Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 | |
Document and Entity Information [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | United Homes Group, Inc. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001830188 |
Amendment Flag | false |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 12,238,835 | $ 51,504,887 |
Accounts receivable | 1,976,334 | 2,086,018 |
Homes under construction and finished homes | 163,997,487 | 123,000,199 |
Developed lots | 16,205,448 | 17,025,273 |
Due from related party | 1,437,235 | |
Lot purchase agreement deposits | 3,804,436 | 2,946,001 |
Investment in Joint Venture | 186,086 | |
Property and equipment, net | 1,385,698 | 1,590,353 |
Operating right-of-use assets | 1,001,277 | |
Prepaid expenses and other assets | 6,112,044 | 4,107,254 |
Total Assets | 208,344,880 | 202,259,985 |
LIABILITIES AND SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | ||
Accounts payable | 22,077,240 | 28,741,054 |
Homebuilding debt and other affiliate debt | 120,797,006 | 102,502,287 |
Operating lease liabilities | 1,001,277 | |
Other accrued expenses and liabilities | 5,465,321 | 4,458,232 |
Total liabilities | 149,340,844 | 135,701,573 |
Commitments and contingencies | ||
Total Shareholders' and Other Affiliates' Net investment | ||
Shareholders' and other affiliates' net investment | 100,322,957 | 83,586,722 |
Net due to and due from shareholders and other affiliates | (41,318,921) | (17,028,310) |
Total Shareholders' and Other Affiliates' Net investment | 59,004,036 | 66,558,412 |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Deficit | $ 208,344,880 | $ 202,259,985 |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenue, net of sales discounts | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 |
Cost of sales | 358,238,703 | 332,274,788 | 260,115,893 |
Gross Profit | 118,807,246 | 100,616,722 | 67,138,412 |
Selling, general and administrative expense | 49,685,730 | 38,461,370 | 29,891,622 |
Loss from operations | 69,121,516 | 62,155,352 | 37,246,790 |
Other income, net | 230,692 | 257,659 | 1,729,584 |
Equity in net earnings from investment in joint venture | 137,086 | ||
Net income | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 |
Basic and diluted earnings per share | |||
Basic net income per share | $ 694.89 | $ 624.13 | $ 389.76 |
Diluted net income per share | $ 674.92 | $ 624.13 | $ 389.76 |
Basic and diluted weighted-average number of shares | |||
Basic weighted average shares outstanding | 100,000 | 100,000 | 100,000 |
Diluted weighted average shares outstanding | 102,960 | 100,000 | 100,000 |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | |||
Beginning balance | $ 66,558,412 | $ 34,168,541 | $ 20,251,063 |
Distributions and net transfer to shareholders and other affiliates | (78,466,300) | (30,023,140) | (25,058,896) |
Stock compensation | 1,422,630 | ||
Net income | 69,489,294 | 62,413,011 | 38,976,374 |
Ending balance | 59,004,036 | 66,558,412 | 34,168,541 |
Shareholders' and Other Affiliates' Net Investment | |||
CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | |||
Beginning balance | 83,586,722 | 54,697,321 | 38,051,216 |
Distributions and net transfer to shareholders and other affiliates | (54,175,689) | (33,523,610) | (22,330,269) |
Stock compensation | 1,422,630 | ||
Net income | 69,489,294 | 62,413,011 | 38,976,374 |
Ending balance | 100,322,957 | 83,586,722 | 54,697,321 |
Net Due To and Due From Shareholders and Other Affiliates | |||
CHANGES IN SHAREHOLDERS' AND OTHER AFFILIATES' NET INVESTMENT | |||
Beginning balance | (17,028,310) | (20,528,780) | (17,800,153) |
Distributions and net transfer to shareholders and other affiliates | (24,290,611) | 3,500,470 | (2,728,627) |
Ending balance | $ (41,318,921) | $ (17,028,310) | $ (20,528,780) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Equity in net earnings from investment in joint venture | (137,086) | ||
Depreciation | 355,566 | 358,587 | 182,786 |
Loss on sale of property and equipment | 6,966 | 15,000 | 14,368 |
Amortization of deferred loan costs | 404,146 | 421,186 | 408,674 |
Stock compensation expense | 1,422,630 | ||
Amortization of operating lease right-of-use assets | 525,434 | ||
Net change in operating assets and liabilities: | |||
Accounts receivable | 109,684 | (1,178,383) | (563,109) |
Related party receivable | (1,437,235) | ||
Inventories | (26,673,147) | (12,726,300) | 29,294,686 |
Lot purchase agreement deposits | (858,435) | 417,025 | (1,290,574) |
Prepaid expenses and other assets | (2,408,936) | (1,983,511) | 229,838 |
Accounts payable | (6,663,814) | 9,937,222 | 3,869,223 |
Operating lease liabilities | (525,434) | ||
Other accrued expenses and liabilities | 1,007,089 | 644,199 | 659,436 |
Net cash used in operating activities | 34,616,722 | 58,318,036 | 71,781,702 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (171,685) | (404,244) | (805,294) |
Proceeds from the sale of property and equipment | 13,808 | 10,190 | 20,000 |
Capital contribution in joint venture | (49,000) | ||
Net cash provided by (used in) investing activities | (206,877) | (394,054) | (785,294) |
Cash flows from financing activities: | |||
Proceeds from homebuilding debt | 179,336,312 | 285,392,912 | 194,418,471 |
Repayments of homebuilding debt | (170,810,631) | (262,064,474) | (210,255,229) |
Proceeds from other affiliate debt | 10,851,187 | 10,025,865 | 13,259,394 |
Repayments of other affiliate debt | (918,453) | (5,624,330) | (7,499,472) |
Repayments on equipment financing | (142,536) | (43,070) | (95,411) |
Payment of deferred loan costs | (1,264,403) | (337,500) | |
Distributions and net transfer to shareholders and other affiliates | (54,175,689) | (33,523,610) | (22,330,269) |
Changes in net due to and due from shareholders and other affiliates | (37,816,087) | (28,497,772) | (18,579,633) |
Net cash provided by financing activities | (73,675,897) | (35,598,882) | (51,419,649) |
Net change in cash and cash equivalents | (39,266,052) | 22,325,100 | 19,576,759 |
Cash - beginning of the period | 51,504,887 | 29,179,787 | 9,603,028 |
Cash - end of the period | 12,238,835 | 51,504,887 | 29,179,787 |
Supplemental cash flow information: | |||
Cash paid for interest | 5,000,196 | 3,199,503 | 4,235,364 |
Conversion of other affiliates debt to homebuilding debt | 1,414,681 | 7,985,557 | 6,101,195 |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 13,504,316 | 33,170,761 | 19,541,090 |
Transfer of constructed model homes to related parties | (1,517,030) | (3,690,084) | |
Contribution of fixed assets | 344,511 | ||
Additions of right-of-use lease assets and liabilities | 1,585,096 | ||
Transfer of co-obligor debt to land development affiliate | 21,160 | ||
Total non-cash activities | $ 16,525,253 | $ 39,983,799 | $ 21,952,201 |
Nature of operations and basis
Nature of operations and basis of presentation | 12 Months Ended |
Dec. 31, 2022 | |
Description of Organization and Business Operations | |
Nature of operations and basis of presentation | Note 1 — Nature of operations and basis of presentation Nature of Business — GSH develops land and constructs single—family residential homes. GSH has active operations in South Carolina and Georgia offering a range of residential products including entry-level attached and detached homes, first-time move up attached and detached homes and second move-up detached homes. The constructed homes appeal to a wide range of buyer profiles, from first-time to lifestyle buyers. Basis of Presentation The Company’s primary objective is to provide customers with homes of exceptional quality and value while maximizing its return on investment. Generally, the Company grows by expanding its market share in existing markets and by expanding into markets contiguous to the current active markets. Throughout the periods covered by the financial statements, the Company operated as part of GSH. The accompanying financial statements have been prepared from GSH’s historical financial records and reflect the historical financial position, results of operations and cash flows of the Company for the periods presented on a carve-out basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company has historically transacted with affiliates that are owned by the shareholders of the Company. The Company has categorized the various affiliates based on the nature of the transactions with the Company and their primary operations. The categories are as follows: Land Development Affiliates Other Operating Affiliates Collectively, these are referred to as “Other Affiliates” in these financial statements and represented as related parties (see Note 6 — Related party transactions All assets, liabilities, revenues, and expenses directly associated with the activity of the Company are included in these financial statements. Cash and cash equivalents is included in these financial statements, as the Company provided the cash management/treasury function for the Other Affiliates. In addition, a portion of GSH’s corporate expenses including share-based compensation were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional cost of sales or employee headcount, as applicable. The corporate expense allocations include the cost of corporate functions and resources provided by or administered by GSH including, predominately, costs associated with executive management, finance, accounting, legal, human resources, and costs associated with operating GSH’s office buildings. The corporate expense allocation requires significant judgment and management believes the basis on which the corporate expenses have been allocated reasonably reflects the utilization of services provided to the Company during the periods presented. Balance sheet accounts were reviewed to determine what was attributable to the Company. There were no Balance Sheet accounts that required allocation procedures for assets and liabilities. In addition, all significant transactions between the Company and GSH have been included in these financial statements. The aggregated net effect of transactions between the Company and GSH are reflected in the Balance Sheets within Total shareholders’ and other affiliates’ net investment and in the Statements of Cash Flows within Distributions and net transfer to shareholders and other affiliates, changes in net due from and net due to shareholders and other affiliates and, when transactions were historically not settled in cash, in Non-cash financing activities. Net due to and due from shareholders and other affiliates balances are generally presented as a contra-account in the Balance Sheets within Total shareholders’ and other affiliates’ net investment due to the expectation they will not be settled in cash in the future. Certain related party amounts that are expected to be settled in cash are presented as Due from related party in the Balance Sheet. GSH’s third-party long-term debt and related interest expense have all been allocated to the Company. The Company is considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. Certain portions of that long-term debt and the related interest consist of construction revolving lines of credit and are reflected as Homebuilding debt. The remaining portions of long-term debt and the related interest have been used to finance operations that are not related to the Company, primarily land development activities, and are presented as Other Affiliate debt. The Other Affiliate debt balances related to these operations have an associated Due from shareholders and other affiliates recorded to the Balance Sheets as of December 31, 2022 and 2021. The results reported in these financial statements would not be indicative of the Company’s future performance, primarily because the lots developed by affiliates were not transferred to the Homebuilding Operations at a market rate. As such, these results do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Emerging Growth Company Status Proposed Business Combination — |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Summary of significant accounting policies | Note 2 — Summary of significant accounting policies Use of Estimates — Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. Accounts Receivable — Inventories and Cost of Sales — — Developed lots — This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. For the years ended December 31, 2022 and 2021, the amount of developed lots included in inventory was $16,205,448 and $17,025,273, respectively. Developed lots purchased at fair value from third parties was $10,052,179 and $9,445,580 as of December 31, 2022 and December 31, 2021, respectively, which is included in Developed Lots on the Balance Sheets. — Homes under construction — At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. For the years ended December 31, 2022 and 2021, the amount of inventory related to homes under construction included in homes under construction and finished homes was $141,863,561 and $110,224,757, respectively. — Finished homes — This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the amount of inventory related to finished homes included in homes under construction and finished homes was $22,133,926 and $12,775,442, respectively. Upon settlement, costs associated with units sold are expensed to Cost of sales based on a specific identification basis. Costs of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home. In addition, the Company receives rebates with certain suppliers for the use of their product. The Company records the receipt of the rebate as a reduction in Cost of sales based on a specific identification basis. At the time of closing, the Company performs an analysis to accrue for costs that were incurred as part of the construction of the home but unpaid at the time of closing. The costs are recorded in Cost of sales in the Statements of Income. Lot Purchase Agreement Deposits — Note 7—Lot purchase agreement deposits Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes the Land Developers under the variable interest model to determine if such interest in Land Developers is considered a variable interest, and, if so, whether the Land Developers are required to be consolidated in the Company’s financial statements. Management determines whether the Land Developers are considered variable interest entities (“VIEs”) at the time management becomes involved with Land Developers. The Company invests in less than half of the fair value of the Land Developers’ assets. The Company does not have any specific performance obligations to purchase a certain number or any of the lots or guarantee any of the Land Developers’ financial or other liabilities. The Company is not involved in the design or creation of these entities. As such, the deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be variable interests in the respective Land Developers. Property and Equipment — Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years Normal repairs and maintenance costs are expensed as incurred, whereas significant improvements which materially increase the value or extend the useful life of an asset are capitalized and depreciated over the remaining estimated useful life of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts. Any gain or loss on the sale or retirement of the depreciable asset is recognized as Other income (expense) on the Statements of Income. Long-Lived Assets — Inventory impairment exists if the carrying amount of the asset is not recoverable from the sale prices expected from future home sales. The Company reviews the performance and outlook of its inventories for indicators of potential impairment on a community level. Any calculated impairments are recorded immediately in Cost of sales. Recoverability for Property and equipment is measured by the expected undiscounted future cash flows of the assets compared to the carrying amounts of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions and appraisal. There were no triggering events or impairments recorded for all years presented. Deferred Loan Costs — Note 5-Homebuilding debt and other affiliate debt Earnings per Share — Note 13 — Earnings per share . Investment in Joint Venture The Company accounts for its investment in the Joint Venture under the equity method of accounting, as it determined that the Company has the ability to exercise significant influence over the venture, but does not have control. Under the equity method, the investment in the unconsolidated joint venture is recorded initially at cost, as Investment in Joint Venture, and subsequently adjusted for equity in earnings, cash contributions, less distributions and impairments. The Joint Venture commenced operations in June 2022. Equity in earnings from the investment in the Joint Venture for the period from the commencement of operations through December 31, 2022 was $137,086, increasing the investment in Joint Venture as of December 31, 2022 to $186,086. There were no additional capital contributions and distributions for the year ended December 31, 2022 aside from the initial contribution of $49,000. Additionally, there were no impairment losses related to the Company’s investment in the Joint Venture recognized during the year ended December 31, 2022. Share-Based Compensation Note 1 — Nature of operations and basis of presentation Stock option awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant. GSH accounts for forfeitures when they occur. Stock warrant awards do not contain a service condition and are expensed on the grant date. The fair value of share-based awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black-Scholes option pricing model. This model requires the input of highly subjective assumptions, including the option’s expected term and stock price volatility. See Note 10 — Stock compensation . Transaction costs — Note 1 — Nature of operations and basis of presentation Leases — Leases (Topic 842) Leases than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company adopted Topic 842 on January 1, 2022, using the modified retrospective transition method. In addition, the Company elected the practical expedients during transition which permitted the Company not to reassess under the new standard prior conclusions about the existence of a lease, lease classification, and initial direct cost. As a result of adopting Topic 842, the Company recognized operating lease ROU assets and operating The Company determines if an arrangement is, or contains, a lease at inception. Leases are recognized when the contract provides the Company the right to use an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease ROU assets and operating lease liabilities in the Balance Sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As most of the Company’s leases do not provide an explicit borrowing rate, management uses the Company’s incremental borrowing rate based on information available at the commencement date, or at the date of transition for leases transitioned to Topic 842 on January 1, 2022, in determining the present value of the lease payments. In determining the incremental borrowing rate, the Company considered the lease term, credit risk of the lessee and the lease, the size of the lease payments, the current economic environment affecting the lessee and the lease, and the collateralized nature of the lease. The ROU assets also include any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. The Company elected the practical expedient to combine lease and non-lease components when accounting for ROU assets and lease liabilities of all asset classes. Variable lease costs represent additional expenses incurred by the Company that are not included in the lease payment. Variable lease costs include maintenance charges, taxes, insurance, and other similar costs, and are recorded within Selling, general and administrative expense on the statement of income for the year ended December 31, 2022. The Company has elected not to recognize leases with an initial term of 12 months or less (“short-term leases”) on the Balance Sheet. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. Unless otherwise noted, GSH accounts for sale-leaseback transactions at their contractually stated terms. As the leases do not provide an explicit borrowing rate, management used the Company’s incremental borrowing rate based on information available as of the lease commencement date. Refer to Note 6 - Related party transactions Revenue Recognition — Performance obligations are generally satisfied at a point in time, when the control of the home is transferred to the customer. Control is considered to be transferred to the customer at the time of closing when the title and possession of the home are received by the homebuyer. The Company generally requires initial cash deposits from the homebuyer at the time the sales contract is executed which is held by an unrelated third-party escrow agent. The remaining consideration to which the Company is entitled to is received at the time of closing through an escrow agent, typically within five days or less of the closing date. For the years ended December 31, 2022, 2021 and 2020, revenue recognized at a point in time from speculative homes totaled $456,792,005, $419,714,758, and $318,041,199, respectively. In some contracts, the Company is contracted to construct a home or homes on underlying land the customer controls. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts using the input method based on costs incurred as compared to total estimated project costs. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. For the years ended December 31, 2022, 2021, and 2020, revenue recognized over time from land owned by customers totaled $20,253,944, $13,176,752, and $9,213,106, respectively. For homes with revenue recognized over time, a large portion of the Company’s contracts with these customers and the related performance obligations have an original expected duration of one year or less. As a result, the Company elected the practical expedient and does not disclose the value of unsatisfied performance obligations for these contracts. The Company periodically bills these customers over the term of the project and performs a quarterly analysis between billings and revenue recognized. The Company records a contract asset when work performed by the Company is greater than the amount billed. Conversely, the Company records deferred revenue when the amount billed is greater than the work performed. As of December 31, 2022 and 2021, the Company recorded a contract asset of $611,343 and $1,361,590, respectively, which is included in Prepaid expense and other assets on the Balance Sheets. As of December 31, 2022 and 2021, the Company recorded deferred revenue of $305,701 and $957,926, respectively, which is included in Other accrued expenses and liabilities on the Balance Sheets. Substantially all deferred revenue is recognized in revenue within twelve months of being received from customers. The Company frequently performs reviews of all contracts to estimate profitability in the future. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total estimated loss at the time it is fully determinable. For the years ended December 31, 2022, 2021, and 2020, the Company did not recognize a loss on any contracts. Concurrent with the recognition of revenues in our Statements of Income, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. Homebuilding revenues include forfeited deposits, which occur when home sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits were considered insignificant for all years presented. The Company determined that costs to obtain a contract include sales commission paid to agents and brokers for selling services to attract home buyers into sales agreements. The contract term is typically the closing date when the title and consideration are exchanged. The Company adopted the practical expedient associated with ASC 606 to recognize the incremental costs of obtaining a contract as an expense when incurred, i.e., when the amortization period of the asset that the Company otherwise would have recognized is one year or less. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. The Company recognized revenue of $5,188,716 on the Statement of income for the year ended December 31, 2022. Refer to Note 6 - Related party transactions Backlog — Advertising — Warranties — Income Taxes — Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt Reporting Segment Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) |
