed lots included in inventory was $23,725,065 and $16,205,448, respectively. Developed lots purchased at fair value from third parties and related parties was $23,150,065 and $10,052,179 as of September 30, 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, materials and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. As of September 30, 2023 and December 31, 2022, the amount of inventory related to homes under construction included in homes under construction and finished homes was $85,322,597 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 September 30, 2023 and December 31, 2022, the amount of inventory related to finished homes included in homes under construction and finished homes was $23,498,419 and $22,133,926, respectively. Goodwill - Goodwill represents the excess of purchase price over the fair value of the assets acquired and the liabilities assumed in a business combinatio n. See Note 4 - Business Combinations , for details on recent acquisitions. In accordance with ASC Topic 350, Intangibles-Goodwill and Other , the Company evaluates goodwill for potential impairment on at least an annual basis. The Company has the option to perform a qualitative or quantitative assessment to determine whether the fair value of a reporting unit exceeds its carrying value. Qualitative factors may include, but are not limited to economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting units and other entity and reporting unit specific events. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, then a quantitative assessment is performed to determine the reporting unit’s fair value. If the reporting unit’s carrying value exceeds its fair value, then an impairment loss is recognized for the amount of the excess of the carrying amount over the reporting unit’s fair value. Unconsolidated Variable Interest Entities - Pursuant to ASC 810 and subtopics related to the consolidation of variable interest entities (“VIEs”), management analyzes the Company’s investments and transactions under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion if changes to the Company’s involvement arise. To make this determination, management considers factors such as whether the Company could direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions. The primary beneficiary is defined as the entity having both of the following characteristics: 1) the power to direct the activities that most significantly impact the VIE’s performance, and 2) the obligation to absorb losses and rights to receive the returns from the VIE that would be potentially significant to the VIE. Management consolidates the entity if the Company is the primary beneficiary or if a standalone primary beneficiary does not exist and the Company and its related parties collectively meet the definition of a primary beneficiary. If the investment does not qualify as a VIE under the variable interest model, management then evaluates the entity under the voting interest model to assess if consolidation is appropriate. The Company has entered into a shared services agreement with a related party that operates in the land development business in which the Company will provide accounting, IT, HR, and other administrative support services and receive property maintenance services and due diligence and negotiation assistance with purchasing third party finished lots. Management has analyzed and concluded that it has a variable interest in this entity through the services agreement that provides the Company with the obligation to absorb losses and the right to receive benefits based on fees that are below market rates. Additionally, the Company enters into lot option purchase agreements with the same related party and other related parties to procure land or lots for the construction of homes. Under these contracts, the Company funds a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time. Under the terms of the option purchase contracts, the option deposits are not refundable. Management determined it holds a variable interest through its potential to absorb some of the related parties’ first dollar risk of loss by placing a non-refundable deposit. Management determined that these related parties are VIEs, however, the Company is not the primary beneficiary of the VIEs as it does not have the power to direct the VIEs’ significant activities related to land development. Accordingly, the Company does not consolidate these VIEs. As of September 30, 2023 the Company recognized $77,333 of assets related to the services agreement included within Due from related party on the Condensed Consolidated Balance Sheets, and $20,138,083 of assets related to lot purchase agreements included within Lot purchase agreement deposits on the Condensed Consolidated Balance Sheets. There were no amounts associated with these agreements as of December 31, 2022. The Company determined these amounts to be the maximum exposure to loss due to involvement with the VIEs as the Company does not provide any financial guarantees or support to these related parties. Revenue Recognition - The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers . For the three months ended September 30, 2023 and 2022, revenue recognized at a point in time from speculative home closings totaled $84,644,068, and $105,694,086, respectively, and for the three months ended September 30, 2023 and 2022, revenue recognized over time from construction activities on land owned by customers totaled $3,084,023, and $5,352,147, respectively. For the nine months ended September 30, 2023 and 2022, revenue recognized at a point in time from speculative home closings totaled $294,749,743, and $345,566,071, respectively, and for the nine months ended September 30, 2023 and 2022, revenue recognized over time from construction activities on land owned by customers totaled $9,896,679, and $16,385,703, 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 September 30, 2023 and 2022, the Company incurred $511,505 and $460,457, respectively, in advertising and marketing costs. For the nine months ended September 30, 2023 and 2022, the Company incurred $1,485,185 and $2,286,890, 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 nine months ended September 30, 2022, 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 (as defined below), 21,491,695 Earnout Shares and certain stock options (as discussed in Note 14 - 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 September 30, 2023. The Private Placement Warrants and the Earnout shares were valued using a Monte Carlo analysis. See the Earnout 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 14 - 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 15 - Earnout Shares. The contingent obligations to issue Earnout Shares to the Earnout Holders, excluding Employee Option Holders, are recognized 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 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 15 - 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 5 - 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 the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination, subject to certain exceptions. During the three and nine months ended September 30, 2023, no Common Stock Warrants were exercised. The Public Warrants are publicly traded and are exercisable for cash 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 was $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 . 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 13 - Convertible Note , would need to be bifurcated, the contingencies themselves are either entirely within the Company’s control or based on an event for which 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 13 - 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. 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. During the three months ended March 31, 2023, the Company adopted Topic 848 and amended the related debt agreement (see Note 8 - Homebuilding debt and other affiliate debt) |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Note 4 - Business Combinations In August 2023, the Company entered the Raleigh, North Carolina market through the acquisition of selected assets of Herring Homes, LLC (“Herring Homes”) for a purchase price of $2,166,516 in cash. The results of operations have been included in the financial statements since August 18, 2023, the effective date of the acquisition. The purchase price for the acquisition was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The Company recognized the excess purchase price over the fair value of the net assets acquired as goodwill o f $500,000 . The goodwill arising from the acquisition consists largely of the expected synergies from establishing a market presence in Raleigh and the experience and reputation of the acquired management team. The remaining basis of $1,666,516 is primarily comprised of the fair value of the acquired developed lots and lot purchase agreement deposits with limited other assets and liabilities. Transaction costs were not material and were expensed as incurred. The Company has entered into an agreement with Herring Homes, LLC to provide certain services including providing the use of UHG employees to finish unacquired WIP and treasury management in exchange for fees outlined in the agreement. For the three and nine months ended September 30, 2023, the C ompany recorded $50,000, $95,086, and $88,931 in Revenue, Other (expense) income, net, and Cost of sales, respectively. Subsequent to the acquisition, UHG acquired 50 lots for a fair value of $4.9 million in the Raleigh, North Carolina market. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Note 5 - 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, and Accounts payable, the carrying amounts of these instruments approximate their fair value. Lot purchase agreement deposits are recorded at the agreed-upon contract value, which approximates 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 8 - 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 September 30, 2023, the fair value of the convertible note is $142,700,000 . See Note 13 - 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 classified within Level 1 or Level 2 of the fair value hierarchy because the Company values these instruments 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 16 - Warrant liability, Note 15 - Earnout Shares, Note 14 - Share-based compensation , and Note 13 - Convertible Note 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 September 30, 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 September 30, 2023 Level 1 Level 2 Level 3 Total Contingent earnout liability $ — $ — $ 50,989,047 $ 50,989,047 Derivative private placement warrant liability — — 2,046,998 2,046,998 Derivative public warrant liability 5,261,250 — — 5,261,250 Derivative stock option liability — — 244,639 244,639 Total Derivative Liability $ 5,261,250 $ — $ 53,280,684 $ 58,541,934 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 nine month period ended September 30, 2023 and the year ended December 31, 2022. The following table presents a roll forward of the Level 3 liabilities measured at fair value on a recurring basis: Contingent earnout liability Derivative private placement warrant liability Derivative stock option 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 Forfeitures $ — $ — $ (817,862) Exercise of liability awards — — (272,621) Change in fair value (245,918,719) 1,394,332 (527,315) Liability at June 30, 2023 $ 199,711,577 $ 2,343,664 $ 494,150 Recognition $ 89,454 Change in fair value (148,722,530) (296,666) (338,965) Liability at September 30, 2023 $ 50,989,047 $ 2,046,998 $ 244,639 |
Capitalized interest
Capitalized interest | 9 Months Ended |
Sep. 30, 2023 | |
Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Abstract] | |
Capitalized interest | Note 6 - Capitalized interest The Company accrues interest on the Company’s Homebuilding debt. That debt is used to finance homebuilding operations (see Note 8 - Homebuilding debt and other affiliate debt ) and the associated interest is capitalized during active development of the home and included within inventory for Homes under construction and finished homes. Capitalized interest is expensed to Cost of sales upon the sale of the home. The Company also accrued interest on the Company’s Convertible note payable. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense within Other (expense) income, net in the period incurred (see Note 13 - Convertible Note ). Capitalized interest activity is summarized in the table below for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Capitalized interest at beginning of the period: $ 847,951 $ 969,337 $ 1,250,460 $ 1,190,318 Interest incurred 4,779,675 1,623,028 12,343,274 3,361,561 Interest expensed: Amortized to cost of sales (1,531,318) (1,582,819) (6,078,117) (3,542,333) Directly to interest expense (2,039,512) — (5,458,821) — Capitalized interest at September 30: $ 2,056,796 $ 1,009,546 $ 2,056,796 $ 1,009,546 |
Property and equipment
