DP Cap Acquisition Corp I - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

OR

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No ☐

DP CAP ACQUISITION CORP I

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS.

DP CAP ACQUISITION CORP I

CONDENSED BALANCE SHEETS

		June 30, 2023 (Unaudited)				December 31, 2022
ASSETS
Cash		$	694,178			$	946,299
Prepaid expenses			120,011				208,548
Total current assets			814,189				1,154,847
Investments held in Trust Account			43,206,763				237,982,862
Total assets		$	44,020,952			$	239,137,709
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION, AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable			151,804			$	2,100
Accrued expenses			816,062				333,092
Total current liabilities			967,866				335,192
Deferred underwriting fees payable			8,050,000				8,050,000
Convertible loan from related party			4,600,000				4,600,000
Total liabilities			13,617,866				12,985,192
Commitments and Contingencies (Note 6)
Class A ordinary shares subject to possible redemption, 4,059,402 shares at $10.64 per share as of June 30, 2023 and 23,000,000 shares at $10.35 as of December 31, 2022, respectively			43,206,763				237,982,862
Shareholders’ Deficit
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding			—				—
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued and outstanding (excluding 4,059,402 and 23,000,000 shares subject to possible redemption as of June 30, 2023 and December 31, 2022, respectively)			—				—
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding			575				575
Additional paid-in capital			—				—
Accumulated deficit			(12,804,252	)			(11,830,920	)
Total shareholders’ deficit			(12,803,677	)			(11,830,345	)
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ deficit		$	44,020,952			$	239,137,709

DP CAP ACQUISITION CORP I

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(UNAUDITED)

		For The Three Months Ended June 30, 2023				For The Three Months Ended June 30, 2022				For The Six Months Ended June 30, 2023				For The Six Months Ended June 30, 2022
General and administrative expenses		$	616,044			$	322,047			$	973,332			$	473,303
Loss from operations			(616,044	)			(322,047	)			(973,332	)			(473,303	)
Gain on marketable securities (net), dividends and interest, held in Trust Account			1,690,637				316,788				4,215,754				339,459
Net income (loss)		$	1,074,593			$	(5,259	)		$	3,242,422			$	(133,844	)
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted			12,384,940				23,000,000				17,663,146				23,000,000
Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption		$	0.06			$	0.00			$	0.14			$	0.00
Weighted average shares outstanding of Class B non-redeemable ordinary shares, basic and diluted			5,750,000				5,750,000				5,750,000				5,750,000
Basic and diluted net income (loss) per share, Class B non-redeemable ordinary shares		$	0.06			$	0.00			$	0.14			$	0.00

See accompanying notes to unaudited condensed financial statements.

 

DP CAP ACQUISITION CORP I

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(UNAUDITED)

		Ordinary Shares								Ordinary Shares
		Class A								Class B
		Shares				Amount				Shares				Amount				Additional Paid-In Capital				Accumulated Deficit				Total Shareholders' Deficit
Balance as of January 1, 2023			-			$	-				5,750,000			$	575			$	-			$	(11,830,920	)		$	(11,830,345	)
Remeasurement of Class A ordinary shares to redemption value			-				-				-				-				-				(2,525,117	)			(2,525,117	)
Net income			-				-				-				-				-				2,167,829				2,167,829
Balance as of March 31, 2023 (unaudited)			-			$	-				5,750,000			$	575			$	-			$	(12,188,208	)		$	(12,187,633	)
Redemption of Class A ordinary shares			-				-				-				-				-				-				-
Capital contribution made by Sponsor for non-redemption agreements			-				-				-				-				1,671,160				-				1,671,160
Cost of raising capital related to shareholder non-redemption agreements			-				-				-				-				(1,671,160	)			-				(1,671,160	)
Remeasurement of Class A ordinary shares to redemption value			-				-				-				-				-				(1,690,637	)			(1,690,637	)
Net income			-				-				-				-				-				1,074,593				1,074,593
Balance as of June 30, 2023 (unaudited)			-			$	-				5,750,000			$	575			$	-			$	(12,804,252	)		$	(12,803,677	)