Capitalized interest
Capitalized interest | 12 Months Ended |
Dec. 31, 2022 | |
Capitalized interest | |
Capitalized interest | Note 3 — Capitalized interest The Company accrues interest on the Company’s Homebuilding debt. That debt is used to finance homebuilding operations (see Note 5 — Homebuilding debt and other affiliate debt 2022 2021 Capitalized interest at January 1: $ 1,190,318 $ 812,874 Interest cost capitalized 5,515,372 3,400,879 Interest cost expensed (5,455,230) (3,023,435) Capitalized interest at December 31: $ 1,250,460 $ 1,190,318 |
Property and equipment
Property and equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment | |
Property and equipment | Note 4 — Property and equipment Property and equipment consisted of the following as of December 31, 2022 and 2021: Asset Group 2022 2021 Furniture and fixtures $ 688,487 $ 580,065 Leasehold improvements 380,187 380,187 Machinery and equipment 1,037,231 985,699 Office equipment 165,774 154,043 Vehicles 750,950 790,519 Total Property and equipment 3,022,629 2,890,513 Less: Accumulated depreciation (1,636,931) (1,300,160) Property and equipment, net $ 1,385,698 $ 1,590,353 Depreciation expense, included within Selling, general and administrative expense on the Statements of Income was $355,566, $358,587 and $182,786 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Homebuilding debt and other aff
Homebuilding debt and other affiliate debt | 12 Months Ended |
Dec. 31, 2022 | |
Homebuilding debt and other affiliate debt | |
Homebuilding debt and other affiliate debt | Note 5 — Homebuilding debt and other affiliate debt GSH, jointly with Other Affiliates considered to be under common control, enters into debt arrangements with financial institutions. These debt arrangements are in the form of revolving lines of credit and are generally secured by land (developed lots and undeveloped land) and homes (under construction and finished). GSH and certain related Other Affiliates, are collectively referred to as the Nieri Group. The Nieri Group entities are jointly and severely liable for the outstanding balances under the revolving lines of credit, however, the Company has been deemed the primary obligor. The Company is considered the primary legal obligor of such debt as it is the sole cash generating entity and responsible for repayment of the debt. As such, the Company has recorded the outstanding advances under the financial institution debt and other debt within these financial statements as of December 31, 2022 and 2021. A portion of the revolving lines of credit were drawn down for the sole operational benefit of the Nieri Group and Other Affiliates outside of the Company. These line of credit balances are reflected in the table below as Other Affiliates’ debt The advances from the revolving construction lines, reflected as Homebuilding debt, are used to build homes and are repaid incrementally upon individual home sales. The various revolving construction lines are collateralized by the homes under construction and developed lots. The revolving construction lines are fully secured, and the availability of funds are based on the inventory value at the time of the draw request. Interest accrued on the loans is added to the balance of the loans outstanding and is paid concurrently with the principal repayments made upon the occurrence of individual home sales. As the average construction time for homes is less than one year, all outstanding debt is considered short-term as of December 31, 2022 and 2021. The following table and descriptions summarize the Company’s debt as of December 31, 2022 and 2021: 2022 Homebuilding Weighted Debt – Wells average Fargo interest rate Syndication Other Affiliates (2) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 2021 Homebuilding Weighted Debt – Wells average Fargo Homebuilding interest rate (1) Syndication Debt – Other Other Affiliates (2) Total Wells Fargo Bank 3.63 % $ 36,453,801 $ — $ — $ 36,453,801 Regions Bank 3.63%/ 4.40 % 23,189,545 — 918,453 24,107,998 Texas Capital Bank 3.63 % 16,561,385 — — 16,561,385 Truist Bank 3.63 % 16,543,353 — — 16,543,353 First National Bank 3.63%/ 3.88 % 6,624,554 — 21,160 6,645,714 Anderson Brothers 4.25 % — 439,200 1,608,300 2,047,500 Other debt — % — 142,536 — 142,536 Total debt on contracts $ 99,372,638 $ 581,736 $ 2,547,913 $ 102,502,287 (1) The weighted average interest rate for the Wells Fargo Syndication debt is 3.63 %. The 4.40 % and 3.88 % represents the weighted average interest rate for Other Affiliates debt for Regions Bank and First National Bank, respectively. (2) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. Wells Fargo Syndication In July 2021, the Nieri Group entities entered into a $150,000,000 Syndicated Credit Agreement (“Syndicated Line”) with Wells Fargo Bank, National Association (“Wells Fargo”). The Syndicated Line is a three-year revolving credit facility with a maturity date of July 2024, and an option to extend the maturity date for one year that can be exercised upon approval from Wells Fargo. The Syndicated Line also includes a $2,000,000 letter of credit as a sub-facility subjected to the same terms and conditions as the Syndicated Line. The Company used the proceeds from the Syndicated Line to repay all syndication group participants’ outstanding construction line balances. The syndication group consisted of Wells Fargo Bank, Regions Bank, Texas Capital Bank, Truist Bank and First National Bank. The remaining availability on the Syndicated Line was $32,044,028, as of December 31, 2022 and $50,627,362 as of December 31, 2021. The Company pays a fee ranging between 15 and 30 basis points per annum depending on the unused amount of the Syndicated Line. The fee is computed on a daily basis and paid quarterly in arrears. The Syndication Agreement contains financial covenants, including (a) a minimum tangible net worth of no less than the sum of (x) $65 million and (y) 25% of positive after-tax income, as of December 31, 2022 (which amount is subject to increase over time based on earnings), (b) a maximum leverage covenant that prohibits the leverage ratio from exceeding 2.75 to 1.00 for any fiscal quarter, (c) a minimum debt service coverage ratio to be less than 2.50 to 1.00 for any fiscal quarter, and (d) a minimum liquidity amount of not less than $15,000,000 at all times and unrestricted cash of not less than $7,500,000 at all times. The Nieri Group was in compliance with all debt covenants as of December 31, 2022, and 2021. The interest rates on the borrowings under the Syndicated Line vary based on the Nieri Group’s leverage ratio and may be based on the greater of either LIBOR plus an applicable margin (ranging from 275 basis points to 350 basis points) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or the base rate plus the aforementioned applicable margin. The interest rate on borrowings under the Syndicated Line may be based on the LIBOR rate and if the LIBOR rate is no longer available, the agreement contemplates transitioning to an alternative widely available market rate agreeable between parties. The amounts in Other Affiliates debt are unrelated to the operations of the Company, and therefore, an equal amount is included in Net due to and due from shareholders and other affiliates on the Balance Sheets. For the years ended December 31, 2022, 2021, and 2020, Other Affiliates borrowed $10,851,187, $10,025,865, $13,259,394, respectively and repaid $918,453, $5,624,330, and $7,499,472, respectively. These amounts are recorded on the Statements of Cash Flows, financing activities section, with borrowings presented as Proceeds from other affiliate debt and repayments as Repayments of other affiliate debt. For the years ended December 31, 2022, 2021, and 2020, the Company capitalized $141,245, $1,264,403, $337,500, of deferred loan costs, respectively. The Company recognized $404,146, $421,186, and $408,674, respectively, of amortized deferred loan costs within Other income (expense), net for the years ended December 31, 2022, 2021, and 2020, respectively. Outstanding deferred loan costs related to the Company’s Homebuilding debt were $711,060 and $973,961 as of December 31, 2022 and 2021, respectively, and are included in Prepaid expenses and other assets on the Balance Sheets. Other Debt The Company enters into retail installment contracts with unrelated third parties. The maturity date of the borrowings was in August 2022 and the amount was repaid in full. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related party transactions | Note 6 — Related party transactions Distributions and net transfer to shareholders and other affiliates Before the carve-out, the Company’s financial information was included in the financial statements and accounting records of GSH. The following transactions consisting of distributions and net transfer to shareholders and other affiliates summarizes the activity between the Company and shareholders and Other Affiliates before the carve-out. Shareholders’ and Other Affiliates’ net investment reflects transactions that occurred between the Company and the Shareholders, and the Company and Other Affiliates, that were not settled in cash. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 — Nature of operations and basis of presentation). 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. General Corporate Allocations — General Financing Activities — Related party transactions The Company transacts with Other Affiliates that are owned by the shareholders of the Company as discussed above. The Company operates and maintains the cash management and treasury function for the Other Affiliates. Cash receipts from customers and cash disbursements made to vendors are recorded through one centralized bank account. The Company records a Due from Other Affiliate when cash is disbursed, generally to a vendor, on behalf of an affiliate. Conversely, the Company records a Due to Other Affiliate when cash is received from a customer on behalf of an affiliate. As of December 31, 2022 and 2021, the Company recorded a Due from Other Affiliates of $72,739,572 and $48,004,261, respectively, and a Due to Other Affiliates of $31,420,651 and $30,975,951, respectively. These balances are presented net as a contra-account against Shareholders’ and other affiliates’ net investment, as the settlement of these balances is not expected in cash. As of December 31, 2022, the Company recorded a Due from related party of $1,437,235 as an asset on the Balance Sheet as the Company is reasonably certain that this amount will be collected because both parties have entered into a binding construction contract and agreed on the expected contract price. The below table summarizes the transactions with the Land Development and Other Affiliates for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 Land development expense Other activities Cash transfer — Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Model home sales Transfer of constructed model homes to related parties Contribution of fixed assets Sale-leaseback transaction ordinary activities. Accordingly, revenue and cost of sales of $5,188,716 and $4,508,819, respectively, were recognized in the Statement of income for the year ended December 31, 2022. In connection with these transactions, GSH simultaneously entered into individual lease agreements for all 19 model homes sold, whereby GSH is the lessee. The Company is responsible for paying the operating expenses associated with the model homes while under lease. Nine of the 19 individual leases had a lease term greater than twelve months. In connection with these nine leases, the Company recognized an operating lease right-of-use-asset and a corresponding operating As the leases associated with the transactions do not commence until 2023, the Company did not pay rent or recognize lease expense associated with the leases during the year ended December 31, 2022. Rent expense will be paid monthly, consistent with the lease contract. Other - Leases In addition to the transactions above, the Company has entered into three separate operating lease agreements with one related party. The terms of the lease, including rent expense and future minimum payments, are described in Note 9 - Commitments and contingencies |
Lot purchase agreement deposits
Lot purchase agreement deposits | 12 Months Ended |
Dec. 31, 2022 | |
Lot purchase agreement deposits | |
Lot purchase agreement deposits | Note 7 - Lot purchase agreement deposits As the carved-out entity, the Company does not engage in the land development business. In certain instances, the Company’s strategy is to acquire developed lots through unrelated third party land developers pursuant to lot purchase agreements. Most lot purchase agreements require the Company to pay a nonrefundable cash deposit of approximately 10% of the agreed-upon fixed purchase price of the developed lots. In exchange for the deposit, the Company receives the right to purchase the finished developed lot at a preestablished price. Such contracts enable the Company to defer acquiring portions of properties owned by third parties until the Company determines whether and when to complete such acquisition, which may serve to reduce financial risks associated with long-term land holdings. The following table provides a summary of the Company’s interest in lot purchase agreements as of December 31, 2022 and 2021: 2022 2021 Deposit and pre-acquisition costs $ 3,804,436 $ 2,946,001 Remaining purchase price 65,451,928 77,007,079 Total contract value $ 69,256,364 $ 79,953,080 The Company has the right to cancel or terminate the lot purchase agreement at any time for any reason. The legal obligation and economic loss resulting from a cancellation or termination is limited to the amount of the deposits paid. The cancellation or termination of a lot purchase agreement results in the Company recording a write-off of the nonrefundable deposit to Cost of sales. For the years ended December 31, 2022, 2021, and 2020, the Company recorded $0, $211,482, and $84,619, respectively, to Cost of sales for the forfeited lot purchase agreement deposits. As discussed in Note 2 — Summary of significant accounting policies |
Warranty reserves
Warranty reserves | 12 Months Ended |
Dec. 31, 2022 | |
Warranty reserves | |
Warranty reserves | Note 8 — Warranty reserves The Company establishes warranty reserves to provide for estimated future costs as a result of construction and product defects. Estimates are determined based on management’s judgment considering factors such as historical spend and projected cost of corrective action. The following table provides a summary of the activity related to warranty reserves, which are included in Other accrued expenses and liabilities on the accompanying Balance Sheets as follows: 2022 2021 Warranty reserves at January 1 $ 1,275,594 $ 963,204 Reserves provided 1,156,027 1,206,142 Payments for warranty costs and other (1,060,209) (893,752) Warranty reserves at December 31 $ 1,371,412 $ 1,275,594 |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies. | |
Commitments and contingencies | Note 9 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $555,806 within Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. Operating lease expense included variable lease expense of $92,285 for the year ended December 31, 2022. The weighted-average discount rate for the operating leases entered into during the year ended December 31, 2022 was 4.90% and the weighted-average remaining lease term was 2.16 years. During the year ended December 31, 2022, the Company closed on 19 sale-leaseback transactions with related parties. For information on sale-leaseback transaction with related parties, see Note 6 — Related party transaction The maturity of the contractual, undiscounted operating lease liabilities as of December 31, 2022 are as follows: December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 Total rent expense for the year ended December 31, 2021 was $931,078. The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $94,386 and $344,016 of rent expense related to the short-term leases within selling, general and administrative expense on the Statements of Income for the year ended December 31, 2022, and 2021, respectively. Litigation The Company is considered to be the primary responsible party for claims and lawsuits brought against the Shareholders and Other Affiliates based on its financial resources. The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these financial statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of current pending litigation involving the Company. The Company is a defendant in a claim involving residential construction defects associated with the premature deterioration of sloped land behind neighboring homes, where the Company served as the general contractor for original construction of the residence in 2013. The Company asserts the slope failure that has caused damage to the structural integrity of the plaintiff’s homes is the result of the plaintiff’s next-door neighbor who voluntarily cleared vegetation from the rear of their home thereby causing the erosion of soil and resulting damages. In 2022, the matter was settled, and the case was dismissed for an immaterial amount. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. |
Stock compensation
Stock compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock compensation | |
Stock compensation | Note 10 — Stock compensation Stock options In January 2022, the Board of Directors of GSH approved and adopted the Great Southern Homes, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan is administered by a committee appointed by the Board of Directors and has reserved 3,000 common shares to be issued as equity-based awards to directors and employees of GSH. The number of awards reserved is subject to change based on certain corporate events or changes in GSH’s capital structure and the shares vest ratably over four years. The 2022 Plan defines awards to include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. As of December 31, 2022, GSH had only issued incentive and non-qualified stock options. The following table summarizes the GSH stock options that were specifically granted to directors and employees of Homebuilding for the year ended December 31, 2022: Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2021 — $ — Granted 2,524 1,049.60 Forfeited (193) 1,049.60 Outstanding, December 31, 2022 2,331 $ 1,049.60 Options exercisable at December 31, 2022 — $ — The aggregate intrinsic value of the stock options outstanding was $7,460,132 as of December 31, 2022. The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the price of the option. GSH recognizes stock compensation expense resulting from the equity-based awards over the requisite service period. Stock compensation expense is recorded based on the estimated fair value of the equity-based award on the grant date using the Black-Scholes valuation model. Stock compensation expense is recognized in the Selling, general and administrative expense line item in the statement of income. Stock compensation expense included in the carve-out statement of income for the year ended December 31, 2022 was $195,830. As of December 31, 2022, there was unrecognized stock compensation expense related to non-vested stock option arrangements totaling $608,826. The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 3 years. As GSH’s common stock is not publicly traded, it estimates the fair value of common stock based on the combination of the three methods: (i) the discounted cash flow method of the income approach; (ii) the guideline company method of the market approach; and (iii) the subject transaction method of the market approach. GSH considers numerous objective and subjective factors to determine the fair value of the Company’s common stock. The factors considered include, but are not limited to: (i) the results of periodic independent third-party valuations; (ii) nature of the business and history of the enterprise from its inception; (iii) the economic outlook in general and for the specific industry; (iv) the book value of the stock and financial condition of the business; (v) earning and dividend paying capacity of the business; (vi) the market prices of stocks of corporations engaged in the same or similar lines of business having their stock actively traded in a free and open market, either on an exchange or over-the-counter. The following assumptions were used in the Black-Scholes valuation model to determine the estimated fair value of the stock options granted during the year ended December 31, 2022: Inputs December 31, 2022 Risk free interest rate 1.82 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.25 Fair value of options $ 394.7 Risk-Free Interest Rate Expected Volatility Expected Dividend Yield Expected Life Stock warrants In January 2022, GSH granted an option to non-employee directors to purchase 5,000 stock warrants for $150,000. Each warrant represents one non-voting common share. The warrants are exercisable at $1,512 per warrant, which represents an out-of-the-money strike price. The warrants can be exercised for 10 years starting from July 1, 2022. Using the Black-Scholes valuation model, GSH determined the aggregate fair value of these warrants to be approximately $1,376,800 as of the grant date. Because there is no continued service requirement for the warrant holders, the Company recorded a one-time stock compensation expense in the amount of $1,226,800 within the Selling, general and administrative expense line item in the Statement of income for the year ended December 31, 2022. The following assumptions were used in the Black-Scholes valuation model to determine the estimated fair value of the stock warrants granted during the year ended December 31, 2022: Inputs December 31, 2022 Risk free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 275.4 The methodology for determining the inputs is consistent with the input methodology for stock options as described above. In March 2022, the option holders purchased the warrants in exchange for $150,000 cash consideration. This amount was recorded directly to Shareholders’ and other affiliates’ net investment in the Company’s Balance sheet. As of December 31, 2022, no warrants have been exercised. |
Employee benefit plan (Imported
Employee benefit plan (Imported) | 12 Months Ended |
Dec. 31, 2022 | |
Employee benefit plan | |
Employee benefit plan | Note 11 — Employee benefit plan Before January 1, 2021, GSH sponsored a Simple Individual Retirement Account (“IRA”) Retirement Plan. The plan covered all employees of the Company who earned at least $5,000 in the prior year and who are expected to earn at least $5,000 in the current year. The Company matched employee contributions up to 3% of compensation for employees participating in the plan up to the maximum amount allowed by the Internal Revenue Code. Administrative costs for the plan were paid by the Company. Effective January 1, 2021, GSH sponsored an elective safe harbor 401(k) contribution plan covering substantially all employees who have completed three Total contributions paid to the plans for the Company’s employees for the years ended December 31, 2022, 2021, and 2020 were approximately $174,184, $150,090, and $93,160, respectively. These amounts are recorded in Selling, general and administrative expenses on the Statements of Income. |