Property and equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Note 7 - Property and equipment Property and equipment consisted of the following as of September 30, 2023 and December 31, 2022: Asset Group September 30, 2023 December 31, 2022 Furniture and fixtures $ 507,972 $ 688,487 Leasehold improvements 380,187 380,187 Machinery and equipment 55,882 1,037,231 Office equipment 23,221 165,774 Vehicles 176,455 750,950 Total Property and equipment $ 1,143,717 $ 3,022,629 Less: Accumulated depreciation (500,363) (1,636,931) Property and equipment, net $ 643,354 $ 1,385,698 |
Homebuilding debt and other aff
Homebuilding debt and other affiliate debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Homebuilding debt and other affiliate debt | Note 8 - 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 is accrued based on the total syndication balance and is paid monthly. As the average construction time for homes is less than one year, all outstanding debt is considered short-term as of September 30, 2023 and December 31, 2022. The following table and descriptions summarize the Company’s debt as of September 30, 2023 and December 31, 2022: September 30, 2023 Weighted average interest rate Homebuilding Debt - Wells Fargo Syndication Wells Fargo Bank 8.02 % $ 16,844,806 Regions Bank 8.02 % 14,253,298 Flagstar Bank 8.02 % 12,957,543 United Bank 8.02 % 10,366,035 Third Coast Bank 8.02 % 7,774,526 Total debt on contracts $ 62,196,208 December 31, 2022 Weighted average interest rate Homebuilding Debt - Wells Fargo 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 was 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 could be exercised upon approval from Wells Fargo. The Syndicated Line also included 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 (“First Amendment”) on March 30, 2023 (“Amendment Date”) in connection with the Business Combination (as defined in Note 1 - Nature of operations and basis of presentation ) and made GSH the sole borrower of the Syndicated Line. An additional amendment and restatement (“Second Amendment”) was entered into on August 10, 2023 (“Second Amendment Date”). As a result of the Second Amendment, UHG became a co-borrower of the Syndicated Line, the maximum borrowing capacity was increased to $240,000,000, and the maturity date was extended to August 10, 2026. In addition, Wells Fargo Bank and Regions Bank increased their participation in the Syndicated Line, three lenders exited the Syndicated Line, and three lenders joined as new participants of the Syndicated Line. No other significant terms of the arrangements were changed other than those relating to the financial covenants and interest rate terms described below. The remaining availability to be drawn down on the Syndicated Line was $48,776,907 as of September 30, 2023 and $12,015,246 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 Syndicated Line 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 until June 30, 2023, no less than $70 million plus 25% of quarterly earnings on and after June 30, 2023 until the Second Amendment Date, no less than the sum of (x) $70 million and (y ) 25% of positive actual consoli dated earnings earned in any fiscal quarter end, plus 100% of new equity contributed to the Company, plus 100% of any new equity contributed as well as inc reases from an equity issuance or repurchase of equity interests on or after the Second 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, 2.50 to 1.00 for any fiscal quarter after the Amendment Date until December 31, 2023, and 2.25 to 1.00 for any fiscal quarter thereafter (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 until the Second Amendment Date, and not less than the greater of i) $20,000,000 or ii) an amount equal to 1.50x the trailing twelve month interest incurred on or after the Second Amendment Date and (e) unrestricted cash of not less than $7,500,000 until the Second Amendment Date and not less than 50% of the required liquidity on or after the Second Amendment Date. The Company was in compliance with all debt covenants as of September 30, 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 First Amendment, 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 is included as an offset in Retained Earnings in lieu of Additional paid-in capital. For the nine months ended September 30, 2023 and 2022, Other Affiliates borrowed $136,773, and $9,456,206, 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-obligor 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 September 30, 2023. In connection with the amendments of the Syndicated Line, the Company incurred debt issuance costs, of which $3,240,984 is deferred and will be amortized over the remaining life of the Syndicated Line. The amendments are accounted for as modifications of an existing line of credit under ASC 470, Debt |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 9 - 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 Operating 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 Affiliates and Other Operating Affiliates for the nine months ended September 30, 2023 and 2022. Nine Months ended September 30, 2023 Land Development Affiliates Other Operating 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 Nine Months ended September 30, 2022 Land Development Affiliates Other Operating Affiliates Total Financing cash flows: Land development expense $ (29,264,304) $ (665,777) $ (29,930,081) Other activities (1,928,677) (748,777) (2,677,454) Cash transfer — (5,000,000) (5,000,000) Total financing cash flows $ (31,192,981) $ (6,414,554) $ (37,607,535) Non-cash activities Acquisition of developed lots 13,822,570 — 13,822,570 Total non-cash activity $ 13,822,570 $ — $ 13,822,570 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 a 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 developed the raw parcels of land, they transferred the land to Legacy UHG in a non-cash transaction. The transfer amount was derived from the costs incurred to develop the land. Leases In addition to the transactions above, Legacy UHG has entered into four separate operating lease agreements with a related party. The terms of the leases, including rent expense and future minimum payments, are described in Note 12 - Commitments and contingencies . Services agreement 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 and nine months ended September 30, 2023 the Company allocated overhead costs to the related party in the amount of $64,614 and $375,805, respectively, and was charged for property maintenance services in the amount of $0 and $71,672, respectively, by the same related party. The remaining balance outstanding as of September 30, 2023 is a receivable of $77,333 and is presented within Due from related party on the Condensed Consolidated Balance Sheet. General contracting The Company has been engaged as a general contractor by several related parties. For the three months ended September 30, 2023 and 2022, Revenue of $1,002,900 and $582,225, respectively, and Cost of sales of $953,802 and $342,686, respectively, were recognized in the Statement of Operations. For the nine months ended September 30, 2023 and 2022, Revenue of $2,435,186 and $1,437,235, respectively, and Cost of sales of $2,165,259 and $1,197,695, respectively, were recognized in the Statement of Operations. Other The Company utilizes a related party vendor to perform certain civil engineering services. For the three and nine months ended September 30, 2023, expenses of $13,125 and $61,037, respectively, were recognized in the Statement of Operations. |
Lot purchase agreement deposits
Lot purchase agreement deposits | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
Lot purchase agreement deposits | Note 10 - Lot purchase agreement deposits 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 approximately 10% - 15% 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 September 30, 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 September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Lot purchase agreement deposits $ 24,605,584 $ 3,804,436 Remaining purchase price 205,799,113 65,451,928 Total contract value $ 230,404,697 $ 69,256,364 Out of the $24,605,584 lot purchase agreement deposits outstanding as of September 30, 2023, $20,138,083 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 and nine months ended September 30, 2023 and 2022, the Company had no forfeited lot purchase agreement deposits. The deposits placed by the Company pursuant to the lot purchase agreements are deemed to be a variable interest in related party land developers but not in the third-party land developers. See Note 3 - Summary of significant accounting policies |
Warranty reserves
Warranty reserves | 9 Months Ended |
Sep. 30, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Warranty reserves | Note 11 - 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: Nine Months Ended September 30, 2023 Year Ended December 31, 2022 Warranty reserves at beginning of the period $ 1,371,412 $ 1,275,594 Reserves provided 754,027 1,156,027 Payments for warranty costs and other (751,558) (1,060,209) Warranty reserves at end of the period $ 1,373,881 $ 1,371,412 |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 12 - Commitments and contingencies Leases The Company leases several office spaces in South Carolina under operating lease agreements with related parties, and one office space in North Carolina with a third party. The office leases 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 $229,407 and $95,185 within Selling, general, and administrative expense on the Condensed Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022, respectively. The Company recognized an operating lease expense of $617,194 and $418,147 within Selling, general, and administrative expense on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2023 and 2022, respectively. Operating lease expense included variable lease expense of $15,578 and $27,822 for the three months ended September 30, 2023 and 2022, respectively, Operating lease expense included variable lease expense of $36,037 and $64,048 for the nine months ended September 30, 2023 and 2022, respectively. The weighted-average discount rate for the operating leases was 7.25% and 3.21% during the nine months ended September 30, 2023 and 2022, respectively. The weighted-average remaining lease term was 1.91 and 2.33 years for the nine months ended September 30, 2023 and 2022, 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 $59,075 and $195,125, respectively, for the three and nine months ended September 30, 2023. The maturity of the contractual, undiscounted operating lease liabilities as of September 30, 2023 are as follows: Lease Payment 2023 $ 145,691 2024 395,064 2025 190,073 2026 43,094 2027 and thereafter — Total undiscounted operating lease liabilities $ 773,922 Interest on operating lease liabilities (50,653) Total present value of operating lease liabilities $ 723,269 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 $73,409 and $20,067 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 September 30, 2023 and 2022, respectively, and $256,282 and $74,582 for the nine months ended September 30, 2023 and 2022, respectively. Litigation The Company is subject to various claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s Condensed Consolidated Financial Statements. 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. |
Convertible Note
Convertible Note | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Convertible Note | Note 13 - 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% in cash rather than PIK Interest. The effective interest rate on the Notes is 20.46%. 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 for which 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 as of September 30, 2023: September 30, 2023 Beginning Balance – Par $ 80,000,000 Unamortized Discount (12,425,292) Carrying Value $ 67,574,708 Interest expense included within Other (expense) income, net on the Condensed Consolidated Statements of Operations was $2.0 million and $5.5 million for the Notes for the three and nine months ended September 30, 2023, respectively. Interest expense included within Cost of sales on the Condensed Consolidated Statements of Operations was $0.3 million and $0.3 million for the Notes for the three and nine months ended September 30, 2023, respectively. The following assumptions were used in the Binomial and Monte Carlo valuation models to determine the estimated fair value of the Notes at the issue date, March 30, 2023 and as of September 30, 2023. September 30, 2023 March 30, 2023 Risk-free interest rate 4.70 % 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. |
Share-based compensation
