The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Cautionary Note Regarding
Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in this
Annual Report on Form 10-K.
Overview
We are a blank check company incorporated in the Cayman Islands on December 22,
2020 formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization, or similar business combination
with one or more businesses or entities. We intend to effectuate our business
combination using cash derived from the proceeds of the initial public offering
and the sale of the private placement warrants, our shares, debt or a
combination of cash, shares and debt. On July 25, 2022, we entered into a
Business Combination Agreement and Plan of Reorganization (the "Business
Combination Agreement"), by and among the Company, Glory Merger Subsidiary
Corp., a Delaware corporation and a direct wholly owned subsidiary of the
Company ("Merger Sub") and With Purpose, Inc. (d/b/a GloriFi, Inc.) a Delaware
corporation ("GloriFi"). On January 26, 2023, we sent GloriFi written notice
that we had terminated the Business Combination Agreement, pursuant to Section
9.01(i) and Section 9.01(f) the Business Combination Agreement. Our decision to
terminate the Business Combination Agreement took into account the fact that
GloriFi had previously publicly announced that GloriFi was winding down its
operations and closing its digital banking platform and other products.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through December 31, 2022 were organizational activities,
those necessary to prepare for the initial public offering, described below, and
identifying a target company for a business combination. We do not expect to
generate any operating revenues until after the completion of our business
combination. We generate non-operating income in the form of interest income on
marketable securities held in the Trust Account. We incur expenses as a result
of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the year ended December 31, 2022, we had a net income of $7,206,713, which
consists of interest earned on investments held in Trust Account of $4,462,497
and a change in fair value of warrant liabilities of $8,135,024, offset by
operating and formation costs of $5,390,808.
For the year ended December 31, 2021, we had a net income of $5,077,920, which
consists of a change in fair value of warrant liabilities of $7,977,190, offset
by transaction costs allocable to warrant liabilities of $586,339 and operating
and formation costs of $2,312,931.
Liquidity and Capital Resources
On March 4, 2021, we consummated the initial public offering of 30,000,000 units
at $10.00 per unit, generating gross proceeds of $300,000,000. Simultaneously
with the closing of the initial public offering, we consummated the sale of
6,000,000 private placement warrants at a price of $1.50 per Private Placement
Warrant in a private placement to the Sponsor, generating gross proceeds of
$9,000,000.
On March 5, 2021, the underwriters of our initial public offering partially
exercised their over-allotment option, and we consummated the sale of an
additional 945,072 units at a price of $10.00 per unit, generating total gross
proceeds of $9,450,720. In addition, we also consummated the sale of an
additional 126,010 private placement warrants at $1.50 per private warrant,
generating total gross proceeds of $189,015.
59
--------------------------------------------------------------------------------
Table of Contents
Following the initial public offering, the partial exercise of the
over-allotment option, and the sale of the private placement warrants, a total
of $309,450,720 was placed in the Trust Account. We incurred $17,501,346 in
initial public offering related costs, including $6,189,014 of underwriting
fees, net of reimbursement, $10,830,775 of deferred underwriting fees and
$481,557 of other costs.
For the year ended December 31, 2022, cash used in operating activities was
$648,866. Net income of $7,206,713 was affected by change in fair value of
warrant liabilities of $8,135,024 and interest earned on investments held in the
Trust Account of $4,462,497. Changes in operating assets and liabilities
provided $4,741,942 of cash for operating activities.
For the year ended December 31, 2021, cash used in operating activities was
$1,650,170. Net income of $5,077,920 was affected by change in fair value of
warrant liabilities of $7,977,190 and transaction costs allocatable to warrant
liabilities of $586,339. Changes in operating assets and liabilities used
$662,761 of cash for operating activities.
As of December 31, 2022, we had cash held in the Trust Account of $313,913,217.