Paycheck Protection Program loa
Paycheck Protection Program loan (Imported) | 12 Months Ended |
Dec. 31, 2022 | |
Paycheck Protection Program loan | |
Paycheck Protection Program loan | Note 12 — Paycheck Protection Program loan In May 2020, GSH received loan proceeds in the amount of $1,693,800 under the Paycheck Protection Program (“PPP”). The PPP established as part of the Coronavirus Aid, Relief, and Economic Security Act and administered by the Small Business Administration (the “SBA”), provided for loans to qualifying business for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest were forgivable after 24 weeks as long as the borrower used the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintained its payroll levels. The amount of loan forgiveness would be reduced if the borrower terminated employees or reduced salaries during the 24-week period. Any unforgiven portion of a PPP loan was payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP loan. In December 2020, GSH received notice from the SBA of loan forgiveness for the principal balance of $1,693,800 and accrued interest of $9,688. The Company accounted for the forgiveness as an extinguishment of debt. The gain on extinguishment was recognized as income within Other income (expense), net on the statement of income for the year ended December 31, 2020. |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings per Share | |
Earnings per Share | Note 13 — Earnings per Share Earnings per share was calculated based on the 100,000 weighted average number of common shares issued and outstanding by GSH for the years ended December 31, 2022, 2021, and 2020. 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 The following table summarizes potentially dilutive outstanding securities for the years ended December 31, 2022, 2021 and 2020 that were excluded from the calculation of diluted EPS, because their effect would have been anti-dilutive. December 31, 2022 December 31, 2021 December 31, 2020 Warrants 3,090 — — Stock Options 1,376 — — Total anti-dilutive features 4,466 — — |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent events | Note 14 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of December 31, 2022 through March 17, 2023, which is the date the financial statements were available to be issued. During this period, the Company has not identified any subsequent events that require recognition or disclosure, except for the ones noted below. On February 27, 2023, the Company paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, the Company was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Proposed Business Combination discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of the date when financial statements were available to be issued. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates — |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. |
Accounts Receivable | Accounts Receivable — |
Inventories and Cost of Sales | Inventories and Cost of Sales — — Developed lots — This inventory consists of land that has been developed for or acquired by the Company and where vertical construction is imminent. Developed lot costs are typically allocated to individual residential lots on a per lot basis based on specific costs incurred for the acquisition of the lot. For the years ended December 31, 2022 and 2021, the amount of developed lots included in inventory was $16,205,448 and $17,025,273, respectively. Developed lots purchased at fair value from third parties was $10,052,179 and $9,445,580 as of December 31, 2022 and December 31, 2021, respectively, which is included in Developed Lots on the Balance Sheets. — Homes under construction — At the time construction of the home begins, developed lots are transferred to homes under construction within inventory. This inventory represents costs associated with active homebuilding activities which include, predominately, labor and overhead costs related to home construction, capitalized interest, real estate taxes and land option fees. For the years ended December 31, 2022 and 2021, the amount of inventory related to homes under construction included in homes under construction and finished homes was $141,863,561 and $110,224,757, respectively. — Finished homes — This inventory represents completed but unsold homes at the end of the reporting period. Costs incurred in connection with completed homes including associated selling, general, and administrative costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the amount of inventory related to finished homes included in homes under construction and finished homes was $22,133,926 and $12,775,442, respectively. Upon settlement, costs associated with units sold are expensed to Cost of sales based on a specific identification basis. Costs of sales consists of specific construction costs of each home, estimated warranty costs, allocated developed lots, and closing costs applicable to the home. In addition, the Company receives rebates with certain suppliers for the use of their product. The Company records the receipt of the rebate as a reduction in Cost of sales based on a specific identification basis. At the time of closing, the Company performs an analysis to accrue for costs that were incurred as part of the construction of the home but unpaid at the time of closing. The costs are recorded in Cost of sales in the Statements of Income. |
Lot Purchase Agreement Deposits | Lot Purchase Agreement Deposits — Note 7—Lot purchase agreement deposits Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 and subtopics related to the consolidation of variable interest entities, the Company analyzes the Land Developers under the variable interest model to determine if such interest in Land Developers is considered a variable interest, and, if so, whether the Land Developers are required to be consolidated in the Company’s financial statements. Management determines whether the Land Developers are considered variable interest entities (“VIEs”) at the time management becomes involved with Land Developers. The Company invests in less than half of the fair value of the Land Developers’ assets. The Company does not have any specific performance obligations to purchase a certain number or any of the lots or guarantee any of the Land Developers’ financial or other liabilities. The Company is not involved in the design or creation of these entities. As such, the deposits placed by the Company pursuant to the lot purchase agreements are not deemed to be variable interests in the respective Land Developers. |
Property and Equipment | Property and Equipment — Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years Normal repairs and maintenance costs are expensed as incurred, whereas significant improvements which materially increase the value or extend the useful life of an asset are capitalized and depreciated over the remaining estimated useful life of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts. Any gain or loss on the sale or retirement of the depreciable asset is recognized as Other income (expense) on the Statements of Income. |
Long-Lived Assets | Long-Lived Assets — Inventory impairment exists if the carrying amount of the asset is not recoverable from the sale prices expected from future home sales. The Company reviews the performance and outlook of its inventories for indicators of potential impairment on a community level. Any calculated impairments are recorded immediately in Cost of sales. Recoverability for Property and equipment is measured by the expected undiscounted future cash flows of the assets compared to the carrying amounts of the assets. If the expected undiscounted future cash flows are less than the carrying amount of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions and appraisal. There were no triggering events or impairments recorded for all years presented. |
Deferred Loan Costs | Deferred Loan Costs — Note 5-Homebuilding debt and other affiliate debt |
Earnings per Share | Earnings per Share — Note 13 — Earnings per share |
Investment in Joint Venture | Investment in Joint Venture The Company accounts for its investment in the Joint Venture under the equity method of accounting, as it determined that the Company has the ability to exercise significant influence over the venture, but does not have control. Under the equity method, the investment in the unconsolidated joint venture is recorded initially at cost, as Investment in Joint Venture, and subsequently adjusted for equity in earnings, cash contributions, less distributions and impairments. The Joint Venture commenced operations in June 2022. Equity in earnings from the investment in the Joint Venture for the period from the commencement of operations through December 31, 2022 was $137,086, increasing the investment in Joint Venture as of December 31, 2022 to $186,086. There were no additional capital contributions and distributions for the year ended December 31, 2022 aside from the initial contribution of $49,000. Additionally, there were no impairment losses related to the Company’s investment in the Joint Venture recognized during the year ended December 31, 2022. |
Share-Based Compensation | Share-Based Compensation Note 1 — Nature of operations and basis of presentation Stock option awards are expensed on a straight-line basis over the requisite service period of the entire award from the date of grant through the period of the last separately vesting portion of the grant. GSH accounts for forfeitures when they occur. Stock warrant awards do not contain a service condition and are expensed on the grant date. The fair value of share-based awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, using the Black-Scholes option pricing model. This model requires the input of highly subjective assumptions, including the option’s expected term and stock price volatility. See Note 10 — Stock compensation . |
Transaction costs | Transaction costs — Note 1 — Nature of operations and basis of presentation |
Leases | Leases — Leases (Topic 842) Leases than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company adopted Topic 842 on January 1, 2022, using the modified retrospective transition method. In addition, the Company elected the practical expedients during transition which permitted the Company not to reassess under the new standard prior conclusions about the existence of a lease, lease classification, and initial direct cost. As a result of adopting Topic 842, the Company recognized operating lease ROU assets and operating The Company determines if an arrangement is, or contains, a lease at inception. Leases are recognized when the contract provides the Company the right to use an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease ROU assets and operating lease liabilities in the Balance Sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As most of the Company’s leases do not provide an explicit borrowing rate, management uses the Company’s incremental borrowing rate based on information available at the commencement date, or at the date of transition for leases transitioned to Topic 842 on January 1, 2022, in determining the present value of the lease payments. In determining the incremental borrowing rate, the Company considered the lease term, credit risk of the lessee and the lease, the size of the lease payments, the current economic environment affecting the lessee and the lease, and the collateralized nature of the lease. The ROU assets also include any lease payments made, reduced by any lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. The Company elected the practical expedient to combine lease and non-lease components when accounting for ROU assets and lease liabilities of all asset classes. Variable lease costs represent additional expenses incurred by the Company that are not included in the lease payment. Variable lease costs include maintenance charges, taxes, insurance, and other similar costs, and are recorded within Selling, general and administrative expense on the statement of income for the year ended December 31, 2022. The Company has elected not to recognize leases with an initial term of 12 months or less (“short-term leases”) on the Balance Sheet. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. Unless otherwise noted, GSH accounts for sale-leaseback transactions at their contractually stated terms. As the leases do not provide an explicit borrowing rate, management used the Company’s incremental borrowing rate based on information available as of the lease commencement date. Refer to Note 6 - Related party transactions |
Revenue Recognition | Revenue Recognition — Performance obligations are generally satisfied at a point in time, when the control of the home is transferred to the customer. Control is considered to be transferred to the customer at the time of closing when the title and possession of the home are received by the homebuyer. The Company generally requires initial cash deposits from the homebuyer at the time the sales contract is executed which is held by an unrelated third-party escrow agent. The remaining consideration to which the Company is entitled to is received at the time of closing through an escrow agent, typically within five days or less of the closing date. For the years ended December 31, 2022, 2021 and 2020, revenue recognized at a point in time from speculative homes totaled $456,792,005, $419,714,758, and $318,041,199, respectively. In some contracts, the Company is contracted to construct a home or homes on underlying land the customer controls. For these specific contracts, the performance obligation is satisfied over time, as the Company’s performance creates or enhances an asset that the customer controls. The Company recognizes revenue for these contracts using the input method based on costs incurred as compared to total estimated project costs. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods or services to the customer. For the years ended December 31, 2022, 2021, and 2020, revenue recognized over time from land owned by customers totaled $20,253,944, $13,176,752, and $9,213,106, respectively. For homes with revenue recognized over time, a large portion of the Company’s contracts with these customers and the related performance obligations have an original expected duration of one year or less. As a result, the Company elected the practical expedient and does not disclose the value of unsatisfied performance obligations for these contracts. The Company periodically bills these customers over the term of the project and performs a quarterly analysis between billings and revenue recognized. The Company records a contract asset when work performed by the Company is greater than the amount billed. Conversely, the Company records deferred revenue when the amount billed is greater than the work performed. As of December 31, 2022 and 2021, the Company recorded a contract asset of $611,343 and $1,361,590, respectively, which is included in Prepaid expense and other assets on the Balance Sheets. As of December 31, 2022 and 2021, the Company recorded deferred revenue of $305,701 and $957,926, respectively, which is included in Other accrued expenses and liabilities on the Balance Sheets. Substantially all deferred revenue is recognized in revenue within twelve months of being received from customers. The Company frequently performs reviews of all contracts to estimate profitability in the future. If the estimate of contract profitability indicates an anticipated loss on a contract, the Company recognizes the total estimated loss at the time it is fully determinable. For the years ended December 31, 2022, 2021, and 2020, the Company did not recognize a loss on any contracts. Concurrent with the recognition of revenues in our Statements of Income, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. Homebuilding revenues include forfeited deposits, which occur when home sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits were considered insignificant for all years presented. The Company determined that costs to obtain a contract include sales commission paid to agents and brokers for selling services to attract home buyers into sales agreements. The contract term is typically the closing date when the title and consideration are exchanged. The Company adopted the practical expedient associated with ASC 606 to recognize the incremental costs of obtaining a contract as an expense when incurred, i.e., when the amortization period of the asset that the Company otherwise would have recognized is one year or less. Beginning in December 2022, GSH entered into sale-leaseback transactions with related parties. The Company recognized revenue of $5,188,716 on the Statement of income for the year ended December 31, 2022. Refer to Note 6 - Related party transactions |
Backlog | Backlog — |
Advertising | Advertising — |
Warranties | Warranties — |
Income Taxes | Income Taxes — |
Fair Value Measurements | Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt |
Reporting Segment | Reporting Segment |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Schedule of estimated useful life of each asset group | Asset Group Estimated Useful Lives Furniture and Fixtures 5 to 7 years Leasehold Improvements Lesser of 40 years or the lease term Machinery and Equipment 5 to 7 years Office Equipment 5 to 7 years Vehicles 5 years |
Capitalized interest (Tables)
Capitalized interest (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Capitalized interest | |
Summary of capitalized interest activity | 2022 2021 Capitalized interest at January 1: $ 1,190,318 $ 812,874 Interest cost capitalized 5,515,372 3,400,879 Interest cost expensed (5,455,230) (3,023,435) Capitalized interest at December 31: $ 1,250,460 $ 1,190,318 |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment | |
Schedule of components of property and equipment | Asset Group 2022 2021 Furniture and fixtures $ 688,487 $ 580,065 Leasehold improvements 380,187 380,187 Machinery and equipment 1,037,231 985,699 Office equipment 165,774 154,043 Vehicles 750,950 790,519 Total Property and equipment 3,022,629 2,890,513 Less: Accumulated depreciation (1,636,931) (1,300,160) Property and equipment, net $ 1,385,698 $ 1,590,353 |
Homebuilding debt and other a_2
Homebuilding debt and other affiliate debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Homebuilding debt and other affiliate debt | |
Summary of debt | 2022 Homebuilding Weighted Debt – Wells average Fargo interest rate Syndication Other Affiliates (2) Total Wells Fargo Bank 4.98 % $ 34,995,080 $ 8,203,772 $ 43,198,852 Regions Bank 4.98 % 27,550,618 — 27,550,618 Texas Capital Bank 4.98 % 19,676,552 — 19,676,552 Truist Bank 4.98 % 19,659,329 — 19,659,329 First National Bank 4.98 % 7,870,621 — 7,870,621 Anderson Brothers 4.74 % — 2,841,034 2,841,034 Total debt on contracts $ 109,752,200 $ 11,044,806 $ 120,797,006 2021 Homebuilding Weighted Debt – Wells average Fargo Homebuilding interest rate (1) Syndication Debt – Other Other Affiliates (2) Total Wells Fargo Bank 3.63 % $ 36,453,801 $ — $ — $ 36,453,801 Regions Bank 3.63%/ 4.40 % 23,189,545 — 918,453 24,107,998 Texas Capital Bank 3.63 % 16,561,385 — — 16,561,385 Truist Bank 3.63 % 16,543,353 — — 16,543,353 First National Bank 3.63%/ 3.88 % 6,624,554 — 21,160 6,645,714 Anderson Brothers 4.25 % — 439,200 1,608,300 2,047,500 Other debt — % — 142,536 — 142,536 Total debt on contracts $ 99,372,638 $ 581,736 $ 2,547,913 $ 102,502,287 (1) The weighted average interest rate for the Wells Fargo Syndication debt is 3.63 %. The 4.40 % and 3.88 % represents the weighted average interest rate for Other Affiliates debt for Regions Bank and First National Bank, respectively. (2) Outstanding balances relate to bank financing for land acquisition and development activities of Other Affiliates for which the Company is the co-obligor or has an indirect guarantee of the indebtedness of the Other Affiliates. In addition, the $8,203,772 of Other Affiliates debt with Wells Fargo Bank as of December 31, 2022 is part of the Wells Fargo Syndication. |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Schedule of components of the distributions and net transfer to shareholders' and other affiliates' net investment | 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. |
Schedule of related party transactions | Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 |
Lot purchase agreement deposi_2
Lot purchase agreement deposits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Lot purchase agreement deposits | |
Summary of the interest in lot purchase agreements | 2022 2021 Deposit and pre-acquisition costs $ 3,804,436 $ 2,946,001 Remaining purchase price 65,451,928 77,007,079 Total contract value $ 69,256,364 $ 79,953,080 |
Warranty reserves (Tables)
Warranty reserves (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Warranty reserves | |
Summary of the activity related to warranty reserves | 2022 2021 Warranty reserves at January 1 $ 1,275,594 $ 963,204 Reserves provided 1,156,027 1,206,142 Payments for warranty costs and other (1,060,209) (893,752) Warranty reserves at December 31 $ 1,371,412 $ 1,275,594 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies. | |
Schedule of the maturity of the contractual, undiscounted operating lease liabilities | December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 |
Stock compensation (Tables)
Stock compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock compensation | |
Summary of stock options granted | Weighted- Average Per share Exercise Stock options price Outstanding, December 31, 2021 — $ — Granted 2,524 1,049.60 Forfeited (193) 1,049.60 Outstanding, December 31, 2022 2,331 $ 1,049.60 Options exercisable at December 31, 2022 — $ — |
Stock Options | |
Stock compensation | |
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk free interest rate 1.82 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.25 Fair value of options $ 394.7 |
Stock warrants | |
Stock compensation | |
Schedule of assumptions used to determine the estimated fair value of the awards granted | Inputs December 31, 2022 Risk free interest rate 1.78 % Expected volatility 35 % Expected dividend yield — % Expected life (in years) 6.40 Fair value of warrants granted $ 275.4 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings per Share | |
Schedule of earnings per share, weighted average number of common shares issued and outstanding by GSH | 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 |
Summary of potentially dilutive outstanding securities | December 31, 2022 December 31, 2021 December 31, 2020 Warrants 3,090 — — Stock Options 1,376 — — Total anti-dilutive features 4,466 — — |
Summary of significant accoun_4
Summary of significant accounting policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Basis of Presentation and Summary of Significant Accounting Policies | ||
Period of receiving home closing proceeds (in days) | 5 days | |
Deposits in transit | $ 0 | $ 981,251 |
Federal deposit insurance coverage | 250,000 | |
Allowance for doubtful accounts | 0 | 0 |
Inventories and Cost of Sales | ||
Developed lots included in inventory | 16,205,448 | 17,025,273 |
Developed lots purchased at fair value from third parties | 10,052,179 | 9,445,580 |
Homes under construction | 141,863,561 | 110,224,757 |
Finished homes | $ 22,133,926 | $ 12,775,442 |
Summary of significant accoun_5
Summary of significant accounting policies - Property and equipment, Long-lived assets (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Property and Equipment | |
Long-lived asset impairments recorded | $ 0 |
Furniture And Fixtures | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Furniture And Fixtures | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Leasehold Improvements | |
Property and Equipment | |
Estimated useful life | 40 years |
Equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Office Equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Office Equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Vehicles | |
Property and Equipment | |
Estimated useful life | 5 years |
Summary of significant accoun_6
Summary of significant accounting policies - Joint Venture (Details) - USD ($) | 12 Months Ended | |
Feb. 04, 2022 | Dec. 31, 2022 | |
Schedule of Equity Method Investments | ||
Equity in net earnings from investment in joint venture | $ 137,086 | |
Investment value | 186,086 | |
Impairment losses | 0 | |
Homeowners Mortgage, LLC | ||
Schedule of Equity Method Investments | ||
Ownership percentage | 49% | |
Initial capital contribution | $ 49,000 | |
Equity in net earnings from investment in joint venture | 137,086 | |
Investment value | $ 186,086 |
Summary of significant accoun_7
Summary of significant accounting policies - SBC, Transaction costs, Leases (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) item | Jan. 01, 2022 USD ($) | |
Basis of Presentation and Summary of Significant Accounting Policies | ||
Number of award types | item | 2 | |
Transaction costs | $ 2,491,459 | |
Operating right-of-use assets | 1,001,277 | $ 1,149,832 |
Operating lease liabilities | $ 1,001,277 | $ 1,149,832 |
Summary of significant accoun_8
Summary of significant accounting policies - Revenue recognition, Backlog (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) item | Dec. 31, 2020 USD ($) | |
Disaggregation of Revenue | |||
Number of performance obligations | item | 1 | ||
Period of receiving home closing proceeds (in days) | 5 days | ||
Revenue recognized | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 |
Contract asset included in Prepaid expense and other assets | 611,343 | 1,361,590 | |
Contract liability included in Other accrued expenses | 305,701 | 957,926 | |
Loss on contracts recognized | $ 0 | $ 0 | $ 0 |
Number of units in backlog | item | 276 | 800 | |
Backlog revenue | $ 86,000,000 | $ 210,000,000 | |
Backlog cancellation rate | 17.50% | 14.20% | 11.40% |
Sale Leaseback Of Model Homes | |||
Disaggregation of Revenue | |||
Revenue recognized | $ 5,188,716 | ||
Contract asset included in Prepaid expense and other assets | 435,264 | ||
Contract liability included in Other accrued expenses | 435,264 | ||
Transferred at Point in Time | |||
Disaggregation of Revenue | |||
Revenue recognized | 456,792,005 | $ 419,714,758 | $ 318,041,199 |
Transferred over Time | |||
Disaggregation of Revenue | |||
Revenue recognized | $ 20,253,944 | $ 13,176,752 | $ 9,213,106 |
Summary of significant accoun_9
Summary of significant accounting policies - Advertising, Warranties, Income taxes, Segments (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Marketing and Advertising Expense | $ 2,709,488 | $ 1,831,526 | $ 1,926,172 |
Standard Product Warranty Disclosure | |||
Warranty period, original installation of the material and workmanship | 1 year | ||
Warranty period, certain systems such as plumbing, electrical and HVAC | 2 years | ||
Warranty period, structural integrity of the home | 10 years | ||
Costs to homebuyers for repairs under warranty | $ 0 | ||
Income Tax Disclosure | |||
Income tax expense | 0 | 0 | 0 |
Income tax liability | 0 | 0 | 0 |
Liability for uncertain tax positions | $ 0 | $ 0 | $ 0 |
Segment Reporting | |||
Number of reporting segments | segment | 1 | ||
Number of operating segments | segment | 1 |
Capitalized interest (Details)
Capitalized interest (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||
Capitalized interest, beginning of period | $ 1,190,318 | $ 812,874 |
Interest cost capitalized | 5,515,372 | 3,400,879 |
Interest cost expensed | (5,455,230) | (3,023,435) |
Capitalized interest, end of period | $ 1,250,460 | $ 1,190,318 |
Property and equipment (Details
Property and equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | |||
Property and equipment | $ 3,022,629 | $ 2,890,513 | |
Less: accumulated depreciation | (1,636,931) | (1,300,160) | |
Property and equipment, net | 1,385,698 | 1,590,353 | |
Depreciation expense | 355,566 | 358,587 | $ 182,786 |
Furniture And Fixtures | |||
Property and Equipment | |||
Property and equipment | 688,487 | 580,065 | |
Leasehold Improvements | |||
Property and Equipment | |||
Property and equipment | 380,187 | 380,187 | |
Equipment | |||
Property and Equipment | |||
Property and equipment | 1,037,231 | 985,699 | |
Office Equipment | |||
Property and Equipment | |||
Property and equipment | 165,774 | 154,043 | |
Vehicles | |||
Property and Equipment | |||
Property and equipment | $ 750,950 | $ 790,519 |
Homebuilding debt and other a_3
Homebuilding debt and other affiliate debt (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 120,797,006 | $ 102,502,287 |
Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 109,752,200 | 99,372,638 |
Homebuilding Debt - Other | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 581,736 | |
Other Affiliates Debt | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 11,044,806 | $ 2,547,913 |
Wells Fargo Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | 3.63% |
Debt on contracts | $ 43,198,852 | $ 36,453,801 |
Wells Fargo Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 34,995,080 | 36,453,801 |
Wells Fargo Bank | Other Affiliates Debt | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 8,203,772 | |
Regions Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | |
Debt on contracts | $ 27,550,618 | $ 24,107,998 |
Regions Bank | Maximum | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.40% | |
Regions Bank | Minimum | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 3.63% | |
Regions Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 27,550,618 | $ 23,189,545 |
Regions Bank | Other Affiliates Debt | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 918,453 | |
Texas Capital Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | 3.63% |
Debt on contracts | $ 19,676,552 | $ 16,561,385 |
Texas Capital Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 19,676,552 | $ 16,561,385 |
Truist Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | 3.63% |
Debt on contracts | $ 19,659,329 | $ 16,543,353 |
Truist Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 19,659,329 | 16,543,353 |
First National Bank | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.98% | |
Debt on contracts | $ 7,870,621 | $ 6,645,714 |
First National Bank | Maximum | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 3.88% | 3.88% |
First National Bank | Minimum | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 3.63% | |
First National Bank | Homebuilding Debt - Wells Fargo Syndication | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 7,870,621 | $ 6,624,554 |
First National Bank | Other Affiliates Debt | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 21,160 | |
Anderson Brothers | ||
Line of Credit Facility [Line Items] | ||
Weighted average interest rate | 4.74% | 4.25% |
Debt on contracts | $ 2,841,034 | $ 2,047,500 |
Anderson Brothers | Homebuilding Debt - Other | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 439,200 | |
Anderson Brothers | Other Affiliates Debt | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 2,841,034 | 1,608,300 |
Other Debt | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | 142,536 | |
Other Debt | Homebuilding Debt - Other | ||
Line of Credit Facility [Line Items] | ||
Debt on contracts | $ 142,536 |
Homebuilding debt and other a_4
Homebuilding debt and other affiliate debt - Activity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Line of Credit Facility [Line Items] | ||||
Proceeds from other affiliate debt | $ 10,851,187 | $ 10,025,865 | $ 13,259,394 | |
Repayments of other affiliate debt | 918,453 | 5,624,330 | 7,499,472 | |
Amortization of deferred loan costs | 404,146 | 421,186 | 408,674 | |
Wells Fargo Bank | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing capacity | $ 150,000,000 | |||
Credit facility term | 3 years | |||
Extension period | 1 year | |||
Remaining availability | 32,044,028 | 50,627,362 | ||
Minimum tangible net worth, dollar component | $ 65,000,000 | |||
Minimum tangible net worth, income component as percent of after-tax income | 25% | |||
Minimum liquidity | 15,000,000% | |||
Minimum cash amount | 7,500,000% | |||
Deferred loan costs capitalized | $ 141,245 | 1,264,403 | 337,500 | |
Amortization of deferred loan costs | $ 404,146 | 421,186 | 408,674 | |
Wells Fargo Bank | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Unused amount fee, as a percent | 30% | |||
Maximum leverage ratio | 2.75% | |||
Minimum debt service coverage | 2.50% | |||
Applicable margin | 350% | |||
Wells Fargo Bank | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Unused amount fee, as a percent | 15% | |||
Maximum leverage ratio | 1% | |||
Minimum debt service coverage | 1% | |||
Applicable margin | 275% | |||
Wells Fargo Bank | Letter of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing capacity | $ 2,000,000 | |||
Wells Fargo Bank | Homebuilding Debt - Other | ||||
Line of Credit Facility [Line Items] | ||||
Outstanding deferred loan costs | $ 711,060 | 973,961 | ||
Wells Fargo Bank | Other Affiliates Debt | ||||
Line of Credit Facility [Line Items] | ||||
Proceeds from other affiliate debt | 10,851,187 | 10,025,865 | 13,259,394 | |
Repayments of other affiliate debt | $ 918,453 | $ 5,624,330 | $ 7,499,472 |
Related party transactions (Det
Related party transactions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related party transaction | |||
General corporate allocations | $ (6,590,564) | $ (2,867,929) | $ (1,733,849) |
General financing activities | (46,162,495) | (30,655,681) | (20,596,420) |
Distributions and net transfer to shareholders and other affiliates, including stock compensation | (52,753,059) | (33,523,610) | (22,330,269) |
Stock compensation | 1,422,630 | ||
Due from related party | 1,437,235 | ||
Shareholders And Other Affiliates | |||
Related party transaction | |||
Stock compensation | 1,422,630 | ||
Reallocation of selling, general and administrative expenses | 6,299,064 | 2,592,429 | 1,561,349 |
Lot purchase agreement deposits paid (received) | 291,500 | 275,500 | $ 172,500 |
Due from related party | 1,437,235 | ||
Other Affiliates | |||
Related party transaction | |||
Due to shareholders and other affiliates presented as equity | 31,420,651 | 30,975,951 | |
Due from shareholders and other affiliates presented as equity | $ 72,739,572 | $ 48,004,261 |
Related party transactions - Tr
Related party transactions - Transactions with Land Development and Other Affiliates (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from financing activities: | |||
Repayment of cash transfer | $ 7,300,000 | ||
Total financing cash flows | (37,816,087) | $ (28,497,772) | $ (18,579,633) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 13,504,316 | 33,170,761 | 19,541,090 |
Contribution of fixed assets | 344,511 | ||
Total non-cash activities | 16,525,253 | 39,983,799 | 21,952,201 |
Shareholders And Other Affiliates | |||
Cash flows from financing activities: | |||
Land development expense | (44,113,503) | (30,308,528) | (23,087,743) |
Model home sales | 6,039,243 | 3,266,711 | |
Other activities | 8,997,416 | (4,228,487) | 1,241,399 |
Cash transfer, net of repayment | (2,700,000) | ||
Total financing cash flows | (37,816,087) | (28,497,772) | (18,579,633) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 13,504,316 | 33,170,761 | 19,541,090 |
Transfer of constructed model homes to related parties | (1,517,030) | (3,690,084) | |
Contribution of fixed assets | 344,511 | ||
Total non-cash activities | 13,504,316 | 31,998,242 | 15,851,006 |
Other Affiliates | |||
Cash flows from financing activities: | |||
Land development expense | (665,777) | (76,762) | (96,903) |
Model home sales | 6,039,243 | 3,266,711 | |
Other activities | 197,818 | (3,537,447) | 791,117 |
Cash transfer, net of repayment | (2,700,000) | ||
Total financing cash flows | (3,167,959) | 2,425,034 | 3,960,925 |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | (219,999) | 656,500 | |
Transfer of constructed model homes to related parties | (1,517,030) | (3,690,084) | |
Contribution of fixed assets | 344,511 | ||
Total non-cash activities | (1,392,518) | (3,033,584) | |
Land Development Affiliates [Member] | |||
Cash flows from financing activities: | |||
Land development expense | (43,447,726) | (30,231,766) | (22,990,840) |
Other activities | 8,799,598 | (691,040) | 450,282 |
Total financing cash flows | (34,648,128) | (30,922,806) | (22,540,558) |
Acquisition of developed lots from related parties in settlement of due from Other Affiliates | 13,504,316 | 33,390,760 | 18,884,590 |
Total non-cash activities | $ 13,504,316 | $ 33,390,760 | $ 18,884,590 |
Related party transactions - Sa
Related party transactions - Sale-leaseback, other, leases (Details) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) item lease | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Related party transaction | ||||
Revenue, net of sales discounts | $ 477,045,949 | $ 432,891,510 | $ 327,254,305 | |
Cost of sales | $ 358,238,703 | 332,274,788 | $ 260,115,893 | |
Number of units in sale-leaseback | lease | 19 | |||
Contract asset included in Prepaid expense and other assets | $ 611,343 | $ 611,343 | 1,361,590 | |
Contract liability included in Other accrued expenses | 305,701 | 305,701 | $ 957,926 | |
Sale Leaseback Of Model Homes | ||||
Related party transaction | ||||
Revenue, net of sales discounts | 5,188,716 | |||
Cost of sales | 4,508,819 | |||
Contract asset included in Prepaid expense and other assets | 435,264 | 435,264 | ||
Contract liability included in Other accrued expenses | 435,264 | $ 435,264 | ||
Unspecified Related Party | Sale Leaseback Of Model Homes | ||||
Related party transaction | ||||
Number of units in sale-leaseback with lease terms greater than 12 months | item | 9 | |||
Revenue recognized | 2,507,216 | |||
Costs recognized | $ 2,093,635 | |||
Chief Executive Officer | Sale Leaseback Of Model Homes | ||||
Related party transaction | ||||
Number of units in sale-leaseback | item | 19 | |||
Number of lease agreements | item | 19 |
Lot purchase agreement deposi_3
Lot purchase agreement deposits (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lot purchase agreement deposits | |||
Cash deposit percentage | 10% | ||
Deposit and pre-acquisition costs | $ 3,804,436 | $ 2,946,001 | |
Remaining purchase price | 65,451,928 | 77,007,079 | |
Total contract value | 69,256,364 | 79,953,080 | |
Forfeited lot purchase agreement deposits | $ 0 | $ 211,482 | $ 84,619 |
Warranty reserves (Details)
Warranty reserves (Details) - Other accrued expenses and liabilities - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of the activity related to warranty reserve | ||
Warranty reserves at January 1 | $ 1,275,594 | $ 963,204 |
Reserves provided | 1,156,027 | 1,206,142 |
Payments for warranty costs and other | (1,060,209) | (893,752) |
Warranty reserves at December 31 | $ 1,371,412 | $ 1,275,594 |
Commitments and contingencies_2
Commitments and contingencies (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) lease | Dec. 31, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Commitments and Contingencies. | |||
Remaining lease term | 5 years | ||
Operating lease expense | $ 555,806 | ||
Variable lease expense | $ 92,285 | ||
Discount rate | 4.90% | ||
Weighted-average remaining lease term | 2 years 1 month 28 days | ||
Number of units in sale-leaseback | lease | 19 | ||
Maturity of the contractual, undiscounted operating lease liabilities | |||
2023 | $ 578,280 | ||
2024 | 305,400 | ||
2025 | 121,200 | ||
2026 | 48,000 | ||
Total undiscounted operating lease liabilities | 1,052,880 | ||
Interest on operating lease liabilities | (51,603) | ||
Total present value of operating lease liabilities | 1,001,277 | $ 1,149,832 | |
Total rent expense | $ 931,078 | ||
Rent expense related to the short-term leases | $ 94,386 | $ 344,016 |
Stock compensation - Options (D
Stock compensation - Options (Details) - Stock Options - USD ($) | 1 Months Ended | 12 Months Ended |
Jan. 31, 2022 | Dec. 31, 2022 | |
Stock compensation | ||
Number of shares reserved for issuance as equity-based awards | 3,000 | |
Vesting period | 4 years | |
Stock options | ||
Granted, Stock options | 2,524 | |
Forfeited, Stock options | (193) | |
Stock options outstanding, at end of period | 2,331 | |
Weighted-Average Per share Exercise Price | ||
Granted, exercise price | $ 1,049.60 | |
Forfeited, exercise price | 1,049.60 | |
Exercise price, at end of period | $ 1,049.60 | |
Aggregate intrinsic value of stock options outstanding | $ 7,460,132 | |
Stock compensation expense | 195,830 | |
Unrecognized stock compensation expense | $ 608,826 | |
Period for recognition | 3 years | |
Estimated fair value of the stock options | ||
Risk-free interest rate | 1.82% | |
Expected volatility | 35% | |
Expected life (in years) | 6 years 3 months | |
Fair value | $ 394.7 |
Stock compensation - Warrants (
Stock compensation - Warrants (Details) - Stock warrants - USD ($) | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Jan. 31, 2022 | Dec. 31, 2022 | |
Stock compensation | |||
Granted, Stock options | 5,000 | ||
Warrant purchase price | $ 150,000 | $ 150,000 | |
Number of shares issuable per warrant | 1 | ||
Warrants exercisable | $ 1,512 | ||
Exercise period | 10 years | ||
Aggregate fair value as of grant date | $ 1,376,800 | ||
Stock compensation expense | $ 1,226,800 | ||
Estimated fair value of the stock warrants | |||
Risk-free interest rate | 1.78% | ||
Expected volatility | 35% | ||
Expected life (in years) | 6 years 4 months 24 days | ||
Fair value | $ 275.4 | ||
Warrants exercised | 0 |
Employee benefit plan (Details)
Employee benefit plan (Details) - USD ($) | 12 Months Ended | |||
Jan. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee benefit plan | ||||
Contributions paid | $ 174,184 | $ 150,090 | $ 93,160 | |
Simple Individual Retirement Account ("IRA") Retirement Plan | ||||
Employee benefit plan | ||||
Minimum earnings to participate, prior year | $ 5,000 | |||
Minimum earnings to participate, current year | $ 5,000 | |||
Employer match, as percentage of employee compensation | 3% | |||
harbor 401(k) contribution plan | ||||
Employee benefit plan | ||||
Consecutive service period to participate | 3 months | |||
Service period for full vesting | 6 years | |||
harbor 401(k) contribution plan | First base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 3% | |||
harbor 401(k) contribution plan | Next base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 2% | |||
Maximum employer match, as a percent of employee compensation | 4% | |||
harbor 401(k) contribution plan | Maximum | First base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 100% | |||
harbor 401(k) contribution plan | Minimum | First base salary | ||||
Employee benefit plan | ||||
Employer match, as percentage of employee contribution | 50% |
Paycheck Protection Program l_2
Paycheck Protection Program loan (Details) - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Paycheck Protection Program loan | ||
Principal amount | $ 1,693,800 | |
Accrued interest | $ 9,688 | |
Paycheck Protection Program loan | ||
Paycheck Protection Program loan | ||
Principal amount | $ 1,693,800 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings per Share | |||
Net income | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 |
Basic weighted average common stock outstanding | 100,000 | 100,000 | 100,000 |
Effect of dilutive securities | $ 2,960 | ||
Diluted weighted average common stock outstanding | 102,960 | 100,000 | 100,000 |
Basic net income per common stock | $ 694.89 | $ 624.13 | $ 389.76 |
Diluted net income per common stock | $ 674.92 | $ 624.13 | $ 389.76 |
Earnings per Share - anti-dilut
Earnings per Share - anti-dilutive - (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Earnings per Share | |
Total anti-dilutive features | 4,466 |
Stock Options | |
Earnings per Share | |
Total anti-dilutive features | 1,376 |
Warrants | |
Earnings per Share | |
Total anti-dilutive features | 3,090 |
Subsequent events (Details)
Subsequent events (Details) - USD ($) | 12 Months Ended | |||
Feb. 27, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent events | ||||
Repayment of debt | $ 170,810,631 | $ 262,064,474 | $ 210,255,229 | |
Subsequent Event | Other Affiliates Debt | Wells Fargo Bank | ||||
Subsequent events | ||||
Repayment of debt | $ 8,340,545 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Total Assets | $ 208,344,880 | $ 202,259,985 |
Current liabilities: | ||
Total liabilities | 149,340,844 | 135,701,573 |
Commitments and Contingencies | ||
Stockholders' Deficit: | ||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Deficit | 208,344,880 | 202,259,985 |
DiamondHead Holdings Corp. | ||
Current assets: | ||
Cash | 36,682 | 252,601 |
Prepaid expenses | 20,016 | 240,075 |
Total current assets | 56,698 | 492,676 |
Investments held in Trust Account | 349,152,086 | 345,020,717 |
Total Assets | 349,208,784 | 345,513,393 |
Current liabilities: | ||
Accounts payable | 100,302 | 54,391 |
Accrued expenses | 3,660,287 | 120,000 |
Income tax payable | 481,430 | |
Franchise tax payable | 114,645 | |
Notes payable - related party | 204,110 | |
Total current liabilities | 4,446,129 | 289,036 |
Deferred underwriting commissions | 12,075,000 | |
Derivative warrant liabilities | 1,531,000 | 8,794,330 |
Total liabilities | 5,977,129 | 21,158,366 |
Commitments and Contingencies | ||
Stockholders' Deficit: | ||
Preferred stock, $0.0001 par value 10,000,000 shares authorized none issued or outstanding | ||
Accumulated deficit | (5,355,239) | (20,645,836) |
Total stockholders' deficit | (5,354,376) | (20,644,973) |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Deficit | 349,208,784 | 345,513,393 |
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | ||
Current liabilities: | ||
Class A common stock subject to possible redemption, $0.0001 par value; 34,500,000 shares at $10.10 and $10.00 per share redemption value at December 31, 2022 and December 31, 2021, respectively | 348,586,031 | 345,000,000 |
DiamondHead Holdings Corp. | Class B common stock | ||
Stockholders' Deficit: | ||
Common stock | $ 863 | $ 863 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - DiamondHead Holdings Corp. - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Class A common stock subject to possible redemption | ||
Class A common stock subject to possible redemption, par value, (in dollars per share) | $ 0.0001 | $ 0.0001 |
Class A common stock subject to possible redemption, outstanding (in shares) | 34,500,000 | 34,500,000 |
Class A common stock subject to possible redemption, redemption value per share | $ 10.10 | $ 10 |
Class A common stock not subject to possible redemption | ||
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 8,625,000 | 8,625,000 |
Common stock, shares outstanding | 8,625,000 | 8,625,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Loss from operations | $ 69,121,516 | $ 62,155,352 |
Income tax expense | 0 | 0 |
Net income | $ 69,489,294 | $ 62,413,011 |
Basic weighted average shares outstanding | 100,000 | 100,000 |
Diluted weighted average shares outstanding | 102,960 | 100,000 |
Basic net income per share | $ 694.89 | $ 624.13 |
Diluted net income per share | $ 674.92 | $ 624.13 |
DiamondHead Holdings Corp. | ||
General and administrative expenses | $ 4,324,075 | $ 1,030,906 |
Franchise tax expense | 200,000 | 200,000 |
Loss from operations | (4,524,075) | (1,230,906) |
Change in fair value of derivative warrant liabilities | 7,263,330 | 4,367,500 |
Financing costs - derivative warrant liabilities | (449,070) | |
Income from investments held in Trust Account | 5,049,912 | 20,717 |
Gain from settlement of deferred underwriting commissions on public warrants | 271,688 | |
Interest expense - related party | (4,110) | |
Net income before income tax expense | 8,056,745 | 2,708,241 |