Share-based compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based compensation | Note 14 - 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 was administered by a committee appointed by the Board of Directors and had reserved 3,000 common shares to be issued as equity-based awards to directors and employees of GSH. The number of awards reserved was 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 defined 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 Exchange 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. 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. Stock options Weighted-Average Per share Exercise price Outstanding, December 31, 2022 870,567 $ 2.81 Granted 3,300,000 11.46 Exercised (2,054) 2.81 Forfeited (114,283) 2.81 Outstanding, September 30, 2023 4,054,230 9.85 Options exercisable at September 30, 2023 193,646 $ 2.81 The aggregate intrinsic value of the stock options outstanding was $2,104,020 and $7,460,132 as of September 30, 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 aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value. 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. Stock compensation expense included in the Condensed Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022 was $1,100,007 and $51,116, respectively, and $1,561,616 and $145,826 for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was unrecognized stock compensation expense related to non-vested stock option arrangements totaling $16,417,253. The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 3.43 years. Prior to the Business Combination, Legacy UHG’s common stock was not publicly traded, and 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 considered numerous objective and subjective factors to determine the fair value of the Company’s common stock. The factors considered included, but were 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, the fair value of stock options replaced on the replacement date and the fair value of options issued during the nine months ended September 30, 2023. Inputs Nine Months Ended September 30, 2023 March 30, 2023 January 19, 2022 Risk-free interest rate 3.97% - 4.68% 3.77 % 1.82 % Expected volatility 40 % 40 % 35 % Expected dividend yield — % — % — % Expected life (in years) 6.25 5.10 6.25 Fair value of options $3.00 - $5.38 $ 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 did 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 $244,639 and is included within Derivative liability on the Condensed Consolidated Balance Sheet as of September 30, 2023. Restricted Stock Units (“RSUs”) On September 12, 2023, the Company granted time-based restricted stock units to certain participants under the 2023 Plan that are stock-settled with UHG Class A Common Shares. The time-based restricted stock units granted under the 2023 Plan vest annually over four years. Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $6,007 for the three and nine months ended September 30, 2023. As of September 30, 2023, there was unrecognized pre-tax compensation expense of $481,600 related to time-based restricted stock units that is expected to be recognized over a weighted-average period of 3.95 years. The time-based restricted stock unit activity for the nine months ended September 30, 2023 was as follows: Units Outstanding Weighted-Average Grant Date Fair Value Per Unit Outstanding, December 31, 2022 — $ — Granted 73,992 6.59 Exercised — — Forfeited — — Outstanding, September 30, 2023 73,992 6.59 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 nine month period ended September 30, 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. On April 28, 2023, a warrant holder of the stock warrants exercised their warrants. 1,120,421 stock warrants were exercised in a cashless exercise whereby the Company issued 748,020 UHG Class A Common Shares in accordance with the conversion terms. As of September 30, 2023, there are 746,947 stock warrants outstanding. Earnout Employee Optionholders 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 nine months ended September 30, 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 15 - Earnout Shares for the assumptions and inputs used in the valuation of the Earnout Shares. |
Earnout Shares
Earnout Shares | 9 Months Ended |
Sep. 30, 2023 | |
Earnout Shares [Abstract] | |
Earnout Shares | Note 15 - 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 to 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 September 30, 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 September 30, 2023, the fair value of the Earnout Shares was $2.86 per share issuable upon Triggering Event I, $2.26 per share issuable upon Triggering Event II and $1.81 per share issuable upon Triggering Event III. The estimated fair value of the Earnout Shares was determined 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 September 30, 2023 March 30, 2023 Current stock price $ 5.60 $ 12.68 Stock price targets $12.50, $15.00, $17.50 $12.50, $15.00, $17.50 Expected life (in years) 4.50 5.00 Earnout period (in years) 4.50 4.75 Risk-free interest rate 4.70 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — % — % The change in the fair value of the Earnout Shares between March 30, 2023 and September 30, 2023 was primarily attributable to the decrease in the current stock price of the Company from $12.68 as of March 30, 2023 to $5.60 as of September 30, 2023. As none of the earnout Triggering Events have occurred as of September 30, 2023, no shares have been distributed. |
Warrant liability
Warrant liability | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Warrant liability | Note 16 - 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 the Closing Date at fair value. The Private Placement Warrant liability is recognized in accordance with ASC 815 as a derivative liability and marked to market at each reporting period end. The change in fair value of the private placement warrant liability for the three and nine months ended September 30, 2023 resulted in a gain of $0.3 million and loss of $2.3 million, respectively. These changes are 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 September 30, 2023 March 30, 2023 Current stock price $ 5.60 $ 12.68 Exercise price $ 11.50 $ 11.50 Expected life (in years) 4.50 5.00 Risk-free interest rate 4.70 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — — |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 17 - Income taxes For the three and nine months ended September 30, 2023, the Company recognized income tax expense of $1,735,839 and $2,372,300, respectively, which includes discrete items of $982,981 for adjustments to deferred revenue and deferred costs during the quarter. 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 effective tax rate for the nine months ended September 30, 2023, including the impact of discrete items, is 44.7%. Excluding discrete items, the Company’s annual effective tax rate is 26.2%. This differs from the federal statutory rate of 21.0% primarily due to state income tax expense and nondeductible 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 on March 30, 2023. In connection with its change in status to a taxable entity, the Company has recorded, for the nine months ended September 30, 2023, discrete items of $982,981 |
Employee benefit plan
Employee benefit plan | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Employee benefit plan | Note 18 - 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 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 September 30, 2023 and 2022 were approximately $51,570, and $36,517, respectively, and $168,682 and $134,862 for the nine months ended September 30, 2023 and 2022, respectively. These amounts are recorded in Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations. |
Net Earnings Per Share
Net Earnings Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Earnings Per Share | Note 19 - Net Earnings Per Share The Company computes basic net earnings per share using net 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 and nine months ended September 30, 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 profit per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income $ 150,842,687 $ 15,672,957 $ 191,701,118 $ 58,592,891 Basic income available to common shareholders $ 150,842,687 $ 15,672,957 $ 191,701,118 $ 58,592,891 Effect of dilutive securities: Add back: Interest on Convertible note, net of tax 1,752,570 — 4,276,020 — Change in fair value of stock options - liability classified, net of tax (250,156) — (306,489) — Diluted income available to common shareholders $ 152,345,101 $ 15,672,957 $ 195,670,649 $ 58,592,891 Weighted-average number of common shares outstanding - basic 48,356,057 37,347,350 44,723,915 34,884,887 Effect of dilutive securities: Convertible notes 16,000,000 — 8,379,450 — Stock options - equity classified — 472,719 206,271 180,840 Stock options - liability classified 43,259 — 70,894 — Stock warrants 406,708 889,583 775,027 305,594 Weighted-average number of common shares outstanding - diluted 64,806,024 38,709,652 54,155,557 35,371,321 Net earnings per common share: Basic $ 3.12 $ 0.42 $ 4.29 $ 1.68 Diluted $ 2.35 $ 0.40 $ 3.61 $ 1.66 The following table summarizes potentially dilutive outstanding securities for that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Private placement warrants 2,966,664 — 23,618 — Public warrants 8,625,000 — 68,664 — Stock options - equity classified 3,914,673 — — — Restricted stock units 14,477 — 4,826 — Total anti-dilutive features 15,520,814 — 97,108 — The Company’s 21,886,378 Earnout Shares are excluded from the anti-dilutive table above for the three and nine months ended September 30, 2023, as the underlying shares remain contingently issuable as the Earnout Triggering Events have not been satisfied. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 20 - Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of September 30, 2023 through the date the Condensed Consolidated Financial Statements were issued. On October 25, 2023 (“the Closing Date”), the Company completed the acquisition of 100% of the common stock of Rosewood Communities, Inc., a South Carolina corporation (“Rosewood”) (the “Rosewood Acquisition”). The purchase price for the Rosewood Acquisition consisted of (a) cash at the Closing in the amount of $13.0 million , subject to a customary post-closing adjustment based on the Closing Book Value of Rosewood as of the Closing Date, (b) a warranty reserve of $0.3 million to be used to satisfy Rosewood warranty claims, and (c) the potential future payment of an earnout generally equal to 25% of EBITDA attributable to Rosewood’s business through December 31, 2025. In addition, the Company paid off approximately $10.0 million of liabilities of Rosewood. The Company has not yet completed its evaluation and determination of consideration paid and certain assets and liabilities acquired in accordance with ASC 805, Business Combinations. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
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, notes, 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/A filed with the SEC on July 17, 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 Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying Condensed Consolidated Financial Statements as of September 30, 2023 and for the three and nine months ended September 30, 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 September 30, 2023, results of operations for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 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 note 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 and nine months ended September 30, 2023 and 2022 are not necessarily indicative of results to be expected for the year ended 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. |
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. |
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. |
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 September 30, 2023 and December 31, 2022, the amount of developed lots included in inventory was $23,725,065 and $16,205,448, respectively. Developed lots purchased at fair value from third parties and related parties was $23,150,065 and $10,052,179 as of September 30, 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, materials and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. As of September 30, 2023 and December 31, 2022, the amount of inventory related to homes under construction included in homes under construction and finished homes was $85,322,597 and $141,863,561, respectively. |
Goodwill | Goodwill - Goodwill represents the excess of purchase price over the fair value of the assets acquired and the liabilities assumed in a business combinatio n. See Note 4 - Business Combinations , for details on recent acquisitions. In accordance with ASC Topic 350, Intangibles-Goodwill and Other , the Company evaluates goodwill for potential impairment on at least an annual basis. The Company has the option to perform a qualitative or quantitative assessment to determine whether the fair value of a reporting unit exceeds its carrying value. Qualitative factors may include, but are not limited to economic |
