☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) |
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Units, each consisting of one share of Class A ordinary shares, $0.0001 par value, and one-third of one redeemable warrant | DHCAU | The Nasdaq Stock Market LLC | ||
Class A ordinary shares included as part of the units | DHCA | The Nasdaq Stock Market LLC | ||
Redeemable warrants included as part of the units, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 | DHCAW | The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
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March 31, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 1,573,788 | — | |||||
Prepaid expenses | 872,378 | — | ||||||
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Total Current Assets | 2,446,166 | — | ||||||
Deferred offering costs | — | 71,546 | ||||||
Cash held in Trust Account | 309,450,720 | — | ||||||
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TOTAL ASSETS | $ | 311,896,886 | $ | 71,546 | ||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accrued Expenses | $ | 50,738 | $ | — | ||||
Accrued offering expenses | 17,000 | 37,905 | ||||||
Promissory note – related party | — | 13,641 | ||||||
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Total Current Liabilities | 67,738 | 51,546 | ||||||
Warrant Liabilities | 16,934,265 | — | ||||||
Deferred underwriting fee payable | 10,830,775 | — | ||||||
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Total Liabilities | 27,832,778 | 51,546 | ||||||
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Commitments and Contingencies | ||||||||
Class A ordinary shares subject to possible redemption; 27,906,410 and no shares at a redemption value of $10.00 per share at March 31, 2021 and December 31, 2020, respectively | 279,064,100 | — | ||||||
Shareholders’ Equity | ||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 3,038,662 and no shares issued and outstanding (excluding 27,906,410 and no shares subject to possible redemption) at March 31, 2021 and December 31, 2020, respectively | 304 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 8,625,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 (1) | 863 | 863 | ||||||
Additional paid-in capital | 6,407,837 | 24,137 | ||||||
Accumulated deficit | (1,408,996 | ) | (5,000 | ) | ||||
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Total Shareholders’ Equity | 5,000,008 | 20,000 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 311,896,886 | $ | 71,546 | ||||
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June 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 1,081,105 | — | |||||
Prepaid expenses | 744,911 | — | ||||||
Total Current Assets | 1,826,016 | — | ||||||
Deferred offering costs | — | 71,546 | ||||||
Cash held in Trust Account | 309,450,720 | — | ||||||
TOTAL ASSETS | $ | 311,276,736 | $ | 71,546 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accrued e xpenses | $ | 59,405 | $ | — | ||||
Accrued offering expenses | 17,000 | 37,905 | ||||||
Advance from related party | 123,780 | — | ||||||
Promissory note – related party | — | 13,641 | ||||||
Total Current Liabilities | 200,185 | 51,546 | ||||||
Warrant l iabilities | 16,831,114 | 0 | ||||||
Deferred underwriting fee payable | 10,830,775 | 0 | ||||||
Total Liabilities | 27,862,074 | 51,546 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A ordinary shares subject to possible redemption; 27,841,466 and 0 shares at a redemption value of $10.00 per share at June 30, 2021 and December 31, 2020, respectively | 278,414,660 | — | ||||||
Shareholders’ Equity | ||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; 0ne issued and outstanding | 0— | 0— | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 3,103,606 and 0 shares issued and outstanding (excluding 27,841,466 and 0 shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively | 311 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 7,736,268 and 8,625,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively (1) | 774 | 863 | ||||||
Additional paid-in capital | 7,057,359 | 24,137 | ||||||
Accumulated deficit | (2,058,442 | ) | (5,000 | ) | ||||
Total Shareholders’ Equity | 5,000,002 | 20,000 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 311,276,736 | $ | 71,546 | ||||
(1) | At December 31, 2020, included up to 1,125,000 shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. On March 1, 2021, the Company effected a share capitalization, pursuant to which an additional 1,437,500 Class B ordinary shares were issued, resulting in an aggregate of 8,625,000 Founder Shares outstanding. At capitalization (see Note 6). |
THREE MONTHS ENDED MARCH 31, 2021
Operating and formation costs | $ | 160,016 | ||
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Loss from operations | (160,016 | ) | ||