Income tax expense | 983,430 | |
Net income | $ 7,073,315 | $ 2,708,241 |
DiamondHead Holdings Corp. | Class A common stock | ||
Basic weighted average shares outstanding | 34,500,000 | 31,947,945 |
Diluted weighted average shares outstanding | 34,500,000 | 31,947,945 |
Basic net income per share | $ 0.16 | $ 0.07 |
Diluted net income per share | $ 0.16 | $ 0.07 |
DiamondHead Holdings Corp. | Class B common stock | ||
Basic weighted average shares outstanding | 8,625,000 | 8,541,781 |
Diluted weighted average shares outstanding | 8,625,000 | 8,625,000 |
Basic net income per share | $ 0.16 | $ 0.07 |
Diluted net income per share | $ 0.16 | $ 0.07 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | DiamondHead Holdings Corp. Class A common stock Common Stock | DiamondHead Holdings Corp. Class B common stock Common Stock | DiamondHead Holdings Corp. Additional Paid In Capital | DiamondHead Holdings Corp. Accumulated Deficit | DiamondHead Holdings Corp. | Total |
Balance at the beginning at Dec. 31, 2020 | $ 0 | $ 863 | $ 24,137 | $ (1,892) | $ 23,108 | |
Balance at the beginning (in shares) at Dec. 31, 2020 | 0 | 8,625,000 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Excess of cash received over fair value of private placement warrants | $ 0 | $ 0 | 3,500,670 | 0 | 3,500,670 | |
Remeasurement of Class A common stock subject to redemption | 0 | 0 | (3,524,807) | (23,352,185) | (26,876,992) | |
Net income | 0 | 0 | 0 | 2,708,241 | 2,708,241 | $ 62,413,011 |
Balance at the end at Dec. 31, 2021 | $ 0 | $ 863 | 0 | (20,645,836) | (20,644,973) | |
Balance at the end (in shares) at Dec. 31, 2021 | 0 | 8,625,000 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Extinguishment of deferred underwriting commissions on public shares | $ 0 | $ 0 | 11,803,313 | 0 | 11,803,313 | |
Reclassification from additional paid-in capital to retained earnings | 0 | 0 | (11,803,313) | 11,803,313 | 0 | |
Remeasurement of Class A common stock subject to redemption | 0 | 0 | 0 | (3,586,031) | (3,586,031) | |
Net income | 0 | 0 | 0 | 7,073,315 | 7,073,315 | $ 69,489,294 |
Balance at the end at Dec. 31, 2022 | $ 0 | $ 863 | $ 0 | $ (5,355,239) | $ (5,354,376) | |
Balance at the end (in shares) at Dec. 31, 2022 | 0 | 8,625,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows from Operating Activities: | |||
Net income | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 |
Changes in operating assets and liabilities: | |||
Net cash used in operating activities | 34,616,722 | 58,318,036 | 71,781,702 |
Cash Flows from Investing Activities | |||
Net cash provided by (used in) investing activities | (206,877) | (394,054) | (785,294) |
Cash Flows from Financing Activities: | |||
Proceeds from note payable to related party | 10,851,187 | 10,025,865 | 13,259,394 |
Net cash provided by financing activities | (73,675,897) | (35,598,882) | (51,419,649) |
Cash - beginning of the period | 51,504,887 | 29,179,787 | 9,603,028 |
Cash - end of the period | 12,238,835 | 51,504,887 | 29,179,787 |
DiamondHead Holdings Corp. | |||
Cash Flows from Operating Activities: | |||
Net income | 7,073,315 | 2,708,241 | |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Change in fair value of derivative warrant liabilities | (7,263,330) | (4,367,500) | |
Financing costs - derivative warrant liabilities | 449,070 | ||
Income from investments held in Trust Account | (5,049,912) | (20,717) | |
Gain from settlement of deferred underwriting commissions on public warrants | (271,688) | ||
Changes in operating assets and liabilities: | |||
Prepaid expenses | 220,059 | (240,075) | |
Accounts payable | 45,912 | 53,667 | |
Accrued expenses | 3,610,287 | (86,250) | |
Franchise tax payable | (114,645) | 113,477 | |
Income tax payable | 481,430 | ||
Accrued interest | 4,110 | ||
Net cash used in operating activities | (1,264,462) | (1,390,087) | |
Cash Flows from Investing Activities | |||
Cash deposited in Trust Account | (345,000,000) | ||
Interest released from Trust Account for payment of income taxes | 918,543 | ||
Net cash provided by (used in) investing activities | 918,543 | (345,000,000) | |
Cash Flows from Financing Activities: | |||
Proceeds from note payable to related party | 200,000 | ||
Repayment of note payable | (130,000) | ||
Proceeds received from initial public offering, gross | 345,000,000 | ||
Proceeds received from private placement | 8,900,000 | ||
Offering costs paid | (70,000) | (7,143,422) | |
Net cash provided by financing activities | 130,000 | 346,626,578 | |
Net (decrease) increase in cash | (215,919) | 236,491 | |
Cash - beginning of the period | 252,601 | 16,110 | |
Cash - end of the period | 36,682 | 252,601 | $ 16,110 |
Supplemental disclosure of noncash financing activities: | |||
Remeasurement of Class A common stock subject to possible redemption | 3,586,031 | ||
Offering costs included in accrued expenses | 70,000 | ||
Deferred underwriting commissions | $ 12,075,000 | ||
Supplemental disclosure of cash flow activities: | |||
Income taxes paid | $ 502,000 |
Description of Organization and
Description of Organization and Business Operations | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Description of Organization and Business Operations | Note 1 — Description of Organization and Business Operations DiamondHead Holdings Corp. (the “Company” or “DHHC”) is a blank check company incorporated in Delaware on October 7, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2022, the Company had not commenced any operations. All activity from the Company’s inception to December 31, 2022 relates to the Company’s formation and the Initial Public Offering (the “Initial Public Offering”) and since the closing of the Initial Public Offering (as described below), the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on investments held in trust from the proceeds of its Initial Public Offering and Private Placement described below, and from changes in the fair value of its derivative warrant liability. On September 10, 2022, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with Hestia Merger Sub, Inc., a South Carolina corporation and wholly-owned subsidiary of DHHC (“Merger Sub”), and Great Southern Homes, Inc., a South Carolina corporation (“GSH”), pursuant to which the Company expects to effect a business combination with GSH through the merger of Merger Sub with and into GSH (the “Merger”), with GSH surviving the Merger as a wholly-owned subsidiary of the Company. Upon the consummation of the transactions contemplated by the Business Combination Agreement (the “Transactions”), the Company expects to be renamed United Homes Group, Inc. The obligations of the Company, Merger Sub and GSH to consummate the Merger are subject to the satisfaction or waiver of certain closing conditions, which are further described in the Business Combination Agreement. The Company’s sponsor is DHP SPAC-II Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 25, 2021. On January 28, 2021, the Company consummated its Initial Public Offering of 34,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 4,500,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.6 million, of which approximately $12.1 million in deferred underwriting commissions (Note 6). On August 10, 2022, the underwriter from the Initial Public Offering resigned from its role in any Business Combination and waived its entitlement to the deferred underwriting commissions in the amount of $12.1 million. Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,933,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to our Sponsor and to certain qualified institutional buyers or institutional accredited investors, including certain funds and accounts managed by subsidiaries of BlackRock, Inc. and Millennium Management LLC (each, an “Anchor Investor”), generating proceeds of $8.9 million (Note 4). Upon the closing of the Initial Public Offering and the Private Placement, $345.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. The Company will provide its holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption have been recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor, officers and directors agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Sponsor agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. The Company will have 30 months from the closing of the Initial Public Offering, or July 28, 2023, to complete a Business Combination (the “Combination Period”). the Company filed If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten The Sponsor agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of its affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter agreed to waive its right to its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period, and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00). In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets. This liability will not apply with respect to any claims (i) by a third party who executed a waiver of any and all rights to seek access to the trust account or (ii) under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Marcum LLP, the Company’s independent registered public accounting firm, will not execute agreements with the Company waiving claims to the monies held in the Trust Account. Proposed Business Combination On September 10, 2022, the Company entered into the GSH Business Combination Agreement with Merger Sub and GSH, pursuant to which the Company expects to effect a business combination with GSH through the merger of Merger Sub with and into GSH (the “Merger”), with GSH surviving the Merger as a wholly-owned subsidiary of the Company. Upon the consummation of the GSH Business Combination, the Company expects to be renamed United Homes Group, Inc. The obligations of the Company, Merger Sub and GSH to consummate the Merger are subject to the satisfaction or waiver of certain closing conditions, which are further described in the GSH Business Combination Agreement. The Company cannot assure that the plans to complete the GSH Business Combination will be successful. Further, the Company may need to pursue third party financing, among other things, to satisfy the closing condition that at Closing, the amount of Closing DHHC Cash be equal to or exceed $125,000,000 (the “Minimum Cash Condition”). However, there can be no assurance that any third-party financing will be entered into in connection with the GSH Business Combination, and there can be no assurance that the Minimum Cash Condition will be satisfied. If the Minimum Cash Condition is not satisfied, amended or waived by GSH pursuant to the terms of the GSH Business Combination Agreement, then the GSH Business Combination would not be consummated. Trust Account Redemptions and Extension of Combination Period On January 25, 2023, the Company held a special meeting of stockholders at which such stockholders voted to extend the time the Company has to consummate an initial Business Combination from January 28, 2023 to July 28, 2023. In connection with such vote, the holders of an aggregate of 30,058,968 Public Shares exercised their right to redeem their shares for an aggregate of approximately $304 million in cash held in the Trust Account. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2 Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying consolidated financial statements of the Company include its wholly owned subsidiary in connection with the planned merger. There were no inter-company activities during the years ended on December 31, 2022 and 2021. Liquidity and Going Concern As of December 31, 2022, the Company had approximately $37,000 in cash and a working capital deficit of approximately $3.9 million (not taking into account tax obligations of approximately $481,000 that may be paid using investment income earned in Trust Account). The Company’s liquidity needs have been satisfied through a contribution of $25,000 from Sponsor to cover for certain offering costs in exchange for the issuance of the Founder Shares, a loan of up to $300,000 from the Sponsor pursuant to the Promissory Note (see Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Promissory Note was repaid on February 1, 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans up to $1,500,000 (see Note 5). As of December 31, 2022 and 2021, there were no amounts outstanding under any Working Capital Loan. In October 2022, the Company issued unsecured promissory notes to two affiliates of the Sponsor for an aggregate principal amount of up to $400,000. As of December 31, 2022, there was an outstanding balance of $204,110 under these promissory notes including $4,110 of accrued but unpaid interest through December 31, 2022. In connection with management’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Consolidated Financial Statements-Going Concern,” management has determined that the existing liquidity condition, mandatory liquidation and subsequent dissolution raise substantial doubt about its ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate on or after July 28, 2023. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult because of the potential differences in accounting standards used. Risks and Uncertainties Various social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility could adversely affect the Company’s ability to complete a business combination. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a business combination and the value of the Company’s securities. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly - traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. Management continues to evaluate the impact of these types of risks and has concluded that while it is reasonably possible that these risks and uncertainties could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and 2021, the Company had no cash equivalents held outside the Trust Account. Investments Held in Trust Account The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from investments held in Trust Account in the accompanying consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using quoted market prices. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 and investments held in the Trust Account. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the consolidated balance sheets. Fair Value Measurements Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Derivative Warrant Liabilities The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480, and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised. Their re-measurement to fair value is recognized in the Company’s consolidated statements of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering were initially measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of and December 31, 2022 and 2021, the value of the Public Warrants is measured based on the listed market price of such warrants since being separately listed and traded. The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the consolidated statements of operations. Offering costs associated with the Class A common stock were charged against the carrying value of the Class A common stock upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. Class A Common Stock Subject to Possible Redemption The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2022 and 2021, 34,500,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s consolidated balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. Subsequently, the Company recognizes changes in redemption value in the accompanying consolidated statements of changes in stockholders’ deficit. Income Taxes The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net (loss) income per common stock is calculated by dividing the net (loss) income by the weighted average shares of common stock outstanding for the respective period. The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement to purchase an aggregate of 14,558,333 shares of common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock. For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements. |
Initial Public Offering
Initial Public Offering | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Initial Public Offering | Note 3 — Initial Public Offering On January 28, 2021, the Company consummated its Initial Public Offering of 34,500,000 Units, including 4,500,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $19.6 million, of which approximately $12.1 million is included in deferred underwriting commissions. On August 10, 2022, the underwriter from the Initial Public Offering resigned from its role in any Business Combination and waived its entitlement to the deferred underwriting commissions in the amount of $12.1 million. Each Unit consists of one share of Class A common stock and one |
Private Placement
Private Placement | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Private Placement | Note 4 Private Placement Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 5,933,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant to the Sponsor and the Anchor Investors, generating proceeds of $8.9 million. Each Private Placement Warrant will be exercisable to purchase one share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Placement Warrants. |
Related Party Transactions_2
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | Note 6 — Related party transactions Distributions and net transfer to shareholders and other affiliates Before the carve-out, the Company’s financial information was included in the financial statements and accounting records of GSH. The following transactions consisting of distributions and net transfer to shareholders and other affiliates summarizes the activity between the Company and shareholders and Other Affiliates before the carve-out. Shareholders’ and Other Affiliates’ net investment reflects transactions that occurred between the Company and the Shareholders, and the Company and Other Affiliates, that were not settled in cash. Those Other Affiliates included Land Development Affiliates and Other Operating Affiliates (see Note 1 — Nature of operations and basis of presentation). 2022 2021 2020 General corporate allocations $ (6,590,564) $ (2,867,929) $ (1,733,849) General financing activities (46,162,495) (30,655,681) (20,596,420) Distributions and net transfer to shareholders and other affiliates(1) $ (52,753,059) $ (33,523,610) $ (22,330,269) (1) This amount differs from the amount included in distributions and net transfer to shareholders and other affiliates on the statements of changes in shareholders’ and other affiliates’ net investment. The 1,422,630 difference is related to stock compensation, which is broken out separately on the statements of changes in shareholders’ and other affiliates’ net investment. General Corporate Allocations — General Financing Activities — Related party transactions The Company transacts with Other Affiliates that are owned by the shareholders of the Company as discussed above. The Company operates and maintains the cash management and treasury function for the Other Affiliates. Cash receipts from customers and cash disbursements made to vendors are recorded through one centralized bank account. The Company records a Due from Other Affiliate when cash is disbursed, generally to a vendor, on behalf of an affiliate. Conversely, the Company records a Due to Other Affiliate when cash is received from a customer on behalf of an affiliate. As of December 31, 2022 and 2021, the Company recorded a Due from Other Affiliates of $72,739,572 and $48,004,261, respectively, and a Due to Other Affiliates of $31,420,651 and $30,975,951, respectively. These balances are presented net as a contra-account against Shareholders’ and other affiliates’ net investment, as the settlement of these balances is not expected in cash. As of December 31, 2022, the Company recorded a Due from related party of $1,437,235 as an asset on the Balance Sheet as the Company is reasonably certain that this amount will be collected because both parties have entered into a binding construction contract and agreed on the expected contract price. The below table summarizes the transactions with the Land Development and Other Affiliates for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, 2022 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (43,447,726) $ (665,777) $ (44,113,503) Other activities 8,799,598 197,818 8,997,416 Cash transfer, net of repayment of $7,300,000 — (2,700,000) (2,700,000) Total financing cash flows $ (34,648,128) $ (3,167,959) $ (37,816,087) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates $ 13,504,316 $ — $ 13,504,316 Total non-cash activity $ 13,504,316 $ — $ 13,504,316 Year ended December 31, 2021 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (30,231,766) $ (76,762) $ (30,308,528) Model home sales — 6,039,243 6,039,243 Other activities (691,040) (3,537,447) (4,228,487) Total financing cash flows $ (30,922,806) $ 2,425,034 $ (28,497,772) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 33,390,760 $ (219,999) $ 33,170,761 Transfer of constructed model homes to related parties — (1,517,030) (1,517,030) Contribution of fixed assets — 344,511 344,511 Total non-cash activity $ 33,390,760 $ (1,392,518) $ 31,998,242 Year ended December 31, 2020 Land Other Development Operating Affiliates Affiliates Total Financing cash flows: Land development expense $ (22,990,840) $ (96,903) $ (23,087,743) Model home sales — 3,266,711 3,266,711 Other activities 450,282 791,117 1,241,399 Total financing cash flows $ (22,540,558) $ 3,960,925 $ (18,579,633) Non-cash activities Acquisition of developed lots from related parties in settlement of due from Other Affiliates’ amounts $ 18,884,590 $ 656,500 $ 19,541,090 Transfer of constructed model homes to related parties — (3,690,084) (3,690,084) Total non-cash activity $ 18,884,590 $ (3,033,584) $ 15,851,006 Land development expense Other activities Cash transfer — Acquisition of developed lots from related parties in settlement of Due from Other Affiliates — Model home sales Transfer of constructed model homes to related parties Contribution of fixed assets Sale-leaseback transaction ordinary activities. Accordingly, revenue and cost of sales of $5,188,716 and $4,508,819, respectively, were recognized in the Statement of income for the year ended December 31, 2022. In connection with these transactions, GSH simultaneously entered into individual lease agreements for all 19 model homes sold, whereby GSH is the lessee. The Company is responsible for paying the operating expenses associated with the model homes while under lease. Nine of the 19 individual leases had a lease term greater than twelve months. In connection with these nine leases, the Company recognized an operating lease right-of-use-asset and a corresponding operating As the leases associated with the transactions do not commence until 2023, the Company did not pay rent or recognize lease expense associated with the leases during the year ended December 31, 2022. Rent expense will be paid monthly, consistent with the lease contract. Other - Leases In addition to the transactions above, the Company has entered into three separate operating lease agreements with one related party. The terms of the lease, including rent expense and future minimum payments, are described in Note 9 - Commitments and contingencies |
DiamondHead Holdings Corp. | |