Unconsolidated Variable Interest Entities | Unconsolidated Variable Interest Entities - Pursuant to ASC 810 and subtopics related to the consolidation of variable interest entities (“VIEs”), management analyzes the Company’s investments and transactions under the variable interest model to determine if they are VIEs and, if so, whether the Company is the primary beneficiary. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion if changes to the Company’s involvement arise. To make this determination, management considers factors such as whether the Company could direct finance, determine or limit the scope of the entity, sell or transfer property, direct development or direct other operating decisions. The primary beneficiary is defined as the entity having both of the following characteristics: 1) the power to direct the activities that most significantly impact the VIE’s performance, and 2) the obligation to absorb losses and rights to receive the returns from the VIE that would be potentially significant to the VIE. Management consolidates the entity if the Company is the primary beneficiary or if a standalone primary beneficiary does not exist and the Company and its related parties collectively meet the definition of a primary beneficiary. If the investment does not qualify as a VIE under the variable interest model, management then evaluates the entity under the voting interest model to assess if consolidation is appropriate. The Company has entered into a shared services agreement with a related party that operates in the land development business in which the Company will provide accounting, IT, HR, and other administrative support services and receive property maintenance services and due diligence and negotiation assistance with purchasing third party finished lots. Management has analyzed and concluded that it has a variable interest in this entity through the services agreement that provides the Company with the obligation to absorb losses and the right to receive benefits based on fees that are below market rates. Additionally, the Company enters into lot option purchase agreements with the same related party and other related parties to procure land or lots for the construction of homes. Under these contracts, the Company funds a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time. Under the terms of the option purchase contracts, the option deposits are not refundable. Management determined it holds a variable interest through its potential to absorb some of the related parties’ first dollar risk of loss by placing a non-refundable deposit. Management determined that these related parties are VIEs, however, the Company is not the primary beneficiary of the VIEs as it does not have the power to direct the VIEs’ significant activities related to land development. Accordingly, the Company does not consolidate these VIEs. |
Revenue Recognition | Revenue Recognition - The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers |
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. |
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. |
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 (as defined below), 21,491,695 Earnout Shares and certain stock options (as discussed in Note 14 - 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 September 30, 2023. The Private Placement Warrants and the Earnout shares were valued using a Monte Carlo analysis. See the Earnout 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 14 - Share-based compensation |
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 15 - Earnout Shares. The contingent obligations to issue Earnout Shares to the Earnout Holders, excluding Employee Option Holders, are recognized 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 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 15 - 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 5 - 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 the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination, subject to certain exceptions. During the three and nine months ended September 30, 2023, no Common Stock Warrants were exercised. The Public Warrants are publicly traded and are exercisable for cash 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 was $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 . 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 13 - Convertible Note , would need to be bifurcated, the contingencies themselves are either entirely within the Company’s control or based on an event for which 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 13 - Convertible Note for further valuation details. |
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. 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. During the three months ended March 31, 2023, the Company adopted Topic 848 and amended the related debt agreement (see Note 8 - Homebuilding debt and other affiliate debt) |
Merger and Reverse Recapitali_2
Merger and Reverse Recapitalization (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Reverse Recapitalization [Abstract] | |
Common Stock Issued Following Consummation of Business Combination | 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. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 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 September 30, 2023 Level 1 Level 2 Level 3 Total Contingent earnout liability $ — $ — $ 50,989,047 $ 50,989,047 Derivative private placement warrant liability — — 2,046,998 2,046,998 Derivative public warrant liability 5,261,250 — — 5,261,250 Derivative stock option liability — — 244,639 244,639 Total Derivative Liability $ 5,261,250 $ — $ 53,280,684 $ 58,541,934 |
Roll forward of Level 3 Liabilities Measured at a Fair Value on a Recurring Basis | The following table presents a roll forward of the Level 3 liabilities measured at fair value on a recurring basis: Contingent earnout liability Derivative private placement warrant liability Derivative stock option 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 Forfeitures $ — $ — $ (817,862) Exercise of liability awards — — (272,621) Change in fair value (245,918,719) 1,394,332 (527,315) Liability at June 30, 2023 $ 199,711,577 $ 2,343,664 $ 494,150 Recognition $ 89,454 Change in fair value (148,722,530) (296,666) (338,965) Liability at September 30, 2023 $ 50,989,047 $ 2,046,998 $ 244,639 |
Capitalized interest (Tables)
Capitalized interest (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Abstract] | |
Capitalized Interest Activity | Capitalized interest activity is summarized in the table below for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Capitalized interest at beginning of the period: $ 847,951 $ 969,337 $ 1,250,460 $ 1,190,318 Interest incurred 4,779,675 1,623,028 12,343,274 3,361,561 Interest expensed: Amortized to cost of sales (1,531,318) (1,582,819) (6,078,117) (3,542,333) Directly to interest expense (2,039,512) — (5,458,821) — Capitalized interest at September 30: $ 2,056,796 $ 1,009,546 $ 2,056,796 $ 1,009,546 |
Property and equipment (Tables)
Property and equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of the following as of September 30, 2023 and December 31, 2022: Asset Group September 30, 2023 December 31, 2022 Furniture and fixtures $ 507,972 $ 688,487 Leasehold improvements 380,187 380,187 Machinery and equipment 55,882 1,037,231 Office equipment 23,221 165,774 Vehicles 176,455 750,950 Total Property and equipment $ 1,143,717 $ 3,022,629 Less: Accumulated depreciation (500,363) (1,636,931) Property and equipment, net $ 643,354 $ 1,385,698 |
Homebuilding debt and other a_2
Homebuilding debt and other affiliate debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | The following table and descriptions summarize the Company’s debt as of September 30, 2023 and December 31, 2022: September 30, 2023 Weighted average interest rate Homebuilding Debt - Wells Fargo Syndication Wells Fargo Bank 8.02 % $ 16,844,806 Regions Bank 8.02 % 14,253,298 Flagstar Bank 8.02 % 12,957,543 United Bank 8.02 % 10,366,035 Third Coast Bank 8.02 % 7,774,526 Total debt on contracts $ 62,196,208 December 31, 2022 Weighted average interest rate Homebuilding Debt - Wells Fargo 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. |
Related party transactions (Tab
Related party transactions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Transactions with Land Development and Other Affiliates | The below table summarizes Legacy UHG transactions with the Land Development Affiliates and Other Operating Affiliates for the nine months ended September 30, 2023 and 2022. Nine Months ended September 30, 2023 Land Development Affiliates Other Operating 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 Nine Months ended September 30, 2022 Land Development Affiliates Other Operating Affiliates Total Financing cash flows: Land development expense $ (29,264,304) $ (665,777) $ (29,930,081) Other activities (1,928,677) (748,777) (2,677,454) Cash transfer — (5,000,000) (5,000,000) Total financing cash flows $ (31,192,981) $ (6,414,554) $ (37,607,535) Non-cash activities Acquisition of developed lots 13,822,570 — 13,822,570 Total non-cash activity $ 13,822,570 $ — $ 13,822,570 |
Lot purchase agreement deposi_2
Lot purchase agreement deposits (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
Interest in Lot Purchase Agreements | The following table provides a summary of the Company’s interest in lot purchase agreements as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Lot purchase agreement deposits $ 24,605,584 $ 3,804,436 Remaining purchase price 205,799,113 65,451,928 Total contract value $ 230,404,697 $ 69,256,364 |
Warranty reserves (Tables)
Warranty reserves (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Activity related to Warranty Reserves | 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: Nine Months Ended September 30, 2023 Year Ended December 31, 2022 Warranty reserves at beginning of the period $ 1,371,412 $ 1,275,594 Reserves provided 754,027 1,156,027 Payments for warranty costs and other (751,558) (1,060,209) Warranty reserves at end of the period $ 1,373,881 $ 1,371,412 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Maturity of the Contractual, Undiscounted Operating Lease Liabilities | The maturity of the contractual, undiscounted operating lease liabilities as of September 30, 2023 are as follows: Lease Payment 2023 $ 145,691 2024 395,064 2025 190,073 2026 43,094 2027 and thereafter — Total undiscounted operating lease liabilities $ 773,922 Interest on operating lease liabilities (50,653) Total present value of operating lease liabilities $ 723,269 |
Convertible Note (Tables)
Convertible Note (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Outstanding Balance of Convertible Notes | The below table presents the outstanding balance of the Notes as of September 30, 2023: September 30, 2023 Beginning Balance – Par $ 80,000,000 Unamortized Discount (12,425,292) Carrying Value $ 67,574,708 |
Assumptions used in Valuation Models to Determine the Estimated Fair of Convertible Notes | The following assumptions were used in the Binomial and Monte Carlo valuation models to determine the estimated fair value of the Notes at the issue date, March 30, 2023 and as of September 30, 2023. September 30, 2023 March 30, 2023 Risk-free interest rate 4.70 % 3.80 % Expected volatility 40 % 40 % Expected dividend yield — % — % |
Share-based compensation (Table
Share-based compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Option Activity | 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. Stock options Weighted-Average Per share Exercise price Outstanding, December 31, 2022 870,567 $ 2.81 Granted 3,300,000 11.46 Exercised (2,054) 2.81 Forfeited (114,283) 2.81 Outstanding, September 30, 2023 4,054,230 9.85 Options exercisable at September 30, 2023 193,646 $ 2.81 |
Assumptions used to determine Grant Date Fair Value of Stock | 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, the fair value of stock options replaced on the replacement date and the fair value of options issued during the nine months ended September 30, 2023. Inputs Nine Months Ended September 30, 2023 March 30, 2023 January 19, 2022 Risk-free interest rate 3.97% - 4.68% 3.77 % 1.82 % Expected volatility 40 % 40 % 35 % Expected dividend yield — % — % — % Expected life (in years) 6.25 5.10 6.25 Fair value of options $3.00 - $5.38 $ 10.41 $ 1.06 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 nine month period ended September 30, 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 |
Time-Based Restricted Stock Unit Activity | The time-based restricted stock unit activity for the nine months ended September 30, 2023 was as follows: Units Outstanding Weighted-Average Grant Date Fair Value Per Unit Outstanding, December 31, 2022 — $ — Granted 73,992 6.59 Exercised — — Forfeited — — Outstanding, September 30, 2023 73,992 6.59 |
Earnout Shares (Tables)
Earnout Shares (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnout Shares [Abstract] | |
Total Earnout Shares | The following table summarizes the number of Earnout Shares allocated to each unit of account as of September 30, 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 |
Assumptions used in Valuation of Earnout Shares | The assumptions used in the valuation of these instruments, using the most reliable information available, include: Inputs September 30, 2023 March 30, 2023 Current stock price $ 5.60 $ 12.68 Stock price targets $12.50, $15.00, $17.50 $12.50, $15.00, $17.50 Expected life (in years) 4.50 5.00 Earnout period (in years) 4.50 4.75 Risk-free interest rate 4.70 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — % — % |
Warrant liability (Tables)