Other expense: | ||||
Change in fair value of warrant liabilities | (657,641 | ) | ||
Transaction costs allocated to warrant liabilities | (586,339 | ) | ||
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Other expense | (1,243,980 | ) | ||
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Net loss | $ | (1,403,996 | ) | |
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Weighted average shares outstanding, Class A redeemable ordinary shares | 30,945,072 | |||
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Basic and diluted net income per share, Class A redeemable ordinary shares | $ | (0.00 | ) | |
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Weighted average shares outstanding, Class B non-redeemable ordinary shares (1) | 7,570,880 | |||
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Basic and diluted net loss per share, Class B non-redeemable ordinary shares | $ | (0.19 | ) | |
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2021 | 2021 | |||||||
General and administrative expenses | $ | 752,597 | $ | 912,613 | ||||
Loss from operations | (752,597 | ) | (912,613 | ) | ||||
Other income (expense): | ||||||||
Change in fair value of warrant liabilities | 103,151 | (554,490 | ) | |||||
Transaction costs alloc warrant liabilitiesated to | 0 | (586,339 | ) | |||||
Total other income (expense), net | 103,151 | (1,140,829 | ) | |||||
Net loss | $ | (649,446 | ) | $ | (2,053,442 | ) | ||
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 30,945,072 | 30,945,072 | ||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0 | $ | 0 | ||||
Basic and diluted weighted average shares outstanding, n on-redeemable Class B ordinary shares (1) | 7,736,268 | 7,654,031 | ||||||
Basic and diluted net loss per share, no n-redeemable C ordinary shareslass B | $ | (0.08 | ) | $ | (0.27 | ) | ||
(1) | At December 31, 2020, excluded up to 1,125,000 shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. On March 1, 2021, the Company effected a share capitalization, pursuant to which an additional 1,437,500 Class B ordinary shares were issued, resulting in an aggregate of 8,625,000 Founder Shares outstanding. At capitalization (see Note 6). |
Class A Ordinary Shares | Class B (1) Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance — January 1, 2021 | — | $ | — | 8,625,000 | $ | 863 | $ | 24,137 | $ | (5,000 | ) | $ | 20,000 | |||||||||||||||
Sale of 30,945,072 Units, net of underwriting discounts, fair value of Public Warrants and offering costs | 30,945,072 | 3,095 | — | — | 282,311,487 | — | 282,314,582 | |||||||||||||||||||||
Cash Paid in excess of fair value for private warrants | — | — | — | — | 3,133,522 | — | 3,133,522 | |||||||||||||||||||||
Ordinary shares subject to possible redemption | | (27,906,410 | ) | (2,791 | ) | — | — | | (279,061,309 | ) | — | | (279,064,100 | ) | ||||||||||||||
Net loss | — | — | — | — | — | (1,403,996 | ) | (1,403,996 | ) | |||||||||||||||||||
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Balance – March 31, 2021 | 3,038,662 | $ | 304 | 8,625,000 | $ | 863 | $ | 6,407,837 | $ | (1,408,996 | ) | $ | 5,000,008 | |||||||||||||||
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Class A Ordinary Shares | Class B (1) Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance — January 1, 2021 | 0— | $ | 0— | 8,625,000 | $ | 863 | $ | 24,137 | $ | (5,000 | ) | $ | 20,000 | |||||||||||||||
Sale of 30,945,072 Units, net of underwriting discounts, fair value of Public Warrants and offering costs | 30,945,072 | 3,095 | — | — | 282,311,487 | — | 282,314,582 | |||||||||||||||||||||
Cash Paid in excess of fair value for private warrants | — | — | — | — | 3,133,522 | — | 3,133,522 | |||||||||||||||||||||
Class A Ordinary shares subject to possible redemption | (27,906,410 | ) | (2,791 | ) | — | — | (279,061,309 | ) | — | (279,064,100 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (1,403,996 | ) | (1,403,996 | ) | |||||||||||||||||||
Balance – March 31, 2021 | 3,038,662 | $ | 304 | 8,625,000 | $ | 863 | $ | 6,407,837 | $ | (1,408,996 | ) | $ | 5,000,008 | |||||||||||||||
Founder Shares subject for Forfeiture | — | — | (888,732 | ) | (89 | ) | 89 | — | 0 | |||||||||||||||||||
Change in Class A ordinary shares subject to possible redemption | 64,944 | 7 | — | — | 649,433 | — | 649,440 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (649,446 | ) | (649,446 | ) | |||||||||||||||||||
Balance – June 30, 2021 | 3,103,606 | $ | 311 | 7,736,268 | $ | 774 | $ | 7,057,359 | $ | (2,058,442 | ) | $ | 5,000,002 | |||||||||||||||