		Ordinary Shares								Ordinary Shares
		Class A								Class B
		Shares				Amount				Shares				Amount				Additional Paid-In Capital				Accumulated Deficit				Total Shareholders' Deficit
Balance as of January 1, 2022			-			$	-				5,750,000			$	575			$	-			$	(10,882,763	)		$	(10,882,188	)
Net loss			-				-				-				-				-				(128,585	)			(128,585	)
Balance as of March 31, 2022 (unaudited)			-				-				5,750,000			$	575			$	-			$	(11,011,348	)		$	(11,010,773	)
Remeasurement of Class A ordinary shares to redemption value			-				-				-				-				-				(339,459	)			(339,459	)
Net loss			-				-				-				-				-				(5,259	)			(5,259	)
Balance as of June 30, 2022 (unaudited)			-			$	-				5,750,000			$	575			$	-			$	(11,356,066	)		$	(11,355,491	)

 

On November 12, 2021, the Company consummated its Public Offering of 23,000,000 units (the “Units”), which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments. Each Unit consists of one Class A ordinary share, par value $0.0001 per share (the “Class A Ordinary Shares ”), and one-half of one redeemable warrant (the “Public Warrants”), each whole Public Warrant entitling the holder thereof to purchase one Class A Ordinary Share at an exercise price of $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds of $230.0 million, which is described in Note 3.

The initial shareholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Extended Combination Period. However, if the initial shareholders acquired Public Shares in or acquire Public Shares after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Extended Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Extended 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 residual assets remaining available for distribution (including Trust Account assets) will be only $10.20. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account to below (i) $10.20 per Public Share or (ii) the 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, in each case net of interest which may be withdrawn to pay taxes. Such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to seek access to the Trust Account. Such liability will also not apply to any claims under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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 (other than the Company’s independent registered public accounting firm), 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.

On May 5, 2023, certain unaffiliated investors of the Company (the “Investors”) entered into non-redemption agreements (“Non-Redemption Agreements”) with the Sponsor, pursuant to which the Investors agreed to (i) not redeem an aggregate of up to 4,000,000 previously-held Class A Ordinary Shares (the “Investor Shares”) in connection with the Extension Proposal (as defined below) and (ii) vote the Investor Shares in favor of the Extension Proposal. In exchange for these commitments from the Investors, the Sponsor has agreed to transfer to the Investors (i) an aggregate of up to 1,000,000 Class B Ordinary Shares in connection with an extension until November 12, 2023 (the “Initial Extension Date”) and (ii) to the extent the Company’s board of directors agrees to further extend the date to consummate its Business Combination on a month to month basis from the Initial Extension Date and without additional shareholder approval, until February 12, 2024 (the “Secondary Extension Date”, and such proposal, the “Extension Proposal”), an aggregate of up to 1,500,000 Class B Ordinary Shares, which includes the Class B Ordinary Shares referred to in clause (i), in each case, on or promptly after the consummation of the Business Combination.

On May 10, 2023, the Company held an Extraordinary General Meeting of shareholders (the “Extraordinary General Meeting”) at which the Company’s shareholders voted to approve, by special resolution, the proposal to amend and restate the Company’s amended and restated memorandum and articles of association (the “Second A&R M&A”), to extend the date by which the Company must (1) consummate the Business Combination, (2) cease its operations except for the purpose of winding up if it fails to complete such Business Combination, and (3) redeem all of the Class A Ordinary Shares included as part of the Units sold in the Company’s IPO, from May 12, 2023 to November 12, 2023, with optional additional extensions of up to three times by an additional month each time, at the option of the Company’s board of directors, until February 12, 2024. The Company estimated the aggregate fair value of the 1,000,000 Class B Ordinary Shares attributable to the Investors to be $1,671,160 or $1.67 per share. The excess of the fair value of the Class B Ordinary Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A.