Warrant liability (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Assumptions used in Valuing Private Placement Warrants | The Private Placement Warrants were valued using the following assumptions under the Monte Carlo method: Inputs September 30, 2023 March 30, 2023 Current stock price $ 5.60 $ 12.68 Exercise price $ 11.50 $ 11.50 Expected life (in years) 4.50 5.00 Risk-free interest rate 4.70 % 3.75 % Expected volatility 40 % 40 % Expected dividend yield — — |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Profit per Share | The following table sets forth the computation of the Company’s basic and diluted net profit per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income $ 150,842,687 $ 15,672,957 $ 191,701,118 $ 58,592,891 Basic income available to common shareholders $ 150,842,687 $ 15,672,957 $ 191,701,118 $ 58,592,891 Effect of dilutive securities: Add back: Interest on Convertible note, net of tax 1,752,570 — 4,276,020 — Change in fair value of stock options - liability classified, net of tax (250,156) — (306,489) — Diluted income available to common shareholders $ 152,345,101 $ 15,672,957 $ 195,670,649 $ 58,592,891 Weighted-average number of common shares outstanding - basic 48,356,057 37,347,350 44,723,915 34,884,887 Effect of dilutive securities: Convertible notes 16,000,000 — 8,379,450 — Stock options - equity classified — 472,719 206,271 180,840 Stock options - liability classified 43,259 — 70,894 — Stock warrants 406,708 889,583 775,027 305,594 Weighted-average number of common shares outstanding - diluted 64,806,024 38,709,652 54,155,557 35,371,321 Net earnings per common share: Basic $ 3.12 $ 0.42 $ 4.29 $ 1.68 Diluted $ 2.35 $ 0.40 $ 3.61 $ 1.66 |
Potentially Dilutive Outstanding Securities | The following table summarizes potentially dilutive outstanding securities for that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Private placement warrants 2,966,664 — 23,618 — Public warrants 8,625,000 — 68,664 — Stock options - equity classified 3,914,673 — — — Restricted stock units 14,477 — 4,826 — Total anti-dilutive features 15,520,814 — 97,108 — |
Merger and Reverse Recapitali_3
Merger and Reverse Recapitalization - Narrative (Details) | 9 Months Ended | ||||
Mar. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2023 $ / shares shares | Dec. 31, 2022 shares | |||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 47,594,950 | ||||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | ||||
Options outstanding (in shares) | 4,054,230 | 870,567 | |||
Options exercisable, exercise price (in dollars per share) | $ / shares | $ 2.81 | ||||
Other intangible assets | $ | $ 0 | ||||
Goodwill | $ | 0 | ||||
Transaction costs including advisory, banking, legal, and other professional fees | $ | $ 25,700,000 | ||||
DHHC Class B Common Stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of earnout shares remaining after those surrendered | 6,738,622 | ||||
Number of shares forfeited | 2,577,691 | ||||
Note Purchase Agreement | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Payments of debt issuance costs | $ | $ 3,500,000 | ||||
Note Purchase Agreement | Convertible Note | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Original principal amount | $ | $ 80,000,000 | ||||
Share Lock-Up Agreements | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Purchase price per share (in dollars per share) | $ / shares | $ 0.01 | ||||
Related Party | DHHC Class B Common Stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares surrendered | 1,886,378 | ||||
DHHC sponsor shareholders – UHG Class A Common Shares | Related Party | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 4,160,931 | ||||
Convertible Note Investors – UHG Class A Common Shares | Related Party | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 744,588 | ||||
Legacy UHG | Related Party | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Transaction costs including advisory, banking, legal, and other professional fees | $ | $ 12,100,000 | ||||
Assumed Warrants | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Exercise price (in dollars per share) | $ / shares | $ 4.05 | ||||
Number of outstanding warrants (in shares) | 1,867,368 | ||||
Warrants issued in Connection with the Dhhc Initial Public Offering and are Held by Anchor Investors | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares called by warrants | 2,966,664 | ||||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | ||||
Private placement warrants | Exercise price | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Warrant liability, measurement input | 11.50 | 11.50 | |||
Class A common stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 1,755,063 | ||||
Common stock, outstanding (in shares) | 10,621,073 | 11,382,296 | [1] | 373,473 | [1] |
Options outstanding (in shares) | 905,930 | ||||
Number of earnout shares reversed | 21,886,378 | ||||
Number of earnout shares to be awarded to certain particular holders | 20,000,000 | 20,000,000 | |||
Class A common stock | Note Purchase Agreement | Convertible Note | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 744,588 | ||||
Class A common stock | Share Lock-Up Agreements | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Purchase price per share (in dollars per share) | $ / shares | $ 0.01 | ||||
Number of shares agreed to issue to each investor | 0.25 | ||||
Number of shares agreed to issue (up to) | 421,100 | ||||
Class A common stock | Related Party | DHHC Class B Common Stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of earnout shares reversed | 1,886,378 | ||||
Class A common stock | Assumed Warrants | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares called by warrants | 1,867,368 | ||||
Class B common stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Common stock, outstanding (in shares) | 36,973,877 | 36,973,877 | [1] | 36,973,877 | [1] |
DHHC Class B Common Stock | Warrants Issued in Connection with the Dhhc Initial Public Offering | DHP SPAC II Sponsor LLC (the "Sponsor") | Related Party | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares converted | 8,625,000 | ||||
Common Class First | PIPE Subscription Agreements | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 471,500 | ||||
Purchase price per share (in dollars per share) | $ / shares | $ 10 | ||||
Common Class First | PIPE Subscription Agreements | Convertible Note | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Purchase price per share (in dollars per share) | $ / shares | $ 10 | ||||
Common Class Second | PIPE Subscription Agreements | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued | 117,875 | ||||
Purchase price per share (in dollars per share) | $ / shares | $ 0.01 | ||||
Legacy UHG | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of outstanding options assumed (in shares) | 2,426 | ||||
Number of options issued upon exchange (in shares) | 905,930 | ||||
Number of outstanding warrants assumed (in shares) | 5,000 | ||||
Legacy UHG | Assumed Warrants | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares called by warrants | 1,867,368 | ||||
Legacy UHG | GSH Class A Common Shares | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of issued and outstanding shares exchanged | 1,000 | ||||
Legacy UHG | Class A common stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued upon exchange | 373,473 | ||||
Legacy UHG | GSH Class B Common Shares | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of issued and outstanding shares exchanged | 99,000 | ||||
Legacy UHG | Class B common stock | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Number of shares issued upon exchange | 36,973,877 | ||||
Diamondhead Holdings Corp. ("DHHC") | |||||
Schedule Of Reverse Recapitalization [Line Items] | |||||
Purchase price in a private placement offering | $ | $ 4,700,000 | ||||
Exchange ratio | 37,347% | ||||
Gross proceeds | $ | $ 128,600,000 | ||||
Cash held in trust account | $ | 43,900,000 | ||||
Cash in connection with notes PIPE financing | $ | 80,000,000 | ||||
Debt issuance costs | $ | 5,000,000 | ||||
Net cash proceeds | $ | 71,500,000 | ||||
Transaction costs including advisory, banking, legal, and other professional fees | $ | $ 13,600,000 | ||||
[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. |
Merger and Reverse Recapitali_4
Merger and Reverse Recapitalization - Common Stock Issued Following Consummation of Business Combination (Details) | Mar. 30, 2023 shares |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 47,594,950 |
Ownership % | 100% |
Related Party | DHHC public shareholders – UHG Class A Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 4,331,606 |
Ownership % | 9.10% |
Related Party | DHHC sponsor shareholders – UHG Class A Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 4,160,931 |
Ownership % | 8.70% |
Related Party | GSH existing shareholders – UHG Class B Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 36,973,877 |
Ownership % | 77.70% |
Related Party | GSH existing shareholders – UHG Class A Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 373,473 |
Ownership % | 0.80% |
Related Party | Convertible Note Investors – UHG Class A Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 744,588 |
Ownership % | 1.60% |
Related Party | PIPE Investors - UHG Class A Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 589,375 |
Ownership % | 1.20% |
Related Party | Lock-up Investors - UHG Class A Common Shares | |
Reverse Recapitalization [Line Items] | |
Number of shares issued | 421,100 |
Ownership % | 0.90% |
Summary of significant accoun_3
Summary of significant accounting policies (Details) | 3 Months Ended | 9 Months Ended | ||||
Mar. 30, 2023 USD ($) financialInstrument $ / shares shares | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Disaggregation of Revenue [Line Items] | ||||||
Developed lots | $ 23,725,065 | $ 23,725,065 | $ 16,205,448 | |||
Developed lots purchased at fair value from third parties | 23,150,065 | 23,150,065 | 10,052,179 | |||
Homes under construction | 85,322,597 | 85,322,597 | 141,863,561 | |||
Finished homes | 23,498,419 | 23,498,419 | 22,133,926 | |||
Due from related party | 77,333 | 77,333 | 1,437,235 | |||
Lot purchase agreement deposits | 24,605,584 | 24,605,584 | 3,804,436 | |||
Purchase agreement deposits outstanding, related party | 0 | |||||
Revenue, net of sales discounts | 87,728,091 | $ 111,046,233 | 304,646,422 | $ 361,951,774 | ||
Advertising and marketing costs | $ 511,505 | 460,457 | $ 1,485,185 | 2,286,890 | ||
Number of shares per warrant | shares | 1 | |||||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | |||||
Term for which shares or warrants are not transferable, assignable or salable | 30 days | |||||
Common stock warrants exercised (in shares) | shares | 0 | 0 | ||||
Number of shares issued | shares | 47,594,950 | |||||
Proceeds from convertible note, net of transaction costs | $ 71,500,000 | 0 | ||||
Number of freestanding financial instruments | financialInstrument | 2 | |||||
Proceeds allocated to notes | $ 70,200,000 | |||||
Proceeds allocated to shares | 4,800,000 | |||||
Diamondhead Holdings Corp. ("DHHC") | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Purchase price in a private placement offering | 4,700,000 | |||||
Note Purchase Agreement | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Payments of debt issuance costs | $ 3,500,000 | |||||
Share Lock-Up Agreements | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Purchase price per share (in dollars per share) | $ / shares | $ 0.01 | |||||
Convertible Note | Note Purchase Agreement | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Original principal amount | $ 80,000,000 | |||||
Original issue discount | 6.25% | |||||
Proceeds from convertible note, net of transaction costs | $ 75,000,000 | |||||
Earnout Shares | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of outstanding warrants (in shares) | shares | 21,491,695 | |||||
Class A common stock | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares issued | shares | 1,755,063 | |||||
Class A common stock | Share Lock-Up Agreements | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Purchase price per share (in dollars per share) | $ / shares | $ 0.01 | |||||
Class A common stock | Convertible Note | Note Purchase Agreement | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares issued | shares | 744,588 | |||||
Common Class First | PIPE Subscription Agreements | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares issued | shares | 471,500 | |||||
Purchase price per share (in dollars per share) | $ / shares | $ 10 | |||||
Common Class First | Convertible Note | PIPE Subscription Agreements | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Purchase price per share (in dollars per share) | $ / shares | $ 10 | |||||
Common Class Second | PIPE Subscription Agreements | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares issued | shares | 117,875 | |||||
Purchase price per share (in dollars per share) | $ / shares | $ 0.01 | |||||
Warrants issued in Connection with the Dhhc Initial Public Offering and are Held by Anchor Investors | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares called by warrants | shares | 2,966,664 | |||||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | |||||