We may withdraw interest from the Trust Account to pay taxes, if any. We intend
to use substantially all of the funds held in the Trust Account, including any
amounts representing interest earned on the Trust Account (less income taxes
payable), to complete our business combination. To the extent that our share
capital or debt is used, in whole or in part, as consideration to complete our
business combination, the remaining proceeds held in the Trust Account will be
used as working capital to finance the operations of the target business or
businesses, make other acquisitions and pursue our growth strategies. On
March 3, 2023, we held the Extension Meeting to, in part, amend our amended and
restated memorandum and articles of association to extend the date by which we
have to consummate a business combination. In connection with that vote, the
holders of 26,298,498 Class A ordinary shares of the Company properly exercised
their right to redeem their shares for an aggregate redemption amount of
approximately $269,473,000. After the satisfaction of such redemptions, the
balance in our trust account was approximately $47,612,090.
As of December 31, 2022, we had cash of $212,608. We intend to use the funds
held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure,
negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, the sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a business combination, we will repay such
loaned amounts. In the event that a business combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1,500,000 of such loans may be convertible into warrants
at a price of $1.50 per warrant, at the option of the lender. The warrants would
be identical to the private placement warrants.
In connection with the Company's assessment of going concern considerations in
accordance with FASB ASU2014-15, "Disclosures of Uncertainties about an Entity's
Ability to Continue as a Going Concern," the Company has until December 4, 2023,
to consummate a business combination. It is uncertain that the Company will be
able to consummate a business combination by this time. If a business
combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the liquidity condition and mandatory liquidation, should a business
combination not occur, and potential subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. Management
plans to consummate a business combination prior to the mandatory liquidation
date. No adjustments have been made to the carrying amounts of assets or
liabilities should the Company be required to liquidate after December 4, 2023.
60
--------------------------------------------------------------------------------
Table of Contents
Based on the foregoing, management has determined that we do not have sufficient
liquidity to meet our anticipated obligations for at least twelve months after
the financial statements are available to be issued, as such, the events and
circumstances raise substantial doubt about our ability to continue as a going
concern, as discussed further below. The accompanying financial statements have
been prepared on a going concern basis and do not include any adjustments that
might arise as a result of uncertainties about our ability to continue as a
going concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of one of our Sponsor a monthly fee of $10,000 for office space,
utilities and secretarial and administrative services. We began incurring these
fees on March 4, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the business combination and our liquidation.
The underwriters of our initial public offering are entitled to a deferred fee
of $0.35 per unit, or $10,830,775 in the aggregate. The deferred fee will become
payable to the underwriters of our initial public offering from the amounts held
in the Trust Account solely in the event that we complete a business
combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued share purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815. We account for the Warrants in accordance with the guidance
contained in ASC 815-40 under which the Warrants do not meet the criteria for
equity treatment and must be recorded as liabilities. Accordingly, we classify
the Warrants as liabilities at their fair value and adjust the Warrants to fair
value at each reporting period. This liability is subject to re-measurement at
each balance sheet date until exercised, and any change in fair value is
recognized in our consolidated statements of operations. The private placement
warrants and the public warrants for periods where no observable traded price
was available are valued using a Monte Carlo simulation. For periods subsequent
to the detachment of the public warrants from the units, the public warrant
quoted market price will be used as the fair value as of each relevant date.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480,
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption, if any, are classified as a liability instrument and measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within our control) are classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly,
ordinary shares subject to possible redemption are presented at redemption value
as temporary equity, outside of the shareholders' deficit section of our
consolidated balance sheets.
61
--------------------------------------------------------------------------------
Table of Contents
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted
average number of ordinary shares outstanding during the period. We apply the
two-class method in calculating earnings per share. Accretion associated with
the redeemable shares of Class A ordinary shares is excluded from earnings per
share as the redemption value approximates fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06,
Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06")
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an
entity's own equity. The new standard also introduces additional disclosures for
convertible debt and freestanding instruments that are indexed to and settled in
an entity's own equity. ASU 2020-06 amends the diluted earnings per share
guidance, including the requirement to use the if-converted method for all
convertible instruments. As a smaller reporting company, ASU 2020-06 is
effective January 1, 2024 for fiscal years beginning after December 15, 2023 and
should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. The Company is currently assessing the
impact, if any, that ASU 2020-06 would have on its financial position, results
of operations or cash flows. The Company has not adopted this guidance as of
December 31, 2022.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our consolidated financial statements.
© Edgar Online, source Glimpses
DHC ACQU 