(1) | At December 31, 2020, included up to 1,125,000 shares subject to forfeiture if the over-allotment option was not exercise in full or in part by the underwriters. On March 1, 2021, the Company effected a share capitalization, pursuant to which an additional 1,437,500 Class B ordinary shares were issued, resulting in an aggregate of 8,625,000 Founder Shares outstanding. At 2021 , the Founder Shares include an aggregate of up to 888,732 that were subject to forfeiture by the Sponsor following the underwriters’ election to partially exercise their over-allotment option. All share and associated amounts have been retroactively restated to reflect the sharecapitalization (see Note 6). |
THREE
Cash Flows from Operating Activities: | ||||
Net loss | $ | (1,403,996 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Change in fair value of warrant liabilities | 657,641 | |||
Transaction costs allocated to warrant liabilities | 586,339 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (845,578 | ) | ||
Accrued expenses | 50,738 | |||
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Net cash used in operating activities | (954,856 | ) | ||
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Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | (309,450,720 | ) | ||
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Net cash used in investing activities | (309,450,720 | ) | ||
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Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting discounts paid | 303,261,706 | |||
Proceeds from sale of Private Placement Warrants | 9,189,015 | |||
Repayment of promissory note – related party | (171,357 | ) | ||
Payment of offering costs | (300,000 | ) | ||
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Net cash provided by financing activities | 311,979,364 | |||
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Net Change in Cash | 1,573,788 | |||
Cash – Beginning of period | — | |||
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Cash – End of period | $ | 1,573,788 | ||
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Non-Cash investing and financing activities: | ||||
Offering costs included in accrued offering costs | $ | 17,000 | ||
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Offering costs paid through promissory note | $ | 130,916 | ||
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Payment of prepaid expenses through promissory note | $ | 26,800 | ||
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Initial classification of Class A ordinary shares subject to possible redemption | 271,198,440 | |||
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Change in value of Class A ordinary shares subject to redemption | $ | 7,865,660 | ||
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Deferred underwriting fee payable | $ | 10,830,775 | ||
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Forfeiture of Founder Shares | $ | (89 | ) | |
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Cash Flows from Operating Activities: | ||||
Net loss | $ | (2,503,442 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Change in fair value of warrant liabilities | 554,490 | |||
Transaction costs allocated to warrant liabilities | 586,339 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (718,111 | ) | ||
Accrued expenses | 59,405 | |||
Net cash used in operating activities | (1,571,319 | ) | ||
Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | (309,450,720 | ) | ||
Net cash used in investing activities | (309,450,720 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting discounts paid | 303,261,706 | |||
Proceeds from sale of Private Placement Warrants | 9,189,015 | |||
Proceeds from advance from related party | 123,780 | |||
Repayment of promissory note – related party | (171,357 | ) | ||
Payment of offering costs | (300,000 | ) | ||
Net cash provided by financing activities | 312,103,144 | |||
Net Change in Cash | 1,081,105 | |||
Cash – Beginning of period | 0— | |||
Cash – End of period | $ | 1,081,105 | ||
Non-Cash investing and financing activities: | ||||
Offering costs included in accrued offering costs | $ | 17,000 | ||
Offering costs paid through promissory note | $ | 130,916 | ||
Payment of prepaid expenses through promissory note | $ | 26,800 | ||
Initial classification of Class A ordinary shares subject to possible redemption | $ | 271,198,440 | ||
Change in value of Class A ordinary shares subject to redemption | $ | 7,216,220 | ||
Deferred underwriting fee payable | $ | 10,830,775 | ||
Forfeiture of Founder Shares | $ | (89 | ) | |
MARCH 31,
(Unaudited)
NOTE 2 — REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENT
The Company previously accounted for its outstanding Public Warrants (as defined in Note 5) and Private Placement Warrants (collectively, with the Public Warrants, the “Warrants”) issued in connection with its Initial Public Offering as components
MARCH 31,
(Unaudited)
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement.