Transferred at Point in Time | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue, net of sales discounts | $ 84,644,068 | 105,694,086 | 294,749,743 | 345,566,071 | ||
Transferred over Time | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue, net of sales discounts | 3,084,023 | 5,352,147 | 9,896,679 | 16,385,703 | ||
Related Party | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Due from related party | 77,333 | 77,333 | $ 0 | |||
Lot purchase agreement deposits | 20,138,083 | 20,138,083 | ||||
Revenue, net of sales discounts | $ 1,002,900 | $ 582,225 | $ 2,435,186 | $ 1,437,235 | ||
Related Party | DHP SPAC II Sponsor LLC (the "Sponsor") | Warrants Issued in Connection with the Dhhc Initial Public Offering | DHHC Class B Common Stock | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares converted | shares | 8,625,000 | |||||
Related Party | Lock-up Investors - UHG Class A Common Shares | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Number of shares issued | shares | 421,100 |
Business Combinations (Details)
Business Combinations (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 18, 2023 USD ($) | Sep. 30, 2023 lot | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Business Acquisition | ||||||
Cash paid for acquisition | $ 2,166,516 | $ 0 | ||||
Number of real estate properties acquired | lot | 50 | |||||
Payments to acquire real estate | $ 4,900,000 | |||||
Herring Homes, LLC Services Agreement | Nonoperating Income (Expense) | ||||||
Business Acquisition | ||||||
Expenses | $ 95,086 | 95,086 | ||||
Herring Homes, LLC Services Agreement | Cost of Sales | ||||||
Business Acquisition | ||||||
Expenses | 88,931 | 88,931 | ||||
Herring Homes | ||||||
Business Acquisition | ||||||
Cash paid for acquisition | $ 2,166,516 | |||||
Goodwill | 500,000 | |||||
Recognized identifiable assets acquired and liabilities assumed, net | $ 1,666,516 | |||||
Herring Homes | Herring Homes, LLC Services Agreement | ||||||
Business Acquisition | ||||||
Revenues | $ 50,000 | $ 50,000 |
Fair Value Measurement - Narrat
Fair Value Measurement - Narrative (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Disclosures [Abstract] | ||
Fair value of the convertible note | $ 142,700,000 | |
Transfers to/from levels | $ 0 | $ 0 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Contingent earnout liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | $ 50,989,047 | $ 199,711,577 | $ 445,630,296 | $ 0 |
Derivative private placement warrant liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 2,046,998 | 2,343,664 | 949,332 | 0 |
Derivative stock option liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 244,639 | $ 494,150 | $ 2,111,948 | $ 0 |
Fair Value, Recurring | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 58,541,934 | |||
Fair Value, Recurring | Level 1 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 5,261,250 | |||
Fair Value, Recurring | Level 2 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Level 3 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 53,280,684 | |||
Fair Value, Recurring | Contingent earnout liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 50,989,047 | |||
Fair Value, Recurring | Contingent earnout liability | Level 1 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Contingent earnout liability | Level 2 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Contingent earnout liability | Level 3 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 50,989,047 | |||
Fair Value, Recurring | Derivative private placement warrant liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 2,046,998 | |||
Fair Value, Recurring | Derivative private placement warrant liability | Level 1 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Derivative private placement warrant liability | Level 2 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Derivative private placement warrant liability | Level 3 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 2,046,998 | |||
Fair Value, Recurring | Derivative public warrant liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 5,261,250 | |||
Fair Value, Recurring | Derivative public warrant liability | Level 1 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 5,261,250 | |||
Fair Value, Recurring | Derivative public warrant liability | Level 2 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Derivative public warrant liability | Level 3 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Derivative stock option liability | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 244,639 | |||
Fair Value, Recurring | Derivative stock option liability | Level 1 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Derivative stock option liability | Level 2 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | 0 | |||
Fair Value, Recurring | Derivative stock option liability | Level 3 | ||||
Fair Value Measurement | ||||
Total Derivative Liability | $ 244,639 |
Fair Value Measurement - Roll f
Fair Value Measurement - Roll forward of Level 3 Liabilities Measured at a Fair Value on a Recurring Basis (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | |
Contingent earnout liability | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Liability, beginning of period | $ 199,711,577 | $ 445,630,296 | $ 0 |
Recognition | 242,211,404 | ||
Forfeitures | 0 | 0 | |
Exercise of liability awards | 0 | ||
Change in fair value | (148,722,530) | (245,918,719) | 203,418,892 |
Liability, end of period | 50,989,047 | 199,711,577 | 445,630,296 |
Derivative private placement warrant liability | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Liability, beginning of period | 2,343,664 | 949,332 | 0 |
Recognition | 625,370 | ||
Forfeitures | 0 | (890,001) | |
Exercise of liability awards | 0 | ||
Change in fair value | (296,666) | 1,394,332 | 1,213,963 |
Liability, end of period | 2,046,998 | 2,343,664 | 949,332 |
Derivative stock option liability | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Liability, beginning of period | 494,150 | 2,111,948 | 0 |
Recognition | 89,454 | 1,189,685 | |
Forfeitures | (817,862) | 0 | |
Exercise of liability awards | (272,621) | ||
Change in fair value | (338,965) | (527,315) | 922,263 |
Liability, end of period | $ 244,639 | $ 494,150 | $ 2,111,948 |
Capitalized interest (Details)
Capitalized interest (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||||
Capitalized interest at beginning of the period: | $ 847,951 | $ 969,337 | $ 1,250,460 | $ 1,190,318 |
Interest incurred | 4,779,675 | 1,623,028 | 12,343,274 | 3,361,561 |
Interest expensed: | ||||
Amortized to cost of sales | (1,531,318) | (1,582,819) | (6,078,117) | (3,542,333) |
Directly to interest expense | (2,039,512) | 0 | (5,458,821) | 0 |
Capitalized interest, end of period | $ 2,056,796 | $ 1,009,546 | $ 2,056,796 | $ 1,009,546 |
Property and equipment - Schedu
Property and equipment - Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total Property and equipment | $ 1,143,717 | $ 3,022,629 |
Less: Accumulated depreciation | (500,363) | (1,636,931) |
Property and equipment, net | 643,354 | 1,385,698 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and equipment | 507,972 | 688,487 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and equipment | 380,187 | 380,187 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and equipment | 55,882 | 1,037,231 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and equipment | 23,221 | 165,774 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and equipment | $ 176,455 | $ 750,950 |
Property and equipment - Narrat
Property and equipment - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 23,594 | $ 89,667 | $ 154,474 | $ 264,884 |
Homebuilding debt and other a_3
Homebuilding debt and other affiliate debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Feb. 27, 2023 USD ($) | Jul. 31, 2021 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Aug. 10, 2023 USD ($) lender | Dec. 31, 2022 USD ($) | |
Line of Credit Facility [Line Items] | ||||||||
Construction time for homes (less than) | 1 year | |||||||
Number of syndicated line lenders exited | lender | 3 | |||||||
Number of syndicated line lenders joined | lender | 3 | |||||||
Proceeds from other affiliate debt | $ 136,773 | $ 9,456,206 | ||||||
Settlement of co-obligor debt to affiliates | 8,340,545 | 0 | ||||||
Outstanding debt balance | 0 | |||||||
Wells Fargo Bank | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Borrowing capacity | $ 150,000,000 | $ 240,000,000 | ||||||
Credit facility term | 3 years | |||||||
Extension period | 1 year | |||||||
Remaining availability | $ 48,776,907 | 48,776,907 | $ 12,015,246 | |||||
Minimum tangible net worth, income component as percent of after-tax income | 25% | |||||||
Minimum tangible net worth, income component as percent of earnings | 25% | |||||||
Debt instrument, covenant, consolidated earnings | $ 70,000,000 | |||||||
Debt instrument, covenant, consolidated earnings, percentage | 25% | |||||||
Debt instrument, covenant, new equity contribution | 100% | |||||||
Debt instrument, covenant, new equity contribution from equity issuance | 100% | |||||||
Minimum debt service coverage | 250% | |||||||
Minimum liquidity | $ 15,000,000 | |||||||
Debt instrument, covenant, maximum liquidity, amount | $ 20,000,000 | |||||||
Debt instrument, covenant, trailing twelve months, percentage | 150% | |||||||
Minimum cash amount | $ 7,500,000 | |||||||
Debt instrument, covenant, minimum liquidity, percentage | 50% | |||||||
Deferred loan costs capitalized | $ 3,240,984 | |||||||
Amortization of deferred financing costs | 358,325 | $ 81,149 | 694,219 | 283,157 | ||||
Debt issuance costs | $ 3,257,825 | $ 690,804 | $ 3,257,825 | $ 690,804 | ||||
Wells Fargo Bank | Scenario One | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Minimum tangible net worth, dollar component | $ 65,000,000 | |||||||
Maximum leverage ratio | 2.75 | |||||||
Wells Fargo Bank | Scenario Two | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Minimum tangible net worth, dollar component | $ 70,000,000 | |||||||
Maximum leverage ratio | 2.50 | |||||||
Wells Fargo Bank | Scenario Three | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum leverage ratio | 2.25 | |||||||
Wells Fargo Bank | Minimum | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unused amount fee | 0.15% | |||||||
Basis spread on variable rate | 2.75% | |||||||
Wells Fargo Bank | Maximum | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unused amount fee | 0.30% | |||||||
Basis spread on variable rate | 3.50% | |||||||
Wells Fargo Bank | Letter of Credit | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Borrowing capacity | $ 2,000,000 | |||||||
Wells Fargo Bank | Other Affiliates | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Settlement of co-obligor debt to affiliates | $ 8,340,545 |
Homebuilding debt and other a_4
Homebuilding debt and other affiliate debt - Debt (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 120,797,006 | |
Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 62,196,208 | 109,752,200 |
Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 11,044,806 | |
Wells Fargo Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 8.02% | 4.98% |
Debt on contracts | $ 43,198,852 | |
Wells Fargo Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 16,844,806 | 34,995,080 |
Wells Fargo Bank | Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 8,203,772 | |
Regions Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 8.02% | 4.98% |
Debt on contracts | $ 27,550,618 | |
Regions Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 14,253,298 | 27,550,618 |
Regions Bank | Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 0 | |
Flagstar Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 8.02% | |
Flagstar Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 12,957,543 | |
United Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 8.02% | |
United Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 10,366,035 | |
Third Coast Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 8.02% | |
Third Coast Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 7,774,526 | |
Texas Capital Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | |
Debt on contracts | $ 19,676,552 | |
Texas Capital Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 19,676,552 | |
Texas Capital Bank | Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 0 | |
Truist Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | |
Debt on contracts | $ 19,659,329 | |
Truist Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 19,659,329 | |
Truist Bank | Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 0 | |
First National Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | |
Debt on contracts | $ 7,870,621 | |
First National Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 7,870,621 | |
First National Bank | Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 0 | |
Anderson Brothers | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.74% | |
Debt on contracts | $ 2,841,034 | |
Anderson Brothers | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 0 | |