Related Party Transactions | Note 5 — Related Party Transactions Founder Shares On October 21, 2020, the Sponsor paid $25,000 on behalf of the Company to cover certain offering costs in exchange for issuance of 8,625,000 shares of the Company’s Class B common stock (the “Founder Shares”). Additionally, upon consummation of the Business Combination, the Sponsor has agreed to transfer an aggregate of 1,250,625 Founder Shares to the Anchor Investors for the same price originally paid for such shares. The Founder Shares will automatically convert into Class A common stock upon consummation of a Business Combination on a one-for-one basis, subject to certain adjustments, as described in Note 8. The Founder Shares included an aggregate of up 1,125,000 shares subject to forfeiture to the extent that the underwriter’s option to purchase additional units was not exercised in full, so that the Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On January 28, 2021, the underwriters fully exercised the over-allotment option; thus, these 1,125,000 Founder Shares were no longer subject to forfeiture. The Sponsor and the Anchor Investors agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Promissory Note — Related Party On October 21, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering (the “Promissory Note”). The Promissory Note was non-interest bearing and due upon the completion of the Initial Public Offering. As of December 31, 2020, the Company borrowed $130,000 under the Promissory Note. On February 1, 2021, the Company repaid the Promissory Note in full. Subsequent to repayment, the facility is no longer available to the Company. On October 18, 2022, the Company issued unsecured promissory notes to two affiliates of the Sponsor for an aggregate principal amount of up to $400,000. The promissory notes bear interest on the outstanding principal balance at 10% per annum, are not convertible and are repayable in full upon the earlier of: (i) April 28, 2023 or (ii) the date on which the Company closes the Proposed Business Combination. As of December 31, 2022, there was an aggregate outstanding balance of $204,110 under the promissory notes including $4,110 of accrued but unpaid interest through December 31, 2022. Related Party Loans In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of December 31, 2022 and 2021, the Company had no borrowings under the Working Capital Loans. Administrative Support Agreement The Company agreed, commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support. The Sponsor has not received any reimbursement of these fees through December 31, 2022. Sponsor Support Agreement In connection with the execution of the Business Combination Agreement, the Sponsor entered into a sponsor support agreement (the “Sponsor Support Agreement”) with the Company and GSH, pursuant to which the Sponsor agreed to, among other things, (i) vote at any meeting of the shareholders of the Company all of its Class B common stock, (the “Sponsor Shares”) and any securities acquired after the execution of the Sponsor Support Agreement, in favor of each Transaction Proposal (as defined in the Business Combination Agreement), (ii) be bound by certain other covenants and agreements related to the Transactions and (iii) be bound by certain transfer and redemption restrictions with respect to such Sponsor Shares, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. The Sponsor has also agreed, subject to certain exceptions, not to transfer approximately 2.1 million Sponsor Earn Out Shares (as defined in the Sponsor Support Agreement) until such shares are released under the Sponsor Support Agreement. Pursuant to the Sponsor Support Agreement, Sponsor Earnout Shares will be released in three tranches upon the occurrence of the following milestones during the period commencing on the 90th day following the date (the “Closing Date”) on which the closing of the Merger (the “Closing”) occurs and ending on the fifth anniversary of the Closing Date: (i) a one-time issuance of 7,500,000 Earnout Shares on the first date on which the volume weighted average price of DHHC Shares over any 20 trading days within the preceding 30 consecutive trading day period (as adjusted, the “VWAP Price”) is greater than or equal to $12.50 (“Triggering Event I”); (ii) a one-time issuance of 7,500,000 Earn Out Shares on the first date on which the VWAP Price is greater than or equal to $15.00 (“Triggering Event II”); and (iii) a one-time issuance of 5,000,000 Earn Out Shares on the first date on which the VWAP Price is greater than or equal to $17.50 (“Triggering Event III”, together with Triggering Event I and Triggering Event II, the “Earn-Out Milestones”). Any such Sponsor Earnout Shares not vested prior to the fifth anniversary of the Closing Date will be deemed to be forfeited. The Sponsor has also agreed that in the event that Closing DHHC Cash (as defined in the Business Combination Agreement) is less than $100,000,000, up to 1.0 million Sponsor Shares will be designated as Sponsor Earnout Shares, subject to the same release conditions set forth in the preceding paragraph. In addition, members of the Sponsor have made a commitment to purchase and not redeem an aggregate of 2.5 million Public Shares. The Sponsor has also agreed, pursuant to the terms of the Sponsor Support Agreement, to forfeit approximately 1.8 million Sponsor Shares and approximately 50% of its Private Placement Warrants. Financing Commitment Letter In connection with the execution of the Business Combination Agreement, we entered into a financing commitment letter (the “Financing Commitment Letter”) with the Sponsor, David T. Hamamoto, our Co-Chief Executive Officer and Chairman and an affiliate of our Sponsor, and Antara Capital, an affiliate of our Sponsor, pursuant to which David T. Hamamoto and Antara Capital (collectively, the “Investors”) will commit to, or cause their respective affiliates to, purchase and not redeem at least in the aggregate 2.5 million DHHC Class A Common Shares. Specifically, the Investors have agreed, among other things, severally, and not jointly, subject to certain terms and conditions, (i) to purchase (in open market transactions or otherwise), or to cause one or more of its controlled affiliates to purchase, and beneficially own no less than 1,250,000 DHHC Class A Common Shares, no later than the date that is five (5) In the event an Investor fails to make the committed purchase, the defaulting investor will automatically forfeit 1,250,000 DHHC Class B Common Shares it is entitled to receive in connection with the Closing for the benefit of the non-defaulting Investor or its designated controlled affiliates. |
Commitments and Contingencies_3
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | Note 9 — Commitments and contingencies Leases The Company leases office spaces in South Carolina under operating lease agreements with related parties, which have a remaining lease term of up to five years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the ROU asset and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $555,806 within Selling, general, and administrative expense on the statement of income for the year ended December 31, 2022. Operating lease expense included variable lease expense of $92,285 for the year ended December 31, 2022. The weighted-average discount rate for the operating leases entered into during the year ended December 31, 2022 was 4.90% and the weighted-average remaining lease term was 2.16 years. During the year ended December 31, 2022, the Company closed on 19 sale-leaseback transactions with related parties. For information on sale-leaseback transaction with related parties, see Note 6 — Related party transaction The maturity of the contractual, undiscounted operating lease liabilities as of December 31, 2022 are as follows: December 31, Lease Payment 2023 578,280 2024 305,400 2025 121,200 2026 48,000 2027 and thereafter — Total undiscounted operating lease liabilities $ 1,052,880 Interest on operating lease liabilities (51,603) Total present value of operating lease liabilities $ 1,001,277 Total rent expense for the year ended December 31, 2021 was $931,078. The Company has certain leases which have initial lease terms of twelve months or less (“short-term leases”). The Company elected to exclude these leases from recognition, and these leases have not been included in our recognized operating ROU assets and operating lease liabilities. The Company recorded $94,386 and $344,016 of rent expense related to the short-term leases within selling, general and administrative expense on the Statements of Income for the year ended December 31, 2022, and 2021, respectively. Litigation The Company is considered to be the primary responsible party for claims and lawsuits brought against the Shareholders and Other Affiliates based on its financial resources. The Company is subject to claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. It is management’s opinion that if a claim has merit, other parties will be partially responsible or liable for the claim. When the Company believes that a loss is probable and estimable and not fully able to be recouped, the Company will record an expense and corresponding contingent liability. As of the date of these financial statements, management believes that the Company has not incurred a liability as a result of any claims. Below is a summary of current pending litigation involving the Company. The Company is a defendant in a claim involving residential construction defects associated with the premature deterioration of sloped land behind neighboring homes, where the Company served as the general contractor for original construction of the residence in 2013. The Company asserts the slope failure that has caused damage to the structural integrity of the plaintiff’s homes is the result of the plaintiff’s next-door neighbor who voluntarily cleared vegetation from the rear of their home thereby causing the erosion of soil and resulting damages. In 2022, the matter was settled, and the case was dismissed for an immaterial amount. The Company is a defendant in a class action lawsuit claiming that the Company required the lawsuit’s representative to sign a waiver of the common law warranty of habitability in the contract for sale but received no compensation for the waiver. The representative and other members of the class that purchased using the same contract seek compensation for the value of the waiver. The suit specifically declines to claim that there was any construction defect in the homes sold by the Company. Management and legal counsel for the Company are uncertain as to the likelihood of the outcome of the case and the amount of potential damages is neither known nor reasonably estimable. No amounts have been accrued for the matter. A hearing before the S.C. Court of Appeals was held in April 2021 regarding arbitration; however, the court has not rendered a decision. If this case were to go to trial it is anticipated that the matter would be unresolved for several years. |
DiamondHead Holdings Corp. | |
Commitments and Contingencies | Note 6 — Commitments and Contingencies Registration Rights The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of working capital loans and upon conversion of the Founder Shares) were entitled to registration rights pursuant to a registration rights agreement signed upon the effective date of Initial Public Offering, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities were entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Amended and Restated Registration Rights Agreement The Business Combination Agreement contemplates that, upon completion of the Merger, the Company (which expects to be named United Homes Group, Inc. at that time), the Sponsor, certain securityholders of the Company and certain former stockholders of GSH will enter into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”). Pursuant to the A&R Registration Rights Agreement, among other things, UHG agrees to file a shelf registration statement with respect to the registrable securities under the A&R Registration Rights Agreement within 45 days of the Closing. Up to two times in any 12-month period, certain legacy DHHC securityholders and legacy GSH stockholders may request to sell all or any portion of their registrable securities in an underwritten offering that is registered pursuant to the shelf registration statement, so long as the total offering price is reasonably expected to exceed $10,000,000. The combined company will also provide customary “demand” and “piggyback” registration rights. The A&R Registration Rights Agreement will provide that UHG will pay certain expenses relating to such registrations and indemnify the securityholders against certain liabilities. Further, each securityholder party to the A&R Registration Rights Agreements agrees not to transfer any of their registrable securities subject to lock-up transfer restrictions (as described in the A&R Registration Rights Agreement) until the end of the applicable Lock-Up Period (as defined in the A&R Registration Rights Agreement) subject to certain customary exceptions described therein. Underwriting Agreement The Company granted the underwriter a 45-day option from the date of Initial Public Offering to purchase up to 4,500,000 additional Units at the Initial Public Offering price less the underwriting discounts and commissions. On January 28, 2021, the underwriters fully exercised the over-allotment option. The underwriter was entitled to a cash underwriting discount of $0.20 per Unit, or $6.9 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, the underwriter was entitled to a deferred fee of $0.35 per Unit, or approximately $12.1 million in the aggregate. Effective as of August 10, 2022, the underwriter from the Initial Public Offering resigned and withdrew from its role in any Business Combination and waived its entitlement to the deferred underwriting commissions in the amount of approximately $12.1 million. The Company recognized approximately $11.8 million of the commissions waiver as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ deficit for the year ended December 31, 2022, as this portion represents an extinguishment of deferred underwriting commissions on Public Shares which was originally recognized directly in accumulated deficit. The remaining balance of approximately $272,000 is recognized as a gain from settlement of deferred underwriting commissions on public warrants in the consolidated statements of operations, which represents the original amount expensed in the Company’s initial public offering. Contingent Fee Arrangement The Company has entered into certain engagement letters with Zelman Partners LLC (“Zelman”) for financial advice and assistance in connection with its search for a prospective initial business combination. Pursuant to the engagement letters, the Company agreed to pay Zelman a transaction fee in cash of $4,500,000 plus, in the Company’s sole discretion, an additional transaction fee of between $0 to $1,000,000 (collectively, the “Transaction Fees”). The Transaction Fees were contingent upon the closing of a Business Combination and therefore not included as liabilities on the consolidated balance sheets. Additionally, if the Company or any of its affiliates enters into an agreement with respect to the acquisition of all or a portion of a target company in the homebuilding industry (the “Agreement”) and (i) such Agreement is terminated prior to consummation of such acquisition or the acquisition is otherwise not consummated and (ii) the Company receives a payment or other consideration (the “Payment”) at any time related to such termination or non-consummation, the Company agrees to pay to Zelman a transaction fee of the lesser of (i) the Transaction Fee that would have been payable had the sale been consummated and (ii) 25% of such Payment in cash if and when such Payment is made to the Company. |
Derivative Warrant Liabilities
Derivative Warrant Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Derivative Warrant Liabilities | Note 7 - Derivative Warrant Liabilities As of December 31, 2022 and 2021, the Company had 8,625,000 Public Warrants and 5,933,333 Private Placement Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. The Company agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company will use its best efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. The Company will use its reasonable best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. Redemptions of Warrants When the Price Per Share of Class A Common Stock Equals or Exceeds $18.00 — ● in whole and not in part; ● at a price of $0.01 per warrant; ● upon not less than 30 days ’ prior written notice of redemption to each warrant holder; and if, and only if, closing price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00 — ● in whole and not in part; ● at $0.10 per warrant upon a minimum of 30 days ’ prior written notice of redemption provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption and receive that number of shares to be determined by reference to the table below, based on the redemption date and the “fair market value” of our Class A common stock except as otherwise described below; ● if, and only if, the closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days within the 30 -trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders; and ● if the closing price of the Class A common stock for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. If the Company calls the Public Warrants for redemption for cash, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis”, as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless. In addition, if the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at a Newly Issued Price of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to our initial stockholders or their respective affiliates, without taking into account any Founder Shares held by them, as applicable, prior to such issuance), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price. The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees (except as set forth under “Redemption of Warrants when the Price per Share of Class A Common Stock Equals or Exceeds $10.00”). If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. |
Class A Common Stock Subject to
Class A Common Stock Subject to Possible Redemption | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Class A Common Stock Subject to Possible Redemption | Note 8 — Class A Common Stock Subject to Possible Redemption The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 300,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 34,500,000 shares of Class A common stock outstanding, which were all subject to possible redemption and are classified outside of permanent equity in the consolidated balance sheets. The Class A common stock subject to possible redemption reflected on the consolidated balance sheets is reconciled on the following table: Class A common stock subject to possible redemption at December 31, 2020 $ — Gross Proceeds 345,000,000 Less: Proceeds allocated to Public Warrants (7,762,500) Class A common stock issuance costs (19,114,492) Plus: Accretion of carrying value to redemption value 26,876,992 Class A common stock subject to possible redemption at December 31, 2021 345,000,000 Increase in redemption value of Class A common stock subject to redemption 3,586,031 Class A common stock subject to possible redemption at December 31, 2022 $ 348,586,031 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Stockholders' Equity (Deficit) | Note 9- Stockholders’ Equity (Deficit) Preferred Stock — Class A Common Stock — Class B Common Stock — Holders of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, except as required by law. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination). Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Fair Value Measurements | Note 10 — Fair Value Measurements The following tables presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy: Fair Value Measured as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Investments held in Trust Account – Money Market Funds $ 349,152,086 $ — $ — $ 349,152,086 Liabilities: Derivative public warrant liabilities $ 905,630 $ — $ — $ 905,630 Derivative private warrant liabilities $ — $ — $ 625,370 $ 625,370 Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets Investments held in Trust Account – Money Market Funds $ 345,020,717 $ — $ — $ 345,020,717 Liabilities: Derivative public warrant liabilities $ 5,175,000 $ — $ — $ 5,175,000 Derivative private warrant liabilities $ — $ — $ 3,619,330 $ 3,619,330 Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to a Level 1 measurement in March 2021, when the Public Warrants were separately listed and traded in an active market. There were no other transfers to/from levels during the years ended December 31, 2022 and 2021. Level 1 assets include investments in mutual funds invested in government securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments. Prior to being publicly traded, the fair value of the Public Warrants issued in connection with the Initial Public Offering were measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of December 31, 2022 and 2021, the value of the Public Warrants was measured based on the trading price since the warrants were separately listed and traded. For the years ended December 31, 2022 and 2021, the Company recognized a gain of approximately $7.3 million and $4.4 million, respectively, resulting from a decrease in the fair value of liabilities, presented as change in fair value of derivative warrant liabilities on the accompanying consolidated statements of operations. The estimated fair value of the Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation and a Black-Scholes model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on the historical volatility of an index of companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates: As of December 31, As of December 31, 2022 2021 Exercise price $ 11.50 $ 11.50 Stock Price $ 10.05 $ 9.74 Option term (in years) 5.00 4.82 Volatility 40 % 12 % Risk-free interest rate 4.1 % 1.3 % The change in the fair value of the derivative warrant liabilities measured utilizing Level 1 and Level 3 inputs for the years ended December 31, 2022 and 2021, is summarized as follows: Derivative warrant liabilities at January 1, 2022 – Level 3 $ 3,619,330 Change in fair value of derivative warrant liabilities – Level 3 (2,993,960) Derivative warrant liabilities at December 31, 2022 – Level 3 $ 625,370 Derivative warrant liabilities at January 1, 2021 – Level 3 $ — Issuance of Derivative Warrants – Level 3 13,161,830 Transfer of Public Warrants to Level 1 (7,762,500) Change in fair value of derivative warrant liabilities – Level 3 (1,780,000) Derivative warrant liabilities at December 31, 2021 – Level 3 $ 3,619,330 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Income Taxes | Note 11 — Income Taxes The Company’s taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative expenses are generally considered start-up costs and are not currently deductible. The income tax provision consists of the following for the years ended December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Current Federal $ 983,430 $ — State — — Deferred Federal (74,706) (254,139) State — — Valuation allowance 74,706 254,139 Income tax provision $ 983,430 $ — The Company’s net deferred tax assets were as follows as of December 31, 2022 and 2021: As of December 31, 2022 As of December 31, 2021 Deferred tax assets: Start-up/Organization costs $ 328,845 $ 216,490 Net operating loss carryforwards — 37,649 Total deferred tax assets 328,845 254,139 Valuation allowance (328,845) (254,139) Deferred tax asset, net of allowance $ — $ — In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ending December 31, 2022 and 2021, the change in valuation allowance was $74,706 and $254,139, respectively. A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the year ended December 31, 2022 and 2021 is as follows: December 31, 2022 December 31, 2021 Statutory federal income tax rate 21.0 % 21.0 % Statutory state rate, net of federal benefit 0.0 % — % Financing costs — 3.5 % Change in fair value of derivative warrant liabilities (18.9) % (33.9) % Merger costs 9.9 % 0.0 % Transaction costs allocated to derivative warrant liabilities 0.0 % 0.0 % Loss upon issuance of private placement warrants (0.7) % 0.0 % Change in valuation allowance 0.9 % 9.4 % Income tax rate 12.2 % 0.0 % |