Accordingly, in substance, it was recognized by the Company as a capital contribution by the Sponsor to induce the Investors not to redeem their Class A Ordinary Shares, with a corresponding charge to additional paid-in capital to recognize the fair value of the shares transferred as an offering cost.

In connection with the Extraordinary General Meeting, shareholders holding 18,940,598 Class A Ordinary Shares exercised their right to redeem such shares at a per share redemption price of approximately $10.51. As a result, approximately $199.0 million was removed from the Company’s Trust Account to pay such holders. Following the redemptions, the Company has 4,059,402 Class A Ordinary Shares with redemption rights outstanding.

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 condensed 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 or impossible because of the potential differences in accounting standards used.

   

Pursuant to the Public Offering, the Company offered 23,000,000 Units at a price of $10.00 per Unit, which included the exercise in full of the underwriter’s option to purchase an additional 3,000,000 Units at the Public Offering price to cover over-allotments. Each Unit consisted of one Class A Ordinary Share and one-half of one Public Warrant. Each whole Public Warrant entitles the holder to purchase one Class A Ordinary Share at a price of $11.50 per share, subject to adjustment (see Note 9). The proceeds from the Public Offering and the related offering costs were allocated between the Class A Ordinary Shares, Public Warrants and Private Placement Warrants using the relative fair value method. Costs associated with Class A Ordinary Shares were classified as a reduction of temporary equity, and costs allocated to the warrants were classified as a reduction of permanent equity.

NOTE 5 - RELATED PARTY TRANSACTIONS

  

Founder Shares

Registration and Shareholder Rights

The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of the Sponsor Loan and the Working Capital Loans, if any, (and any Class A Ordinary Shares issuable upon the exercise of the Private Placement Warrants and warrants issued upon conversion of the Sponsor Loan and the Working Capital Loans, if any), are entitled to registration rights pursuant to the registration rights agreement, dated as of November 8, 2021, by and among the Company, the Sponsor and the  undersigned parties listed under holders thereto. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

  

Underwriting Agreement

 

On May 10, 2023, the Company held an Extraordinary General Meeting at which the Company’s shareholders voted to approve an amendment to the Company’s amended and restated memorandum and articles of association to extend the date by which the Company must (1) consummate its Business Combination, (2) cease its operations except for the purpose of winding up if it fails to complete such Business Combination, and (3) redeem all of the Class A Ordinary Shares included as part of the Units sold in the Public Offering, from May 12, 2023 to November 12, 2023, with optional additional extensions of up to three times by an additional month each time, at the option of the Company’s board of directors and without additional shareholder approval, until February 12, 2024.

In connection with the Extraordinary General Meeting, shareholders holding 18,940,598 Class A ordinary shares exercised their right to redeem such shares at a per share redemption price of approximately $10.51. As a result, approximately $199.0 million was removed from the Company’s Trust Account to pay such holders. Following the redemptions, the Company has 4,059,402 Class A Ordinary Shares with redemption rights outstanding.

NOTE 8 - SHAREHOLDERS’ DEFICIT

Preference Shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2023, there were no preference shares issued or outstanding. 

Class A Ordinary Shares — The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of June 30, 2023 and 2022, there were no Class A Ordinary Shares issued and outstanding, excluding 4,059,402 and 23,000,000 shares subject to possible redemption, respectively.

 

Class B Ordinary Shares — The Company is authorized to issue 20,000,000 Class B Ordinary Shares with a par value of $0.0001 per share. As of June 30, 2023, 5,750,000 Class B Ordinary Shares were issued and outstanding. Up to 750,000 of Founder Shares were subject to forfeiture in the event that the underwriter did not purchase additional Units to cover over-allotments. The underwriters’ over-allotment option was exercised in full on November 12, 2021 and forfeiture restrictions lapsed. Prior to the initial investment in the Company of $25,000 by the Sponsor along with certain funds controlled by Data Point Capital, we had no assets, tangible or intangible. The per share purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the Company by the aggregate number of Founder Shares issued. Holders of the Class A Ordinary Shares and holders of the Class B Ordinary Shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B Ordinary Shares shall have the right to vote on the election of the Company’s directors prior to the Business Combination.