Anderson Brothers | Other Affiliates | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 2,841,034 |
Related party transactions - Tr
Related party transactions - Transactions with Land Development and Other Affiliates (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Non-cash activities | ||
Settlement of co-obligor debt to affiliates | $ 8,340,545 | $ 0 |
Release of guarantor from GSH to shareholder | 2,841,034 | 0 |
Credit for earnest money deposits | 2,521,626 | 0 |
Acquisition of developed lots | 0 | 13,822,570 |
Total non-cash financing activities | 320,077,435 | 16,387,083 |
Related Party | ||
Cash flows from financing activities: | ||
Land development expense | (384,349) | (29,930,081) |
Other activities | (647,734) | (2,677,454) |
Cash transfer | (5,000,000) | |
Total financing cash flows | (1,032,083) | (37,607,535) |
Non-cash activities | ||
Settlement of co-obligor debt to affiliates | 8,340,545 | |
Release of guarantor from GSH to shareholder | 2,841,034 | |
Credit for earnest money deposits | 2,521,626 | |
Acquisition of developed lots | 13,822,570 | |
Total non-cash financing activities | 13,703,205 | 13,822,570 |
Related Party | Land Development Affiliates | ||
Cash flows from financing activities: | ||
Land development expense | (384,349) | (29,264,304) |
Other activities | (225,392) | (1,928,677) |
Cash transfer | 0 | |
Total financing cash flows | (609,741) | (31,192,981) |
Non-cash activities | ||
Settlement of co-obligor debt to affiliates | 8,340,545 | |
Release of guarantor from GSH to shareholder | 2,841,034 | |
Credit for earnest money deposits | 2,521,626 | |
Acquisition of developed lots | 13,822,570 | |
Total non-cash financing activities | 13,703,205 | 13,822,570 |
Related Party | Other Operating Affiliates | ||
Cash flows from financing activities: | ||
Land development expense | 0 | (665,777) |
Other activities | (422,342) | (748,777) |
Cash transfer | (5,000,000) | |
Total financing cash flows | (422,342) | (6,414,554) |
Non-cash activities | ||
Settlement of co-obligor debt to affiliates | 0 | |
Release of guarantor from GSH to shareholder | 0 | |
Credit for earnest money deposits | 0 | |
Acquisition of developed lots | 0 | |
Total non-cash financing activities | $ 0 | $ 0 |
Related party transactions - Na
Related party transactions - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) agreement | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) agreement | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Related Party Transaction [Line Items] | |||||
Lessee operating lease, number of agreements | agreement | 4 | 4 | |||
Overhead costs allocated to related party | $ 64,614 | $ 375,805 | |||
Property maintenance services | 0 | 71,672 | |||
Due from related party | 77,333 | 77,333 | $ 1,437,235 | ||
Lot purchase agreement deposits | 24,605,584 | 24,605,584 | 3,804,436 | ||
Revenue, net of sales discounts | 87,728,091 | $ 111,046,233 | 304,646,422 | $ 361,951,774 | |
Cost of sales | 70,317,796 | 82,107,334 | 246,540,874 | 264,730,624 | |
Related Party | |||||
Related Party Transaction [Line Items] | |||||
Due from related party | 77,333 | 77,333 | $ 0 | ||
Lot purchase agreement deposits | 20,138,083 | 20,138,083 | |||
Revenue, net of sales discounts | 1,002,900 | 582,225 | 2,435,186 | 1,437,235 | |
Cost of sales | 953,802 | $ 342,686 | 2,165,259 | $ 1,197,695 | |
Professional fees | $ 13,125 | $ 61,037 |
Lot purchase agreement deposi_3
Lot purchase agreement deposits - Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Real Estate [Line Items] | ||
Lot purchase agreement deposits | $ 24,605,584 | $ 3,804,436 |
Related Party | ||
Real Estate [Line Items] | ||
Lot purchase agreement deposits | $ 20,138,083 | |
Minimum | ||
Real Estate [Line Items] | ||
Nonrefundable cash deposit | 10% | |
Maximum | ||
Real Estate [Line Items] | ||
Nonrefundable cash deposit | 15% |
Lot purchase agreement deposi_4
Lot purchase agreement deposits - Interest in Lot Purchase Agreements (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Real Estate [Abstract] | ||
Lot purchase agreement deposits | $ 24,605,584 | $ 3,804,436 |
Remaining purchase price | 205,799,113 | 65,451,928 |
Total contract value | $ 230,404,697 | $ 69,256,364 |
Warranty reserves (Details)
Warranty reserves (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Warranty reserves at beginning of the period | $ 1,371,412 | $ 1,275,594 |
Reserves provided | 754,027 | 1,156,027 |
Payments for warranty costs and other | (751,558) | (1,060,209) |
Warranty reserves at end of the period | $ 1,373,881 | $ 1,371,412 |
Commitments and contingencies -
Commitments and contingencies - Narrative (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 USD ($) officeSpace | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) officeSpace | Sep. 30, 2022 USD ($) | Dec. 31, 2022 transaction | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Number of office spaces with third party | officeSpace | 1 | 1 | |||
Lease term | 5 years | 5 years | |||
Operating lease cost | $ 229,407 | $ 95,185 | $ 617,194 | $ 418,147 | |
Variable lease expense | $ 15,578 | $ 27,822 | $ 36,037 | $ 64,048 | |
Weighted-average discount rate for operating leases | 7.25% | 3.21% | 7.25% | 3.21% | |
Weighted-average remaining lease term | 1 year 10 months 28 days | 2 years 3 months 29 days | 1 year 10 months 28 days | 2 years 3 months 29 days | |
Number of leases in sale-leaseback transactions | transaction | 19 | ||||
Operating lease expense | $ 59,075 | $ 195,125 | |||
Rent expense related to the short-term leases | $ 73,409 | $ 20,067 | $ 256,282 | $ 74,582 |
Commitments and contingencies_2
Commitments and contingencies - Maturity of the Contractual, Undiscounted Operating Lease Liabilities (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
2023 | $ 145,691 | |
2024 | 395,064 | |
2025 | 190,073 | |
2026 | 43,094 | |
2027 and thereafter | 0 | |
Total undiscounted operating lease liabilities | 773,922 | |
Interest on operating lease liabilities | (50,653) | |
Total present value of operating lease liabilities | $ 723,269 | $ 1,001,277 |
Convertible Note - Narrative (D
Convertible Note - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2023 USD ($) d $ / shares shares | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||
Number of shares issued | shares | 47,594,950 | |||
Proceeds from convertible note, net of transaction costs | $ 71,500,000 | $ 0 | ||
Class A common stock | ||||
Debt Instrument [Line Items] | ||||
Number of shares issued | shares | 1,755,063 | |||
Convertible Note | Nonoperating Income (Expense) | ||||
Debt Instrument [Line Items] | ||||
Interest expense | $ 2,000,000 | 5,500,000 | ||
Convertible Note | Cost of Sales | ||||
Debt Instrument [Line Items] | ||||
Interest expense | $ 300,000 | $ 300,000 | ||
Convertible Note | Note Purchase Agreement | ||||
Debt Instrument [Line Items] | ||||
Original principal amount | $ 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 (in excess of) | 10% | |||
Effective interest rate | 20.46% | |||
Redemption term before maturity date | 60 days | |||
Convertible Note | Note Purchase Agreement | Expected dividend yield | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, measurement input | 0 | 0 | 0 | |
Convertible Note | Note Purchase Agreement | Debt Instrument, Convertible, Period One | ||||
Debt Instrument [Line Items] | ||||
Initial conversion price as percentage of volume-weighted average trading sale price per common share | 80% | |||
Number of trading days | d | 30 | |||
Convertible Note | Note Purchase Agreement | Debt Instrument, Convertible, Period Two | ||||
Debt Instrument [Line Items] | ||||
Number of trading days | d | 20 | |||
Conversion price (in dollars per share) | $ / shares | $ 13.50 | |||
Number of consecutive trading days | d | 30 | |||
Convertible Note | Note Purchase Agreement | Minimum | Debt Instrument, Convertible, Period One | ||||
Debt Instrument [Line Items] | ||||
Conversion price (in dollars per share) | $ / shares | $ 5 | |||
Convertible Note | Note Purchase Agreement | Maximum | Debt Instrument, Convertible, Period One | ||||
Debt Instrument [Line Items] | ||||
Conversion price (in dollars per share) | $ / shares | $ 10 | |||
Convertible Note | Note Purchase Agreement | Class A common stock | ||||
Debt Instrument [Line Items] | ||||
Number of shares issued | shares | 744,588 |
Convertible Note - Outstanding
Convertible Note - Outstanding Balance of Convertible Notes (Details) - Note Purchase Agreement - Convertible Note | Sep. 30, 2023 USD ($) |
Debt Instrument [Line Items] | |
Beginning Balance – Par | $ 80,000,000 |
Unamortized Discount | (12,425,292) |
Carrying Value | $ 67,574,708 |
Convertible Note - Assumptions
Convertible Note - Assumptions used in Valuation Models to Determine the Estimated Fair of Convertible Notes (Details) - Note Purchase Agreement - Convertible Note | Sep. 30, 2023 | Mar. 30, 2023 |
Risk-free interest rate | ||
Debt Instrument [Line Items] | ||
Long-term debt, measurement input | 0.0470 | 0.0380 |
Expected volatility | ||
Debt Instrument [Line Items] | ||
Long-term debt, measurement input | 0.40 | 0.40 |
Expected dividend yield | ||
Debt Instrument [Line Items] | ||
Long-term debt, measurement input | 0 | 0 |
Share-based compensation - Narr
Share-based compensation - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 12, 2023 | Apr. 28, 2023 shares | Mar. 30, 2023 $ / shares shares | Jan. 19, 2022 | Mar. 31, 2022 USD ($) | Jan. 31, 2022 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jul. 01, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Total stock compensation expense | $ 4,400,000 | |||||||||||
Derivative liabilities | $ 58,541,934 | $ 58,541,934 | $ 0 | |||||||||
Granted options (in shares) | shares | 3,300,000 | |||||||||||
Number of shares per warrant | shares | 1 | |||||||||||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | |||||||||||
Employee Stock Option | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Aggregate intrinsic value of stock options outstanding | 2,104,020 | $ 2,104,020 | 7,460,132 | |||||||||
Total stock compensation expense | 1,100,007 | $ 51,116 | 1,561,616 | $ 145,826 | ||||||||
Unrecognized stock compensation expense for options | 16,417,253 | $ 16,417,253 | ||||||||||
Weighted average period when unrecognized stock compensation expense is expected to be recognized | 3 years 5 months 4 days | |||||||||||
Expected dividend yield | 0% | 0% | 0% | |||||||||
Derivative liabilities | 244,639 | $ 244,639 | ||||||||||
Restricted stock units | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Vesting period | 4 years | |||||||||||
Total stock compensation expense | 6,007 | $ 6,007 | ||||||||||
Weighted average period when unrecognized stock compensation expense is expected to be recognized | 3 years 11 months 12 days | |||||||||||
Unrecognized stock compensation expense for equity instruments excluding options | $ 481,600 | $ 481,600 | ||||||||||
Option to Purchase Stock Warrants | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Total stock compensation expense | $ 1,226,800 | |||||||||||
Expected dividend yield | 0% | |||||||||||
Granted options (in shares) | shares | 1,867,368 | |||||||||||
Cash consideration for issuance of warrants | $ 150,000 | $ 150,000 | ||||||||||
Number of shares per warrant | shares | 1 | |||||||||||
Exercise price (in dollars per share) | $ / shares | $ 4.05 | |||||||||||
Warrants exercisable term | 10 years | |||||||||||
Aggregate fair value of warrants | $ 1,376,800 | |||||||||||
Exchange ratio | 373.47 | 373.47 | ||||||||||
Number of shares called by warrants | shares | 1,120,421 | |||||||||||
Number of outstanding warrants (in shares) | shares | 746,947 | 746,947 | ||||||||||
Option to Purchase Stock Warrants | Class A common stock | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Number of shares issued with conversion terms | shares | 748,020 | |||||||||||
2022 Plan | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Number of shares reserved for future issuance | shares | 3,000 | |||||||||||
Vesting period | 4 years | |||||||||||
2023 Plan | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Increase in shares reserved and available for issuance as percentage of number of outstanding shares | 4% | |||||||||||
Exchange ratio | 373.47 | 373.47 |
Share-based compensation - Stoc
Share-based compensation - Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Stock options | |
Beginning balance (in shares) | shares | 870,567 |
Granted options (in shares) | shares | 3,300,000 |
Exercised (in shares) | shares | (2,054) |
Forfeited (in shares) | shares | (114,283) |
Ending balance (in shares) | shares | 4,054,230 |
Weighted-Average Per share Exercise price | |
Beginning balance (in dollars per share) | $ / shares | $ 2.81 |
Granted (in dollars per share) | $ / shares | 11.46 |
Exercised (in dollars per share) | $ / shares | 2.81 |
Forfeited (in dollars per share) | $ / shares | 2.81 |
Ending balance (in dollars per share) | $ / shares | $ 9.85 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Additional Disclosures [Abstract] | |
Options exercisable (in shares) | shares | 193,646 |
Options exercisable (in dollars per share) | $ / shares | $ 2.81 |