In further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s ordinary shares. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s ordinary shares if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement Warrants are not indexed to the Company’s ordinary shares in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the tender offer provision fails the “classified in shareholders’ equity” criteria as contemplated by ASC Section 815-40-25.
In accordance with ASC 825-10, as a result of the classification of the warrants as derivative liabilities, the Company expensed a portion of the offering costs originally recorded as a reduction in equity. The portion of offering costs that was expensed was determined based on the relative fair value of the Public Warrants and Class A ordinary shares included in the Units.
As a result of the above, the Company should have classified the Warrants as derivative liabilities in its previously issued financial statement as of March 4, 2021. Under this accounting treatment, the Company is required to measure the fair value of the Warrants at the end of each reporting period as well as re-evaluate the treatment of the warrants and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.
The Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported investments held in trust or cash.
As | ||||||||||||
Previously | As | |||||||||||
Reported | Adjustments | Revised | ||||||||||
Balance sheet as of March 4, 2021 (audited) | ||||||||||||
Warrant Liabilities | $ | — | $ | 15,840,000 | $ | 15,840,000 | ||||||
Total liabilities | 10,988,357 | 15,840,000 | 26,828,357 | |||||||||
Class A Ordinary Shares Subject to Possible Redemption | 287,038,440 | (15,840,000 | ) | 271,198,440 | ||||||||
Class A Ordinary Shares | 130 | 158 | 288 | |||||||||
Additional Paid-in Capital | 5,004,010 | 586,181 | 5,590,191 | |||||||||
Accumulated Deficit | (5,000 | ) | (586,339 | ) | (591,339 | ) |
2021.
MARCH 31,
(Unaudited)
Cash Held in Trust Account
At March 31, 2021, the assets held in the Trust Account were held in cash.
Offering.
MARCH 31,
(Unaudited)
The Company’s statementstatements of operations includes a presentation of income (loss) per share for ordinary shares subject to possible redemption in a manner similar to the
Three Months Ended March 31, | ||||
2021 | ||||
Redeemable Class A Ordinary Shares | ||||
Numerator: Earnings allocable to Redeemable Class A Ordinary Shares | ||||
Interest Income | $ | — | ||
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Net Earnings | $ | — | ||
Denominator: Weighted Average Redeemable Class A Ordinary Shares | ||||
Redeemable Class A Ordinary Shares, Basic and Diluted | 30,945,072 | |||
Earnings/Basic and Diluted Redeemable Class A Ordinary Shares | $ | — | ||
Non-Redeemable Class B Ordinary Shares | ||||
Numerator: Net Loss minus Redeemable Net Earnings | ||||
Net Loss | $ | (1,393,996 | ) | |
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Non-Redeemable Net Loss | $ | (1,393,996 | ) | |
Denominator: Weighted Average Non-Redeemable Class B Ordinary Shares | ||||
Non-Redeemable Class B Ordinary Shares, Basic and Diluted (1) | 7,570,880 | |||
Loss/Basic and Diluted Non-Redeemable Class B Ordinary Shares | $ | (0.18 | ) |
Note: As of March 31, 2021, basic and diluted shares are the same as there are no non-redeemable securities that are dilutive to the Company’s shareholders.