Subsequent Events_2
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | Note 14 — Subsequent events Management has performed an evaluation of subsequent events after the Balance Sheet date of December 31, 2022 through March 17, 2023, which is the date the financial statements were available to be issued. During this period, the Company has not identified any subsequent events that require recognition or disclosure, except for the ones noted below. On February 27, 2023, the Company paid off Wells Fargo debt associated with Other Affiliates in the amount of $8,340,545 and on February 28, 2023, the Company was released as a co-obliger from the Anderson Brothers debt associated with Other Affiliates in anticipation of the Proposed Business Combination discussed in Note 1. As a result there is no remaining debt balance associated with Other Affiliates as of the date when financial statements were available to be issued. |
DiamondHead Holdings Corp. | |
Subsequent Events | Note 12 — Subsequent Events Management has evaluated subsequent events to determine if events or transactions occurring through the date the consolidated financial statements were issued. The Company did not identify any subsequent event, other than as described herein or below, that would have required adjustment or disclosure in the consolidated financial statements. On January 11, 2023, the Company received a letter (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Company is not in compliance with Nasdaq Listing Rule Section 5620(a) (the “Annual Meeting Rule”) which requires the Company to hold an annual meeting of stockholders within 12 months of the Company’s fiscal year end. The Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on Nasdaq. The Notice advises that the Company will have 45 calendar days to submit to Nasdaq a plan to regain compliance with the Annual Meeting Rule. On March 16, 2023, Nasdaq advised the Company of its determination to grant the Company an extension until June 29, 2023 to regain compliance with the Annual Meeting Rule by holding a special meeting of stockholders to approve the GSH Business Combination where the Company’s stockholders will also have the opportunity to discuss Company affairs and elect directors. The special meeting was held on March 23, 2023 and served as the Company’s annual meeting of stockholders for purposes of the Annual Meeting Rule. As such, the Company has regained compliance with the Annual Meeting Rule. As previously announced on March 22, 2023, the Company entered into a Convertible Note Purchase Agreement (the “Note Purchase Agreement”) among itself, GSH and a certain group of investors party thereto (the “PIPE Investors”). Pursuant to the Note Purchase Agreement, the Investors have agreed to purchase $80,000,000 in original principal amount of convertible promissory notes (the “Notes”) and 744,588 shares of Class A common stock in a private placement PIPE investment (the “PIPE Investment”) in connection with the GSH Business Combination. The aggregate gross amount of the PIPE Investment is approximately $75,000,000. The proceeds of the PIPE Investment are expected to be used by the Company to offset redemptions of the Company’s Class A common stock (see “Extension and Redemptions” below for details on redemptions of the Company’s Class A common stock), and may be used by DHHC to satisfy the Minimum Cash Condition. The closing of the Note Purchase Agreement is contingent upon the substantially concurrent consummation of the GSH Business Combination and subject to other customary closing conditions and terms set forth therein. On March 23, 2023, in connection with the Company’s efforts to raise funds to meet the Minimum Cash Condition, the Company entered into certain private placement transactions (collectively, the “Share Lock-Up Agreements”) with certain investors who purchased shares of the Company’s Class A common stock on the open market prior to March 16, 2023 (each a “Lock-Up Investor”), pursuant to which, and subject to and conditioned upon the satisfaction of the closing conditions set forth in the Share Lock-Up Agreements, the Company agreed to issue to each Lock-Up Investor 0.25 UHG Class A Common Shares for a purchase price of $0.01, for each share of the Company’s Class A common stock held by such Lock-Up Investor at the Closing. Also, on March 23, 2023, the Company and certain investors (“PIPE Investors”) entered into subscription agreements (collectively, the “PIPE Subscription Agreements”) providing for the purchase by the PIPE Investors at the effective time of the GSH Business Combination of (i) an aggregate of 471,500 shares of the Company’s Class A common stock at a price per share of $10.00, and (ii) for each share of the Company’s Class A common stock purchased by each PIPE Investor, the Company agreed to issue to the applicable PIPE Investor 0.25 UHG Class A Shares for a purchase price of $0.01 per share for gross proceeds to the Company of approximately $4.7 million. On March 23, 2023, the Company held a special meeting of its stockholders in lieu of the 2022 annual meeting of stockholders (the “Special Meeting”) in connection with the GSH Business Combination. At the Special Meeting, the GSH Business Combination Agreement was approved, and the stockholders holding 109,426 shares of Class A common stock (after giving effect to withdrawals of redemptions) exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $1.1 million (approximately $10.13 per share) will be removed from the Trust Account to pay such redeeming holders and approximately $43.9 million will remain in the Company’s Trust Account. On January 10 and February 9, 2023, the Company drew additional amounts of $100,000 from the unsecured promissory notes, respectively, which were issued to two affiliates of the Sponsor on October 18, 2022 (See Note 5). The total outstanding balance of the promissory notes was fully repaid on March 24, 2023. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Use of Estimates | Use of Estimates — |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company places its cash and cash equivalents on deposit with various financial institutions in the United States. The Federal Deposit Insurance Corporation insures up to $250,000 for substantially all depository accounts at each financial institution. The Company’s cash accounts at various times during the year may be in excess of the insured amount. |
Fair Value Measurements | Fair Value Measurements Level 1 Level 2 Level 3 The Company’s financial instruments primarily include Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, Accounts Payable and Homebuilding debt and Other affiliate debt. Due to the short-term nature of the Company’s Cash and Cash equivalents, Accounts Receivable, Lot purchase agreement deposits, and Accounts Payable, the carrying amounts of these instruments approximate their fair value. The interest rates on the Homebuilding debt and Other affiliate debt vary and are the greater of either a reference rate plus an applicable margin, or the base rate plus the aforementioned applicable margin. Refer to Note 5 — Homebuilding debt and other affiliate debt |
Offering Costs Associated with the Initial Public Offering | Deferred Loan Costs — Note 5-Homebuilding debt and other affiliate debt |
Income Taxes | Income Taxes — |
Net Income (Loss) Per Share of Common Stock | Earnings per Share — Note 13 — Earnings per share |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted — Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) |
DiamondHead Holdings Corp. | |
Basis of Presentation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying consolidated financial statements of the Company include its wholly owned subsidiary in connection with the planned merger. There were no inter-company activities during the years ended on December 31, 2022 and 2021. |
Liquidity and Going Concern | Liquidity and Going Concern As of December 31, 2022, the Company had approximately $37,000 in cash and a working capital deficit of approximately $3.9 million (not taking into account tax obligations of approximately $481,000 that may be paid using investment income earned in Trust Account). The Company’s liquidity needs have been satisfied through a contribution of $25,000 from Sponsor to cover for certain offering costs in exchange for the issuance of the Founder Shares, a loan of up to $300,000 from the Sponsor pursuant to the Promissory Note (see Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Promissory Note was repaid on February 1, 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans up to $1,500,000 (see Note 5). As of December 31, 2022 and 2021, there were no amounts outstanding under any Working Capital Loan. In October 2022, the Company issued unsecured promissory notes to two affiliates of the Sponsor for an aggregate principal amount of up to $400,000. As of December 31, 2022, there was an outstanding balance of $204,110 under these promissory notes including $4,110 of accrued but unpaid interest through December 31, 2022. In connection with management’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Consolidated Financial Statements-Going Concern,” management has determined that the existing liquidity condition, mandatory liquidation and subsequent dissolution raise substantial doubt about its ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate on or after July 28, 2023. |
Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult because of the potential differences in accounting standards used. |
Risks and Uncertainties | Risks and Uncertainties Various social and political circumstances in the United States and around the world (including wars and other forms of conflict, including rising trade tensions between the United States and China, and other uncertainties regarding actual and potential shifts in the United States and foreign, trade, economic and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility could adversely affect the Company’s ability to complete a business combination. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s ability to complete a business combination and the value of the Company’s securities. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly - traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. Management continues to evaluate the impact of these types of risks and has concluded that while it is reasonably possible that these risks and uncertainties could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and 2021, the Company had no cash equivalents held outside the Trust Account. |
Investments Held in Trust Account | Investments Held in Trust Account The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from investments held in Trust Account in the accompanying consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using quoted market prices. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 and investments held in the Trust Account. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the consolidated balance sheets. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. |
Derivative Warrant Liabilities | Derivative Warrant Liabilities The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480, and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised. Their re-measurement to fair value is recognized in the Company’s consolidated statements of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering were initially measured at fair value using a Monte Carlo simulation model, and the Private Placement Warrants have been measured at fair value using a modified Black-Scholes model. As of and December 31, 2022 and 2021, the value of the Public Warrants is measured based on the listed market price of such warrants since being separately listed and traded. The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. |
Offering Costs Associated with the Initial Public Offering | Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the consolidated statements of operations. Offering costs associated with the Class A common stock were charged against the carrying value of the Class A common stock upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. |
Class A Common Stock Subject to Possible Redemption | Class A Common Stock Subject to Possible Redemption The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2022 and 2021, 34,500,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s consolidated balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. Subsequently, the Company recognizes changes in redemption value in the accompanying consolidated statements of changes in stockholders’ deficit. |
Income Taxes | Income Taxes The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. |
Net Income (Loss) Per Share of Common Stock | Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net (loss) income per common stock is calculated by dividing the net (loss) income by the weighted average shares of common stock outstanding for the respective period. The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement to purchase an aggregate of 14,558,333 shares of common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock. For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 |
Recent Accounting Pronouncements | For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of reconciliation of net income (loss) per share of common stock | 2022 2021 2020 Numerator Net Income $ 69,489,294 $ 62,413,011 $ 38,976,374 Denominator Weighted-average number of common shares outstanding – basic 100,000 100,000 100,000 Effect of dilutive securities 2,960 — — Weighted–average number of common shares outstanding - diluted 102,960 100,000 100,000 Basic earnings per share $ 694.89 $ 624.13 $ 389.76 Diluted earnings per share $ 674.92 $ 624.13 $ 389.76 |
DiamondHead Holdings Corp. | |
Schedule of reconciliation of net income (loss) per share of common stock | For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Class A Class B Class A Class B Basic and diluted net income per common stock: Numerator: Allocation of net income - Basic $ 5,658,652 $ 1,414,663 $ 2,136,906 $ 571,335 Allocation of net income - Diluted $ 5,658,652 $ 1,414,663 $ 2,132,523 $ 575,718 Denominator: Basic weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,541,781 Diluted weighted average common stock outstanding 34,500,000 8,625,000 31,947,945 8,625,000 Basic and diluted net income per common stock $ 0.16 $ 0.16 $ 0.07 $ 0.07 |
Class A Common Stock Subject _2
Class A Common Stock Subject to Possible Redemption (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DiamondHead Holdings Corp. | |
Schedule of Class A ordinary shares subject to possible redemption reflected on the condensed balance sheet | The Class A common stock subject to possible redemption reflected on the consolidated balance sheets is reconciled on the following table: Class A common stock subject to possible redemption at December 31, 2020 $ — Gross Proceeds 345,000,000 Less: Proceeds allocated to Public Warrants (7,762,500) Class A common stock issuance costs (19,114,492) Plus: Accretion of carrying value to redemption value 26,876,992 Class A common stock subject to possible redemption at December 31, 2021 345,000,000 Increase in redemption value of Class A common stock subject to redemption 3,586,031 Class A common stock subject to possible redemption at December 31, 2022 $ 348,586,031 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) - DiamondHead Holdings Corp. | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of company's financial assets and liabilities that are measured at fair value on a recurring basis | Fair Value Measured as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Investments held in Trust Account – Money Market Funds $ 349,152,086 $ — $ — $ 349,152,086 Liabilities: Derivative public warrant liabilities $ 905,630 $ — $ — $ 905,630 Derivative private warrant liabilities $ — $ — $ 625,370 $ 625,370 Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets Investments held in Trust Account – Money Market Funds $ 345,020,717 $ — $ — $ 345,020,717 Liabilities: Derivative public warrant liabilities $ 5,175,000 $ — $ — $ 5,175,000 Derivative private warrant liabilities $ — $ — $ 3,619,330 $ 3,619,330 |
Schedule of quantitative information regarding Level 3 fair value measurements inputs | As of December 31, As of December 31, 2022 2021 Exercise price $ 11.50 $ 11.50 Stock Price $ 10.05 $ 9.74 Option term (in years) 5.00 4.82 Volatility 40 % 12 % Risk-free interest rate 4.1 % 1.3 % |
Schedule of change in the derivative fair value of the warrant liabilities | Derivative warrant liabilities at January 1, 2022 – Level 3 $ 3,619,330 Change in fair value of derivative warrant liabilities – Level 3 (2,993,960) Derivative warrant liabilities at December 31, 2022 – Level 3 $ 625,370 Derivative warrant liabilities at January 1, 2021 – Level 3 $ — Issuance of Derivative Warrants – Level 3 13,161,830 Transfer of Public Warrants to Level 1 (7,762,500) Change in fair value of derivative warrant liabilities – Level 3 (1,780,000) Derivative warrant liabilities at December 31, 2021 – Level 3 $ 3,619,330 |
Income Taxes (Tables)
Income Taxes (Tables) - DiamondHead Holdings Corp. | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of income tax provision | December 31, 2022 December 31, 2021 Current Federal $ 983,430 $ — State — — Deferred Federal (74,706) (254,139) State — — Valuation allowance 74,706 254,139 Income tax provision $ 983,430 $ — |
Summary of net deferred tax assets | As of December 31, 2022 As of December 31, 2021 Deferred tax assets: Start-up/Organization costs $ 328,845 $ 216,490 Net operating loss carryforwards — 37,649 Total deferred tax assets 328,845 254,139 Valuation allowance (328,845) (254,139) Deferred tax asset, net of allowance $ — $ — |
Schedule of statutory federal income tax rate to the Company's effective tax rate | December 31, 2022 December 31, 2021 Statutory federal income tax rate 21.0 % 21.0 % Statutory state rate, net of federal benefit 0.0 % — % Financing costs — 3.5 % Change in fair value of derivative warrant liabilities (18.9) % (33.9) % Merger costs 9.9 % 0.0 % Transaction costs allocated to derivative warrant liabilities 0.0 % 0.0 % Loss upon issuance of private placement warrants (0.7) % 0.0 % Change in valuation allowance 0.9 % 9.4 % Income tax rate 12.2 % 0.0 % |
Description of Organization a_2
Description of Organization and Business Operations (Details) - DiamondHead Holdings Corp. | 12 Months Ended | ||||||
Jan. 25, 2023 USD ($) shares | Aug. 10, 2022 USD ($) | Jan. 28, 2021 USD ($) $ / shares shares | Oct. 07, 2020 item | Dec. 31, 2022 USD ($) M $ / shares | Dec. 31, 2021 USD ($) shares | Sep. 10, 2022 USD ($) | |
Description of Organization and Business Operations | |||||||
Condition for future business combination number of businesses minimum | item | 1 | ||||||
Sale of Units, net of underwriting discounts (in shares) | shares | 4,500,000 | ||||||
Proceeds received from initial public offering, gross | $ 345,000,000 | ||||||
Deferred underwriting commissions | $ 12,100,000 | 12,075,000 | |||||
Deferred underwriting commissions waived | $ 12,100,000 | ||||||
Investment of cash into Trust Account | $ 345,000,000 | ||||||
Maturity term of U.S. government securities | 185 days | ||||||
Condition for future business combination use of proceeds percentage | 80 | ||||||
Condition for future business combination threshold ownership percentage | 50 | ||||||
Redemption price per unit | $ / shares | $ 10 | ||||||
Condition for future business combination threshold net tangible assets | $ 5,000,001 | ||||||
Threshold percentage of public shares subject to redemption without company's prior written consent | 15% | ||||||
Obligation to redeem Public Shares if entity does not complete a Business Combination (as a percent) | 100% | ||||||
Months to complete acquisition | M | 30 | ||||||
Redemption period upon closure | 10 days | ||||||
Maximum allowed dissolution expenses | $ 100,000 | ||||||
Aggregate number of Public Shares, holders exercised their right to redeem shares | shares | 30,058,968 | ||||||
Aggregate redemption amount | $ 304,000,000 | ||||||
GSH Business Combination Agreement | |||||||
Description of Organization and Business Operations | |||||||
Minimum Cash Condition | $ 125,000,000 | ||||||
Private Placement Warrants | |||||||
Description of Organization and Business Operations | |||||||
Sale of Private Placement Warrants (in shares) | shares | 5,933,333 | ||||||
Initial Public Offering | |||||||
Description of Organization and Business Operations | |||||||
Sale of Units, net of underwriting discounts (in shares) | shares | 34,500,000 | ||||||
Purchase price | $ / shares | $ 10 | ||||||
Proceeds received from initial public offering, gross | $ 345,000,000 | ||||||
Offering costs incurred | 19,600,000 | ||||||
Deferred underwriting commissions | 12,100,000 | ||||||
Investment of cash into Trust Account | $ 345,000,000 | ||||||
Private Placement | Private Placement Warrants | |||||||
Description of Organization and Business Operations | |||||||
Sale of Private Placement Warrants (in shares) | shares | 5,933,333 | ||||||
Price of warrant | $ / shares | $ 1.50 | ||||||
Proceeds from sale of Private Placement Warrants | $ 8,900,000 | ||||||
Over-allotment option | |||||||
Description of Organization and Business Operations | |||||||
Sale of Units, net of underwriting discounts (in shares) | shares | 4,500,000 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | ||||
Oct. 18, 2022 USD ($) item | Oct. 31, 2022 USD ($) item | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) | Oct. 21, 2020 USD ($) | |
Basis of Presentation and Summary of Significant Accounting Policies | ||||||
Cash | $ 12,238,835 | $ 51,504,887 | ||||
Unrecognized tax benefits | $ 0 | 0 | $ 0 | |||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | shares | 4,466 | |||||
Federal Depository Insurance Coverage | $ 250,000 | |||||
DiamondHead Holdings Corp. | ||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||
Cash | 37,000 | |||||
Working capital deficit | 3,900,000 | |||||
Tax obligations that may be paid using investment income earned in Trust Account | 481,000 | |||||
Working capital loan | 1,500,000 | |||||
Working capital loans outstanding | 0 | 0 | ||||
Notes payable - related party | 204,110 | |||||
Cash equivalents | $ 0 | 0 | ||||
Maturity term of U.S. government securities | 185 days | |||||
Unrecognized tax benefits | $ 0 | $ 0 | ||||
Number of shares excluded calculation of diluted net income (loss) because their inclusion would be anti-dilutive | shares | 14,558,333 | |||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | ||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | |||||
Notes payable - related party | $ 204,110 | |||||
Accrued interest | 4,110 | |||||
DiamondHead Holdings Corp. | Sponsor | ||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||
Consideration received | 25,000 | |||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | |||||
DiamondHead Holdings Corp. | Sponsor | Promissory Note with Related Party | ||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||
Maximum borrowing capacity of related party promissory note | $ 400,000 | |||||
Unsecured promissory notes issued, number of affiliates of the Sponsor | item | 2 | 2 | ||||
Notes payable - related party | $ 400,000 | |||||
DiamondHead Holdings Corp. | Class A common stock subject to possible redemption | ||||||
Basis of Presentation and Summary of Significant Accounting Policies | ||||||
Class A ordinary shares, temporary equity | shares | 34,500,000 | 34,500,000 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Net Income Per Share of Common Stock (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Allocation of net income - basic | $ 69,489,294 | $ 62,413,011 | $ 38,976,374 |
Denominator: | |||
Basic weighted average common stock outstanding | 100,000 | 100,000 | 100,000 |