2023 Plan | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Exchange ratio | 373.47 |
Share-based compensation - Assu
Share-based compensation - Assumptions used to determine Grant Date Fair Value of Stock (Details) - $ / shares | 9 Months Ended | 12 Months Ended | ||
Mar. 30, 2023 | Jan. 19, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Employee Stock Option | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Risk-free interest rate, minimum | 3.97% | |||
Risk-free interest rate | 3.77% | 1.82% | ||
Risk-free interest rate, maximum | 4.68% | |||
Expected volatility | 40% | 35% | 40% | |
Expected dividend yield | 0% | 0% | 0% | |
Expected life (in years) | 5 years 1 month 6 days | 6 years 3 months | 6 years 3 months | |
Fair value of warrants granted (in dollars per share) | $ 10.41 | $ 1.06 | ||
Employee Stock Option | Minimum | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Fair value of warrants granted (in dollars per share) | $ 3 | |||
Employee Stock Option | Maximum | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Fair value of warrants granted (in dollars per share) | $ 5.38 | |||
Option to Purchase Stock Warrants | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Number of warrants granted | 0 | |||
Risk-free interest rate | 1.78% | |||
Expected volatility | 35% | |||
Expected dividend yield | 0% | |||
Expected life (in years) | 6 years 4 months 24 days | |||
Fair value of warrants granted (in dollars per share) | $ 0.7 |
Share-based compensation - Time
Share-based compensation - Time-Based Restricted Stock Unit Activity (Details) - Restricted stock units | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Units Outstanding | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 73,992 |
Exercised (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Ending balance (in shares) | shares | 73,992 |
Weighted-Average Grant Date Fair Value Per Unit | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 6.59 |
Exercised (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 6.59 |
Earnout Shares - Narrative (Det
Earnout Shares - Narrative (Details) | 9 Months Ended | |
Mar. 30, 2023 $ / shares shares | Sep. 30, 2023 d unit $ / shares shares | |
Earnout Shares [Line Items] | ||
Number of units of accounts | unit | 2 | |
Current stock price | ||
Earnout Shares [Line Items] | ||
Fair value of total earnout shares (in dollars per share) | $ 12.68 | $ 5.60 |
Triggering Event I | ||
Earnout Shares [Line Items] | ||
Fair value of total earnout shares (in dollars per share) | 12.10 | 2.86 |
Triggering Event II | ||
Earnout Shares [Line Items] | ||
Fair value of total earnout shares (in dollars per share) | 11.16 | 2.26 |
Triggering Event III | ||
Earnout Shares [Line Items] | ||
Fair value of total earnout shares (in dollars per share) | $ 10.19 | $ 1.81 |
Class A common stock | ||
Earnout Shares [Line Items] | ||
Number of earnout shares to be awarded to certain particular holders | shares | 20,000,000 | 20,000,000 |
Sponsor Support Agreement | ||
Earnout Shares [Line Items] | ||
Earnout period | 5 years | |
Derivative instrument, threshold trading days | d | 20 | |
Derivative instrument, threshold consecutive trading days | d | 30 | |
Sponsor Support Agreement | Triggering Event I | ||
Earnout Shares [Line Items] | ||
Threshold volume-weighted average price for earn-out shares to be received (in dollars per share) | $ 12.50 | |
Percentage of earn out shares to be issued upon triggering event | 37.50% | |
Sponsor Support Agreement | Triggering Event II | ||
Earnout Shares [Line Items] | ||
Threshold volume-weighted average price for earn-out shares to be received (in dollars per share) | $ 15 | |
Percentage of earn out shares to be issued upon triggering event | 37.50% | |
Sponsor Support Agreement | Triggering Event III | ||
Earnout Shares [Line Items] | ||
Threshold volume-weighted average price for earn-out shares to be received (in dollars per share) | $ 17.50 | |
Percentage of earn out shares to be issued upon triggering event | 25% | |
Sponsor Support Agreement | Class B common stock | ||
Earnout Shares [Line Items] | ||
Number of earnout shares surrendered | shares | 1,886,378 |
Earnout Shares - Total Earnout
Earnout Shares - Total Earnout Shares (Details) | 9 Months Ended |
Sep. 30, 2023 shares | |
Triggering Event I | |
Earnout Shares [Line Items] | |
Derivative liability | 8,207,392 |
Triggering Event II | |
Earnout Shares [Line Items] | |
Derivative liability | 8,207,392 |
Triggering Event III | |
Earnout Shares [Line Items] | |
Derivative liability | 5,471,594 |
Derivative Liability | Triggering Event I | |
Earnout Shares [Line Items] | |
Derivative liability | 8,059,386 |
Derivative Liability | Triggering Event II | |
Earnout Shares [Line Items] | |
Derivative liability | 8,059,386 |
Derivative Liability | Triggering Event III | |
Earnout Shares [Line Items] | |
Derivative liability | 5,372,923 |
Stock Compensation | Triggering Event I | |
Earnout Shares [Line Items] | |
Derivative liability | 148,006 |
Stock Compensation | Triggering Event II | |
Earnout Shares [Line Items] | |
Derivative liability | 148,006 |
Stock Compensation | Triggering Event III | |
Earnout Shares [Line Items] | |
Derivative liability | 98,671 |
Earnout Shares - Assumptions us
Earnout Shares - Assumptions used in Valuation of Earnout Shares (Details) | Sep. 30, 2023 $ / shares | Mar. 30, 2023 $ / shares |
Stock price targets | Minimum | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 12.50 | 12.50 |
Stock price targets | Median | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 15 | 15 |
Stock price targets | Maximum | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 17.50 | 17.50 |
Expected life (in years) | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 4.50 | 5 |
Earnout period (in years) | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 4.50 | 4.75 |
Risk-free interest rate | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 0.0470 | 0.0375 |
Expected volatility | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 0.40 | 0.40 |
Expected dividend yield | Valuation, Income Approach | ||
Earnout Shares [Line Items] | ||
Derivative liability, measurement input | 0 | 0 |
Warrant liability - Narrative (
Warrant liability - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 29, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Class of Warrant or Right [Line Items] | ||||
Change in fair value of warrant liabilities | $ 6,667,249 | $ 0 | ||
Private placement warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants forfeited (in shares) | 2,966,669 | |||
Warrants recognized as liability (in shares) | 5,933,333 | |||
Change in fair value of warrant liabilities | $ (300,000) | 2,300,000 | ||
Public warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Change in fair value of warrant liabilities | $ (300,000) | $ 4,400,000 |
Warrant liability - Assumptions
Warrant liability - Assumptions used in Valuing Private Placement Warrants (Details) - Private placement warrants | Sep. 30, 2023 | Mar. 30, 2023 |
Current stock price | ||
Summary of significant accounting policies | ||
Warrant liability, measurement input | 5.60 | 12.68 |
Exercise price | ||
Summary of significant accounting policies | ||
Warrant liability, measurement input | 11.50 | 11.50 |
Expected life (in years) | ||
Summary of significant accounting policies | ||
Warrant liability, measurement input | 4.50 | 5 |
Risk-free interest rate | ||
Summary of significant accounting policies | ||
Warrant liability, measurement input | 0.0470 | 0.0375 |
Expected volatility | ||
Summary of significant accounting policies | ||
Warrant liability, measurement input | 0.40 | 0.40 |
Expected dividend yield | Valuation, Income Approach | ||
Summary of significant accounting policies | ||
Warrant liability, measurement input | 0 | 0 |
Income taxes (Details)
Income taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 1,735,839 | $ 0 | $ 2,372,300 | $ 0 | |
Income tax expense, deferred adjustments | $ (982,981) | ||||
Estimated effective tax rate | 44.70% | ||||
Annual effective tax rate including discrete items | 26.20% | ||||
Federal statutory rate | 21% | ||||
Income tax benefit in order to establish various deferred tax assets, primarily attributable to timing differences in revenue recognition | $ (982,981) |
Employee benefit plan (Details)
Employee benefit plan (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jan. 01, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |||||
Minimum service period | 3 months | ||||
Employee base pay matched at 100% | 3% | ||||
Employer matching contribution of employee's first 3% of base pay | 100% | ||||
Employer matching contribution of employee's next 2% of base pay after first 3% of base pay matched | 50% | ||||
Employee base pay matched at 50% after employee's first 3% of base pay matched | 2% | ||||
Maximum annual contributions per employee | 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 | $ 51,570 | $ 36,517 | $ 168,682 | $ 134,862 |
Net Earnings Per Share - Comput
Net Earnings Per Share - Computation of Basic and Diluted Net Profit per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||||||
Sep. 30, 2023 | Jun. 30, 2023 | [1] | Mar. 31, 2023 | [1] | Sep. 30, 2022 | Jun. 30, 2022 | [1] | Mar. 31, 2022 | [1] | Sep. 30, 2023 | Sep. 30, 2022 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Net income | $ 150,842,687 | [1] | $ 245,362,759 | $ (204,504,328) | $ 15,672,957 | [1] | $ 25,902,006 | $ 17,017,928 | $ 191,701,118 | $ 58,592,891 | |||||
Basic income available to common shareholders | 150,842,687 | 15,672,957 | 191,701,118 | 58,592,891 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Interest on Convertible note, net of tax | 1,752,570 | 0 | 4,276,020 | 0 | |||||||||||
Change in fair value of stock options - liability classified, net of tax | (250,156) | 0 | (306,489) | 0 | |||||||||||
Diluted income available to common shareholders | $ 152,345,101 | $ 15,672,957 | $ 195,670,649 | $ 58,592,891 | |||||||||||
Weighted-average number of common shares outstanding - basic (in shares) | [2] | 48,356,057 | 37,347,350 | 44,723,915 | 34,884,887 | ||||||||||
Weighted-average number of common shares outstanding - diluted (in shares) | [2] | 64,806,024 | 38,709,652 | 54,155,557 | 35,371,321 | ||||||||||
Net earnings per common share: | |||||||||||||||
Basic (in dollars per share) | $ 3.12 | $ 0.42 | $ 4.29 | $ 1.68 | |||||||||||
Diluted (in dollars per share) | $ 2.35 | $ 0.40 | $ 3.61 | $ 1.66 | |||||||||||
Convertible notes | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||
Weighted-average number of common shares outstanding - diluted (in shares) | 16,000,000 | 0 | 8,379,450 | 0 | |||||||||||
Stock options - equity classified | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||
Weighted-average number of common shares outstanding - diluted (in shares) | 0 | 472,719 | 206,271 | 180,840 | |||||||||||
Stock options - liability classified | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||
Weighted-average number of common shares outstanding - diluted (in shares) | 43,259 | 0 | 70,894 | 0 | |||||||||||
Stock warrants | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||
Weighted-average number of common shares outstanding - diluted (in shares) | 406,708 | 889,583 | 775,027 | 305,594 | |||||||||||
[1]The shares of the Company’s common stock, prior to the Business Combination (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately 373.47 (“Exchange Ratio”) established in the Business Combination.[2]Retroactively restated for the three and nine months ended September 30, 2022 for the Reverse Recapitalization as a result of the Business Combination as described in Notes 1 and 2. |
Net Earnings Per Share - Potent
Net Earnings Per Share - Potentially Dilutive Outstanding Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive features (in shares) | 15,520,814 | 0 | 97,108 | 0 |
Private placement warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive features (in shares) | 2,966,664 | 0 | 23,618 | 0 |
Public warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive features (in shares) | 8,625,000 | 0 | 68,664 | 0 |
Stock options - equity classified | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive features (in shares) | 3,914,673 | 0 | 0 | 0 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive features (in shares) | 14,477 | 0 | 4,826 | 0 |
Net Earnings Per Share - Narrat
Net Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Earnings Per Share [Abstract] | ||
Earnout shares excluded from anti-dilutive securities (in shares) | 21,886,378 | 21,886,378 |
Subsequent events (Details)
Subsequent events (Details) - USD ($) | 9 Months Ended | ||
Oct. 25, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Subsequent Event [Line Items] | |||
Cash paid for acquisition | $ 2,166,516 | $ 0 | |
Subsequent Event | Rosewood | |||
Subsequent Event [Line Items] | |||
Percentage of voting interests acquired | 100% | ||
Cash paid for acquisition | $ 13,000,000 | ||
Warranty reserve | 300,000 | ||
Consideration transferred, payment of outstanding liabilities | $ 10,000,000 | ||
Subsequent Event | Rosewood | Measurement Input, EBITDA Multiple | |||
Subsequent Event [Line Items] | |||
Measurement input | 0.25 |