For the Three Months ended June 30, 2021 | For the Six Months ended June 30, 2021 | |||||||
Class A ordinary Shares subject to possible redemption | ||||||||
Numerator: Earnings allocable to Class A ordinary shares subject to possible redemption | ||||||||
Interest earned on marketable securities held in Trust Account | $ | 0 | $ | 0 | ||||
Net income (loss) attributable to Class A ordinary shares subject to possible redemption | $ | 0 | $ | 0 | ||||
Denominator: Weighted Average Class A ordinary shares subject to possible redemption | ||||||||
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 30,945,072 | 30,945,072 | ||||||
Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption | $ | 0 | $ | 0 | ||||
Non-Redeemable Ordinary shares | ||||||||
Numerator: Net loss minus Net Earnings—Basic | ||||||||
Net loss | $ | (649,446 | ) | $ | (2,053,442 | ) | ||
Less: Net income allocable to Class A ordinary shares subject to possible redemption | 0 | 0 | ||||||
Non-Redeemable Net loss—Basic | $ | (649,446 | ) | $ | (2,053,442 | ) | ||
Denominator: Weighted Average n on- ordinary sharesr edeemable Class B | ||||||||
Basic and diluted weighted average shares outstanding, n on-redeemable Class B | 7,736,268 | 7,654,031 | ||||||
Basic net loss per share, n on-redeemable ordinary shares Class B | $ | (0.08 | ) | $ | (0.27 | ) | ||
MARCH 31,
(Unaudited)
MARCH 31,
(Unaudited)
Borrowings under the Promissory Note are no longer available.
MARCH 31,
(Unaudited)
8. WARRANT LIABILITIES
MARCH 31,
(Unaudited)
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Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
Description | Level | March 31, 2021 | December 31, 2020 | |||||||||
Liabilities: | ||||||||||||
Warrant Liability – Public Warrants | 3 | $ | 10,624,475 | $ | — | |||||||
Warrant Liability – Private Placement Warrants | 3 | $ | 6,309,790 | $ | — |
Description | Level | June 30, 2021 | ||||||
Liabilities: | ||||||||
Warrant Liability – Public Warrants | 1 | $ | 10,521,324 | |||||
Warrant Liability – Private Placement Warrants | 3 | $ | 6,309,790 |
MARCH 31,
(Unaudited)
Initial Measurement
The key inputs intosubsequent measurements of the Monte Carlo simulation model for the Private Placement Warrants and Public Warrants were as follows at initial measurement:
Input | March 4, 2021 (Initial Measurement and Over- allotment) | |||
Risk-free interest rate | 1.03 | % | ||
Expected Term (Years) | 5.0 | |||
Expected volatility | 25.0 | % | ||
Exercise price | $ | 11.50 | ||
Unit Price | $ | 9.67 |
On March 4, 2021, inclusiveafter the detachment of over-allotment, the Private Placement Warrants and Public Warrants were determinedfrom the Units is classified as Level 1 due to be $0.99 per warrant for aggregate valuesthe use of $6.06 million and $10.21 million, respectively.
Subsequent Measurement
The Warrants are measured at fair value on a recurring basis.an observable market quote in an active market under the ticker DHCAW. The subsequent measurement of the Public Warrants and the Private Placement Warrants was calculated using a Monte Carlo Simulation which is considered a Level 3 measurement.
Input | ||||
Risk-free interest rate | 1.38 | % | ||
Expected Term (Years) | 5.0 | |||
Expected volatility | 25.0 | % | ||
Exercise price | $ | 11.50 | ||
Unit Price | $ | 9.65 |
As of March 31, 2021, the aggregate values of the Private Placement Warrants and Public Warrants were determined to be $1.03 per warrant for aggregate values of $6.31 million and $10.62 million, respectively.