Diluted weighted average common stock outstanding | 102,960 | 100,000 | 100,000 |
Basic net income per common stock | $ 694.89 | $ 624.13 | $ 389.76 |
Diluted net income per common stock | $ 674.92 | $ 624.13 | $ 389.76 |
DiamondHead Holdings Corp. | Class A common stock | |||
Numerator: | |||
Allocation of net income - basic | $ 5,658,652 | $ 2,136,906 | |
Allocation of net income - diluted | $ 5,658,652 | $ 2,132,523 | |
Denominator: | |||
Basic weighted average common stock outstanding | 34,500,000 | 31,947,945 | |
Diluted weighted average common stock outstanding | 34,500,000 | 31,947,945 | |
Basic net income per common stock | $ 0.16 | $ 0.07 | |
Diluted net income per common stock | $ 0.16 | $ 0.07 | |
DiamondHead Holdings Corp. | Class B common stock | |||
Numerator: | |||
Allocation of net income - basic | $ 1,414,663 | $ 571,335 | |
Allocation of net income - diluted | $ 1,414,663 | $ 575,718 | |
Denominator: | |||
Basic weighted average common stock outstanding | 8,625,000 | 8,541,781 | |
Diluted weighted average common stock outstanding | 8,625,000 | 8,625,000 | |
Basic net income per common stock | $ 0.16 | $ 0.07 | |
Diluted net income per common stock | $ 0.16 | $ 0.07 |
Initial Public Offering (Detail
Initial Public Offering (Details) - DiamondHead Holdings Corp. - USD ($) | 12 Months Ended | |||
Aug. 10, 2022 | Jan. 28, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Initial Public Offering | ||||
Number of units sold | 4,500,000 | |||
Proceeds received from initial public offering, gross | $ 345,000,000 | |||
Deferred underwriting commissions | $ 12,100,000 | $ 12,075,000 | ||
Deferred underwriting commissions waived | $ 12,100,000 | |||
Class A common stock | ||||
Initial Public Offering | ||||
Number of class A common stock in a unit | 1 | |||
Public Warrants | ||||
Initial Public Offering | ||||
Number of warrants in a unit | 0.25 | |||
Public Warrants | Class A common stock | ||||
Initial Public Offering | ||||
Number of shares issuable per warrant | 1 | |||
Exercise price of warrants | $ 11.50 | |||
Initial Public Offering | ||||
Initial Public Offering | ||||
Number of units sold | 34,500,000 | |||
Purchase price | $ 10 | |||
Proceeds received from initial public offering, gross | $ 345,000,000 | |||
Offering costs incurred | 19,600,000 | |||
Deferred underwriting commissions | $ 12,100,000 | |||
Over-allotment option | ||||
Initial Public Offering | ||||
Number of units sold | 4,500,000 |
Private Placement (Details)
Private Placement (Details) - DiamondHead Holdings Corp. - Private Placement Warrants - USD ($) $ / shares in Units, $ in Millions | Jan. 28, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Private placement | |||
Number of warrants to purchase shares issued | 5,933,333 | ||
Class A common stock | |||
Private placement | |||
Number of shares per warrant | 1 | ||
Exercise price of warrant | $ 11.50 | ||
Private Placement | |||
Private placement | |||
Number of warrants to purchase shares issued | 5,933,333 | ||
Price of warrants | $ 1.50 | ||
Aggregate purchase price | $ 8.9 |
Related Party Transactions - Fo
Related Party Transactions - Founder Shares (Details) - DiamondHead Holdings Corp. | 1 Months Ended | 12 Months Ended | ||||
Oct. 18, 2022 USD ($) item | Jan. 28, 2021 shares | Oct. 21, 2020 USD ($) D $ / shares shares | Oct. 31, 2022 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2020 USD ($) shares | |
Related Party Transactions | ||||||
Aggregate outstanding balance | $ 204,110 | |||||
Class B common stock | ||||||
Related Party Transactions | ||||||
Shares subject to forfeiture | shares | 1,125,000 | |||||
Sponsor | ||||||
Related Party Transactions | ||||||
Consideration received | 25,000 | |||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | |||||
Sponsor | Class B common stock | ||||||
Related Party Transactions | ||||||
Number of shares not subject to forfeiture | shares | 1,125,000 | |||||
Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 150 days | |||||
Founder Shares | Class A common stock | ||||||
Related Party Transactions | ||||||
Share exchange ratio | 1 | |||||
Founder Shares | Class B common stock | ||||||
Related Party Transactions | ||||||
Number of shares not subject to forfeiture | shares | 1,125,000 | |||||
Founder Shares | Sponsor | Class B common stock | ||||||
Related Party Transactions | ||||||
Consideration received | $ 25,000 | |||||
Issuance of Class B common stock to Sponsor (in Shares) | shares | 8,625,000 | |||||
Shares subject to forfeiture | shares | 1,125,000 | |||||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20% | |||||
Restrictions on transfer period of time after business combination completion | 1 year | |||||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12 | |||||
Threshold trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | D | 20 | |||||
Threshold consecutive trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | D | 30 | |||||
Founder Shares | Anchor Investors | Class B common stock | ||||||
Related Party Transactions | ||||||
Issuance of Class B common stock to Sponsor (in Shares) | shares | 1,250,625 | |||||
Promissory Note with Related Party | ||||||
Related Party Transactions | ||||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | |||||
Outstanding balance of related party note | $ 130,000 | |||||
Aggregate outstanding balance | $ 204,110 | |||||
Interest rate per annum | 10% | |||||
Accrued interest | $ 4,110 | |||||
Promissory Note with Related Party | Sponsor | ||||||
Related Party Transactions | ||||||
Maximum borrowing capacity of related party promissory note | $ 400,000 | |||||
Unsecured promissory notes issued, number of affiliates of the Sponsor | item | 2 | 2 | ||||
Aggregate outstanding balance | $ 400,000 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) D tranche $ / shares shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Oct. 31, 2022 USD ($) | Oct. 21, 2020 USD ($) | |
Related Party Transactions | |||||
Repayment of promissory note - related party | $ 918,453 | $ 5,624,330 | $ 7,499,472 | ||
DiamondHead Holdings Corp. | |||||
Related Party Transactions | |||||
Borrowing under Working Capital Loans | 0 | 0 | |||
Working capital loan | 1,500,000 | ||||
DiamondHead Holdings Corp. | Sponsor | |||||
Related Party Transactions | |||||
Maximum borrowing capacity of related party promissory note | 300,000 | ||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | |||||
Related Party Transactions | |||||
Maximum borrowing capacity of related party promissory note | $ 300,000 | ||||
Outstanding balance of related party note | $ 130,000 | ||||
DiamondHead Holdings Corp. | Promissory Note with Related Party | Sponsor | |||||
Related Party Transactions | |||||
Maximum borrowing capacity of related party promissory note | $ 400,000 | ||||
DiamondHead Holdings Corp. | Administrative Support Agreement | |||||
Related Party Transactions | |||||
Expenses per month | $ 10,000 | ||||
DiamondHead Holdings Corp. | Related Party Loans | Working capital loans warrant | |||||
Related Party Transactions | |||||
Price of warrant | $ / shares | $ 1.50 | ||||
Borrowing under Working Capital Loans | $ 0 | $ 0 | |||
Working capital loan | $ 1,500,000 | ||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | |||||
Related Party Transactions | |||||
Number of Sponsor Earn Out Shares that the Sponsor has agreed not to transfer | shares | 2,100,000 | ||||
Number of tranches for issuance of Earn Out Shares | tranche | 3 | ||||
Earn-Out milestones, number of trading days for VWAP trigger | D | 20 | ||||
Earn-Out milestones, Number of consecutive trading days for VWAP trigger | D | 30 | ||||
Threshold closing balance of Cash to trigger conversion of Sponsor shares to Sponsor Earn Out Shares | $ 100,000,000 | ||||
Maximum number of Sponsor shares that will be converted to Sponsor Earn Out shares | shares | 1,000,000 | ||||
Aggregate shares committed by the holder to purchase and not redeem | shares | 2,500,000 | ||||
Number of Sponsor Shares agreed to be forfeited | shares | 1,800,000 | ||||
Percentage of Private Placement Warrants agreed to be forfeited by Sponsor | 50% | ||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | Triggering Event I | |||||
Related Party Transactions | |||||
Issuance of Class B common stock to Sponsor | shares | 7,500,000 | ||||
Threshold VWAP Price for Earn-Out milestones | $ / shares | $ 12.50 | ||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | Triggering Event II | |||||
Related Party Transactions | |||||
Issuance of Class B common stock to Sponsor | shares | 7,500,000 | ||||
Threshold VWAP Price for Earn-Out milestones | $ / shares | $ 15 | ||||
DiamondHead Holdings Corp. | Sponsor Support Agreement | Triggering Event III | |||||
Related Party Transactions | |||||
Issuance of Class B common stock to Sponsor | shares | 5,000,000 | ||||
Threshold VWAP Price for Earn-Out milestones | $ / shares | $ 17.50 | ||||
DiamondHead Holdings Corp. | Financing Commitment Letter | Class A common stock | |||||
Related Party Transactions | |||||
Number of Sponsor Shares agreed to be forfeited | shares | 2,500,000 | ||||
Aggregate maximum shares committed by the holder to purchase and beneficially own, no later than five business days prior to the special meeting of stockholders | shares | 1,250,000 | ||||
Specified period prior to special meeting of stockholders before which the aggregate maximum shares are committed to be purchased and beneficially owned | 5 days | ||||
DiamondHead Holdings Corp. | Financing Commitment Letter | Class B common stock | |||||
Related Party Transactions | |||||
Number of shares automatically forfeited, in the event an Investor fails to make the committed purchase | shares | 1,250,000 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - DiamondHead Holdings Corp. | 12 Months Ended | |||
Aug. 10, 2022 USD ($) | Jan. 28, 2021 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) Transaction item | Dec. 31, 2021 USD ($) | |
Commitments and Contingencies | ||||
Maximum number of demands for registration of securities | item | 3 | |||
Granted term | 45 days | |||
Sale of Units, net of underwriting discounts (in shares) | shares | 4,500,000 | |||
Underwriting cash discount per unit | $ / shares | $ 0.20 | |||
Underwriter cash discount | $ 6,900,000 | |||
Deferred fee per unit | $ / shares | $ 0.35 | |||
Deferred underwriting commissions | $ 12,100,000 | $ 12,075,000 | ||
Deferred underwriting commissions waived | $ 12,100,000 | |||
Extinguishment of deferred underwriting commissions on public shares | $ 11,803,313 | |||
Gain from settlement of deferred underwriting commissions on public warrants | $ 271,688 | |||
Amended and Restated Registration Rights Agreement | ||||
Commitments and Contingencies | ||||
Number of days within Closing, a shelf registration statement is agreed to be filed | 45 days | |||
Number of times that the legacy stockholders may request to sell all or any portion of their registrable securities in an underwritten offering pursuant to business combination | Transaction | 2 | |||
Specified period within which the legacy stockholders may request to sell all or any portion of their registrable securities in an underwritten offering pursuant to business combination | 12 months | |||
Threshold total offering price considered for legacy stockholder's request to sell all or any portion of their registrable securities in an underwritten offering pursuant to business combination | $ 10,000,000 | |||
Engagement letters with Zelman Partners LLC | ||||
Commitments and Contingencies | ||||
Agreed transaction fee in cash | $ 4,500,000 | |||
Percentage of transaction fee on Payment in cash | 25% | |||
Engagement letters with Zelman Partners LLC | Minimum | ||||
Commitments and Contingencies | ||||
Additional transaction fee | $ 0 | |||
Engagement letters with Zelman Partners LLC | Maximum | ||||
Commitments and Contingencies | ||||
Additional transaction fee | $ 1,000,000 |
Derivative Warrant Liabilities
Derivative Warrant Liabilities (Details) - DiamondHead Holdings Corp. - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Derivative Warrant Liabilities | ||
Threshold period for not to transfer, assign or sell any of their shares or warrants after the completion of the initial business combination | 30 days | |
Public Warrants | ||
Derivative Warrant Liabilities | ||
Number of warrants to purchase shares issued | 8,625,000 | |
Minimum threshold written notice period for redemption of public warrants | 30 days | |
Public Warrants exercisable term from the closing of the initial public offering | 12 months | |
Public Warrants expiration term | 5 years | |
Threshold period for filling registration statement after business combination | 15 days | |
Maximum threshold period for registration statement to become effective after business combination | 60 days | |
Stock price trigger for redemption of public warrants (in dollars per share) | $ 10 | |
Share price | $ 9.20 | |
Adjustment of exercise price of warrants based on market value and newly issued price (as a percent) | 115% | |
Private Placement Warrants | ||
Derivative Warrant Liabilities | ||
Number of warrants to purchase shares issued | 5,933,333 | |
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00 | Public Warrants | ||
Derivative Warrant Liabilities | ||
Stock price trigger for redemption of public warrants (in dollars per share) | $ 18 | |
Redemption price per public warrant (in dollars per share) | $ 0.01 | |
Redemption period | 30 days | |
Threshold trading days for redemption of public warrants | 20 days | |
Threshold consecutive trading days for redemption of public warrants | 30 days | |
Threshold number of business days before sending notice of redemption to warrant holders | 3 days | |
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00 | Public Warrants | ||
Derivative Warrant Liabilities | ||
Stock price trigger for redemption of public warrants (in dollars per share) | $ 10 | |
Redemption price per public warrant (in dollars per share) | $ 0.10 | |
Redemption period | 30 days | |
Threshold trading days for redemption of public warrants | 20 days | |
Threshold consecutive trading days for redemption of public warrants | 30 days |
Class A Common Stock Subject _3
Class A Common Stock Subject to Possible Redemption (Details) - DiamondHead Holdings Corp. | 12 Months Ended | |
Dec. 31, 2022 USD ($) Vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | |
Class A Common Stock Subject to Possible Redemption | ||
Increase in redemption value of Class A common stock subject to redemption | $ 3,586,031 | $ 26,876,992 |
Class A common stock | ||
Class A Common Stock Subject to Possible Redemption | ||
Common stock, shares authorized | shares | 300,000,000 | 300,000,000 |
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 |
Number of votes per share | Vote | 1 | |
Class A common stock issuance costs | $ (19,114,492) | |
Class A common stock subject to possible redemption | ||
Class A Common Stock Subject to Possible Redemption | ||
Class A common stock subject to possible redemption, outstanding (in shares) | shares | 34,500,000 | 34,500,000 |
Class A common stock subject to possible redemption | $ 348,586,031 | $ 345,000,000 |
Gross Proceeds | 345,000,000 | |
Proceeds allocated to Public Warrants | (7,762,500) | |
Accretion of carrying value to redemption value | $ 26,876,992 | |
Increase in redemption value of Class A common stock subject to redemption | $ 3,586,031 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Preferred Stock Shares (Details) - DiamondHead Holdings Corp. - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred shares, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred shares, shares issued | 0 | 0 |
Preferred shares, shares outstanding | 0 | 0 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Common Stock Shares (Details) - DiamondHead Holdings Corp. | 12 Months Ended | ||||
Jan. 28, 2021 shares | Dec. 31, 2022 Vote $ / shares shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 shares | Oct. 21, 2020 shares | |
Class A common stock | |||||
Stockholders' Equity (Deficit) | |||||
Common shares, shares authorized | 300,000,000 | 300,000,000 | |||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||
Common shares, votes per share | Vote | 1 | ||||
Class A common stock subject to possible redemption | |||||
Stockholders' Equity (Deficit) | |||||
Class A common stock subject to possible redemption, issued (in shares) | 34,500,000 | 34,500,000 | |||
Class A common stock subject to possible redemption, outstanding (in shares) | 34,500,000 | 34,500,000 | |||
Class B common stock | |||||
Stockholders' Equity (Deficit) | |||||
Common shares, shares authorized | 10,000,000 | 10,000,000 | |||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||
Common shares, votes per share | Vote | 1 | ||||
Common shares, shares issued | 8,625,000 | 8,625,000 | |||
Common stock, shares outstanding | 8,625,000 | 8,625,000 | 8,625,000 | ||
Shares subject to forfeiture | 1,125,000 | ||||
Ratio to be applied to the stock in the conversion | 20 | ||||
Class B common stock | Founder Shares | |||||
Stockholders' Equity (Deficit) | |||||
Number of shares not subject to forfeiture | 1,125,000 | ||||
Class B common stock | Sponsor | |||||
Stockholders' Equity (Deficit) | |||||
Adjustment one of redemption price of stock based on market value and newly issued price (as a percent) | 20% | ||||
Number of shares not subject to forfeiture | 1,125,000 | ||||
Class B common stock | Sponsor | Founder Shares | |||||
Stockholders' Equity (Deficit) | |||||
Shares subject to forfeiture | 1,125,000 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial assets and liabilities that are measured at fair value on a recurring basis (Details) - DiamondHead Holdings Corp. - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Assets: | ||
Investments held in Trust Account - Money Market Funds | $ 349,152,086 | $ 345,020,717 |
Liabilities: | ||
Warranty liabilities | 1,531,000 | 8,794,330 |
Change in fair value of derivative warrant liabilities | 7,300,000 | 4,400,000 |
Recurring | ||
Assets: | ||
Investments held in Trust Account - Money Market Funds | 349,152,086 | 345,020,717 |
Recurring | Public Warrants | ||
Liabilities: | ||
Warranty liabilities | 905,630 | 5,175,000 |
Recurring | Private Placement Warrants | ||
Liabilities: | ||
Warranty liabilities | 625,370 | 3,619,330 |
Level 1 | Recurring | ||
Assets: | ||
Investments held in Trust Account - Money Market Funds | 349,152,086 | 345,020,717 |
Level 1 | Recurring | Public Warrants | ||
Liabilities: | ||
Warranty liabilities | 905,630 | 5,175,000 |
Level 3 | ||
Liabilities: | ||
Change in fair value of derivative warrant liabilities | (2,993,960) | (1,780,000) |
Level 3 | Recurring | Private Placement Warrants | ||
Liabilities: | ||
Warranty liabilities | $ 625,370 | $ 3,619,330 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Fair Value Measurements Inputs (Details) - DiamondHead Holdings Corp. - Level 3 | Dec. 31, 2022 $ / shares Y | Dec. 31, 2021 $ / shares Y |
Dividend rate | ||
Fair Value Measurements | ||
Derivative liability, measurement input | 0 | |
Exercise price | ||
Fair Value Measurements | ||
Derivative liability, measurement input | 11.50 | 11.50 |
Stock Price | ||
Fair Value Measurements | ||
Derivative liability, measurement input | 10.05 | 9.74 |
Option term (in years) | ||
Fair Value Measurements | ||
Derivative liability, measurement input | Y | 5 | 4.82 |
Volatility | ||
Fair Value Measurements | ||
Derivative liability, measurement input | 0.40 | 0.12 |
Risk-free interest rate | ||
Fair Value Measurements | ||
Derivative liability, measurement input | 0.041 | 0.013 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in the Fair Value of the Warrant Liabilities (Details) - DiamondHead Holdings Corp. - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Change in fair value of derivative warrant liabilities | $ 7,300,000 | $ 4,400,000 |
Level 1 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Transfer of Public Warrants to Level 1 | (7,762,500) | |
Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Derivative warrant liabilities at beginning of period | 3,619,330 | |
Issuance of Derivative Warrants | 13,161,830 | |
Change in fair value of derivative warrant liabilities | $ (2,993,960) | (1,780,000) |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value Adjustment of Warrants | |
Derivative warrant liabilities at end of period | $ 625,370 | $ 3,619,330 |
Income Taxes - Income tax provi
Income Taxes - Income tax provision (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred | |||
Income tax provision | $ 0 | $ 0 | $ 0 |
DiamondHead Holdings Corp. | |||
Current | |||
Federal | 983,430 | ||
Deferred | |||
Federal | (74,706) | (254,139) | |
Valuation allowance | 328,845 | $ 254,139 | |
Income tax provision | $ 983,430 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (Details) - DiamondHead Holdings Corp. - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred tax assets: | ||
Start-up/Organization costs | $ 328,845 | $ 216,490 |
Net operating loss carryforwards | 37,649 | |
Total deferred tax assets | 328,845 | 254,139 |
Valuation allowance | (74,706) | (254,139) |
Deferred tax asset, net of allowance | 0 | 0 |
Change in valuation allowance | $ 74,706 | $ 254,139 |
Income Taxes - Summary of the s
Income Taxes - Summary of the statutory federal income tax rate to the Company's effective tax rate (Details) - DiamondHead Holdings Corp. | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Statutory federal income tax rate | 21% | 21% |
Statutory state rate, net of federal benefit | 0% | |
Financing costs | 3.50% | |
Change in fair value of derivative warrant liabilities | (18.90%) | (33.90%) |
Merger costs | 9.90% | (0.00%) |
Transaction costs allocated to derivative warrant liabilities | 0% | 0% |
Loss upon issuance of private placement warrants | (0.70%) | (0.00%) |
Change in valuation allowance | 0.90% | 9.40% |
Income tax rate | 12.20% | 0% |
Subsequent Events (Details)_2
Subsequent Events (Details) | Mar. 23, 2023 USD ($) $ / shares shares | Mar. 22, 2023 USD ($) shares | Feb. 09, 2023 USD ($) item | Jan. 10, 2023 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) |
Subsequent Events | |||||||
Principal amount of promissory note | $ 1,693,800 | ||||||
DiamondHead Holdings Corp. | |||||||
Subsequent Events | |||||||
Investments held in Trust Account | $ 349,152,086 | $ 345,020,717 | |||||
DiamondHead Holdings Corp. | Subsequent event | |||||||
Subsequent Events | |||||||
Drew additional amounts | $ 100,000 | $ 100,000 | |||||
Number of affiliates to whom promissory notes are issued | item | 2 | 2 | |||||
DiamondHead Holdings Corp. | Subsequent event | PIPE Investors | |||||||
Subsequent Events | |||||||
Principal amount of promissory note | $ 80,000,000 | ||||||
DiamondHead Holdings Corp. | Subsequent event | GSH Business Combination | |||||||
Subsequent Events | |||||||
Redeeming in trust account | $ 1,100,000 | ||||||
Redeeming in trust account per share | $ / shares | $ 10.13 | ||||||
Investments held in Trust Account | $ 43,900,000 | ||||||
DiamondHead Holdings Corp. | Subsequent event | Class A common stock | PIPE Investors | |||||||
Subsequent Events | |||||||
Aggregate number of common stock issued | shares | 471,500 | 744,588 | |||||
Purchase price per share | $ / shares | $ 10 | ||||||
Gross proceeds | $ 4,700,000 | $ 75,000,000 | |||||
Number of UHG common stock shares issued | shares | 0.25 | ||||||
UHG shares price per share | $ / shares | $ 0.01 | ||||||
DiamondHead Holdings Corp. | Subsequent event | Class A common stock | Lock-Up Investor | |||||||
Subsequent Events | |||||||
Number of UHG common stock shares issued | shares | 0.25 | ||||||
UHG shares price per share | $ / shares | $ 0.01 | ||||||
DiamondHead Holdings Corp. | Subsequent event | Class A common stock | GSH Business Combination | |||||||
Subsequent Events | |||||||
Number of shares issued | shares | 109,426 |