NOTE 9 - WARRANTS

The Private Placement Warrants are identical to the Public Warrants, except that, (i) they will not be redeemable by the Company, (ii) they (including the Class A Ordinary Shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the Business Combination, and (iii) are subject to registration rights.

●

in whole and not in part;

●

at a price of $0.01 per warrant;

●

upon a minimum of 30 days’ prior written notice of redemption; and

●

if, and only if the last reported sale price of Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).

 

On May 5, 2023, certain of our unaffiliated investors (the “Investors”) entered into non-redemption agreements (“Non-Redemption Agreements”) with the Sponsor, pursuant to which the Investors agreed to (i) not redeem an aggregate of up to 4,000,000 previously-held Class A ordinary shares (the “Investor Shares”) in connection with the Extension Proposal (as defined below) and (ii) vote the Investor Shares in favor of the Extension Proposal. In exchange for these commitments from the Investors, the Sponsor has agreed to transfer to the Investors (i) an aggregate of up to 1,000,000 Class B ordinary shares in connection with an extension until November 12, 2023 (the “Initial Extension Date”) and (ii) to the extent our board of directors agrees to further extend the date up to three times by an additional month each time until February 12, 2024 (the “Secondary Extension Date,” such proposal, the “Extension Proposal” and such combination period, the “Extended Combination Period”) to consummate its Business Combination, an aggregate of up to 1,500,000 Class B ordinary shares, which includes the Class B ordinary shares referred to in clause (i), in each case, on or promptly after the consummation of the Business Combination.

On May 10, 2023, we held an Extraordinary General Meeting of shareholders (the “Extraordinary General Meeting”) at which our shareholders voted to approve an amendment to our amended and restated memorandum and articles of association to extend the date by which we must (1) consummate our Business Combination, (2) cease our operations except for the purpose of winding up if we fail to complete such Business Combination, and (3) redeem all of the Class A ordinary shares included as part of the Units sold in the Public Offering, from May 12, 2023 to November 12, 2023, with optional additional extensions of up to three times by an additional month each time, at the option of our board of directors, until February 12, 2024.

Management continues its search for a target and will continue pursuing all options to complete a Business Combination. It is uncertain whether the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date and an extension is not approved by the shareholders, 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 an extension is not approved by the shareholders, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern.The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.

This management’s discussion and analysis of our financial condition and results of operations is based on our Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our Financial Statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Refer to our Annual Report on Form 10-K for the year ended December 31, 2022 filed on April 17, 2023 for our critical accounting policies. There have been no changes in these policies since the filing of this Form 10-K, except as follows:

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management concluded that a deficiency in internal control over financial reporting was identified during the fiscal quarter ended June 30, 2023 relating to the accounting for complex financial instruments and that such deficiency constituted a material weakness.

Net proceeds of $230,000,000 from the Public Offering and the sale of the Private Placement Warrants, including deferred underwriting discounts of $8,050,000, were deposited into the Trust Account on the Close Date and $4,600,000 of the proceeds from the sale of the Private Placement Warrants was deposited in our operating account for future working capital expenditures. We paid $4,600,000 in underwriting discounts and incurred offering costs of $498,152 related to the Public Offering. In addition, the Underwriters agreed to defer $8,050,000 in underwriting discounts, which amount will be payable when and if a business combination is consummated. No payments were made by us to directors, officers or persons owning ten percent or more of our Class A ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Public Offering as described in our final Prospectus, dated November 8, 2021, which was filed with the SEC on November 10, 2021, though the amount available has decreased as a result of redemptions.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

a)

None.

b)

None.

c)	Not applicable.