:
Input | June 30, 2021 | |||
Risk-free interest rate | 1.10 | % | ||
Expected Term (Years) | 5.0 | |||
Expected volatility | 15 | % | ||
Exercise price | $ | 11.50 | ||
Unit Price | $ | 10.00 |
Private Placement | Public | Warrant Liabilities | ||||||||||
Fair value as of January 1, 2021 | $ | — | $ | — | $ | — | ||||||
Initial measurement on March 4, 2021 (IPO) | 5,940,000 | 9,900,000 | 15,840,000 | |||||||||
Initial measurement on March 5, 2021 (Over allotment) | 124,750 | 311,874 | 436,624 | |||||||||
Change in fair value | 245,040 | 412,601 | 657,641 | |||||||||
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Fair value as of March 31, 2021 | $ | 6,309,790 | $ | 10,624,475 | $ | 16,934,265 | ||||||
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Private Placement | Public | Warrant Liabilities | ||||||||||
Fair value as of January 1, 2021 | $ | 0— | $ | 0— | $ | 0— | ||||||
Initial measurement on March 4, 2021 (IPO) | 5,940,000 | 9,900,000 | 15,840,000 | |||||||||
Initial measurement on March 5, 2021 (Over allotment) | 124,750 | 311,874 | 436,624 | |||||||||
Change in fair value | 245,040 | 412,621 | 657,641 | |||||||||
Fair value as of March 31, 2021 | $ | 6,309,790 | $ | 10,624,475 | $ | 16,934,265 | ||||||
Change in fair value | — | (103,151 | ) | (103,151 | ) | |||||||
Transfer to Level 1 | — | (10,521,324 | ) | (10,521,324 | ) | |||||||
Fair v alue as of June 30, 2021 | $ | 6,309,790 | $ | — | $ | 6,309,790 | ||||||
MARCH 31,
(Unaudited)
Liabilities
We have identified a material weaknesssupplemented by the risk factors included in our internal control over financial reporting as ofQuarterly Report on Form 10-Q for the quarter ended March 31, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
On April 12, 2021, the staff of the SEC issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “Statement”). In the Statement, the SEC staff, among other things, expressed its view that certain terms and conditions common to warrants issued by special purpose acquisition companies, such as the Company, may require such warrants to be classified as liabilities on the special purpose acquisition company’s balance sheet as opposed to equity. The Company previously accounted for its outstanding warrants as components of equity instead of as derivative liabilities. See “—Our warrants are accounted for as a warrant liability and will be recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Class A ordinary shares or may make it more difficult for us to consummate an initial business combination.” In connection with this change to our accounting methodology, we identified a material weakness in our internal controls over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
As a result of such material weakness, the change in accounting for the warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Quarterly Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete an initial business combination.
Our warrants are accounted for as a warrant liability and will be recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Class A ordinary shares or may make it more difficult for us to consummate an initial business combination.
In connection with our initial public offering and the concurrent private placement of warrants, we issued an aggregate of 16,441,034 warrants (including 10,315,024 warrants included in the units and 6,126,010 private placement warrants). We account for these as a warrant liability and will record at fair value any changes in fair value each period reported in earnings as determined by us based upon a valuation report obtained from an independent third-party valuation firm. The impact of changes in fair value on earnings may have an adverse effect on the market price of our Class A ordinary shares. In addition, potential targets may seek a special purpose acquisition company that does not have warrants or that does not have warrants that are accounted for as a warrant liability, which may make it more difficult for us to consummate an initial business combination with a target business.
32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
|
DHC ACQUISITION CORP. | ||||||
Date: | By: | /s/ Christopher Gaertner | ||||
Name: | Christopher Gaertner | |||||
Title: | Co-Chief Executive Officer | |||||
(Principal Executive Officer) | ||||||
Date: | By: | /s/ Christopher Gaertner | ||||
Name: | Christopher Gaertner | |||||
Title: | Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
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