| ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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References in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to “we,” “us” or the “Company” refer to DP Cap Acquisition Corp I. References to our
“management” or our “management team” refer to our officers and directors and references to the “Sponsor” refer to DP Investment Management Sponsor I LLC. The following discussion and analysis of the Company’s financial condition and results of
operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report (the “Financial Statements”). Capitalized terms used but not otherwise defined herein have
the meaning set forth in the Financial Statements. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of
historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy
and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify
such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those
anticipated in the forward-looking statements, please refer to the Risk Factors sections of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 17, 2023 and this Quarterly Report. The
Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on April 8, 2021 as a Cayman Islands exempted company and 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 (the “Business Combination”) that we have not yet identified. We are an emerging growth company and, as such, we are subject to all of the risks associated with
emerging growth companies. We completed our Public Offering on November 12, 2021. As of September 30, 2023, we had not identified any Business Combination target.
We presently have no revenue and have had no operations other than the active solicitation of a target business with which to complete a Business Combination.
We expect to continue to incur significant costs in the pursuit of our Business Combination. We cannot assure you that our plans to complete a Business Combination will be successful.
Our registration statement for our Public Offering was declared effective on November 8, 2021. On November 12, 2021, we consummated our 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.
Simultaneously with the closing of the Public Offering, we consummated the private sale (the “Private Placement”) of 4,733,333 warrants (the “Private Placement Warrants”) to DP Investment Management Sponsor I LLC (the
“Sponsor”), each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating total gross proceeds of $7.1 million.
Simultaneously with the closing of the Public Offering, pursuant to the Sponsor’s promissory note (the “Sponsor Note”), the Sponsor loaned $4,600,000 to the Company (the “Sponsor Loan”). The Sponsor Loan is interest free. The Sponsor Loan shall be
repaid or converted into warrants (the “Sponsor Loan Warrants”) at a purchase price of $1.50 per Sponsor Loan Warrant, at the Sponsor’s discretion and at any time until the consummation of our initial Business Combination. Any Sponsor Loan Warrants
issued will be identical to the Private Placement Warrants.
Upon the closing of our Public Offering, a total of $234.6 million ($10.20 per unit), comprised of $225.4 million of the proceeds from the Public
Offering (which amount includes $8.05 million of the underwriter’s deferred discount), $4.6 million of the proceeds of the sale of the Private Placement Warrants and $4.6 million of the proceeds from the Sponsor Loan, were placed in a U.S.- based
trust account (“Trust Account”) maintained by Continental Stock Transfer & Trust Company acting as trustee. The funds held in the Trust Account may be invested 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 us meeting the conditions of Rule
2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of the net proceeds of our Public Offering and the sale of the 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 we will be able to complete a Business Combination successfully.
We must complete one or more Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working
capital purposes, if permitted, and excluding the amount of deferred underwriting discounts held in trust) at the time of our signing a definitive agreement in connection with our Business Combination. However, we only intend to 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.
If we are unable to complete a Business Combination within the Extended Combination Period (as defined below), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as
reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes (if any) (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares,
which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of the remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other
applicable law.
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. On November 8, 2023, our board of directors approved the extension of the date by
which we are required to complete our Business Combination until December 12, 2023 (the “Optional Extension”).
In connection with the Extraordinary General Meeting, shareholders holding 18,940,598 Class A ordinary shares issued in our Public Offering exercised
their right to redeem such shares at a per share redemption price of $10.51. As a result, approximately $199.0 million was removed from our Trust Account to pay such holders. Following the redemptions, and as of the date of this filing, we have
4,059,402 Class A ordinary shares with redemption rights outstanding.
Recent Developments
Notices of Delisting or Failure to Satisfy Continued Listing Rules or Standards
On August 21, 2023, we received a letter (the “MVLS Letter”) from the Listing Qualifications staff (the “Nasdaq Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we are not in
compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires that our listed securities maintain a minimum MVLS of $50 million. The Nasdaq Letter further provided that, pursuant to Nasdaq Listing Rule 5810(c)(3)(C), we are entitled to a
compliance period to regain compliance with Nasdaq Listing Rule 5450(b)(2)(A), which compliance period will expire on February 20, 2024 (the “MVLS Compliance Period”). If our MVLS is $50 million or more for a minimum of ten consecutive business days
during the MVLS Compliance Period, Nasdaq will provide us written confirmation of compliance. If we fail to regain compliance with the continued listing standards of The Nasdaq Global Market prior to the expiration of the MVLS Compliance Period,
Nasdaq will provide us notice that our securities are subject to delisting.
On October 12, 2023, we received a second letter (the “Total Holders Letter”) from the Nasdaq Staff of Nasdaq notifying us that we are not in compliance with Nasdaq Listing Rule 5450(a)(2), which requires that we
maintain a minimum of 400 total holders for continued listing on the Nasdaq Global Market (the “Minimum Total Holders Rule”). In accordance with Nasdaq Listing Rule 5810(c)(2)(A)(i), the Total Holders Letter states that we have 45 calendar days, or
until November 27, 2023 (the “Total Holders Compliance Date”), to submit a plan to regain compliance with the Minimum Total Holders Rule. If Nasdaq accepts our plan, Nasdaq may grant us an extension of up to 180 calendar days from the date of the
Total Holders Letter to evidence compliance with the Minimum Total Holders Rule. If Nasdaq does not accept our plan, we will have the opportunity to appeal the decision in front of a Nasdaq Hearings Panel.
Neither letters from Nasdaq has an immediate effect on the listing of our securities on the Nasdaq Global Market. We intend to actively monitor our MVLS during the MVLS Compliance Period,
and may, if appropriate, evaluate available options including applying for a transfer to The Nasdaq Capital Market to resolve the deficiency and regain compliance with the MVLS requirement. We also intend to submit our compliance plan by
the Total Holders Compliance Date and will evaluate available options to regain compliance with the Minimum Total Holders Rule. While we are exercising diligent efforts to maintain the listing of our securities on
The Nasdaq Global Market, there can be no assurance that we will be able to regain or maintain compliance with the continued listing standards of The Nasdaq Global Market.
Liquidation of Investment Held in the Trust Account Into Cash Held in an Interest-Bearing Demand Deposit Account
On November 7, 2023, in order to mitigate the potential risks of being deemed to have been operating as an unregistered investment company for purposes of the
Investment Company Act, we have determined to instruct Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations and money market funds held in the Trust
Account and to hold all funds in the Trust Account in cash in an interest-bearing demand deposit account until the earlier of consummation of our Business Combination or liquidation. Interest on such demand deposit account is variable and therefore
such rate of interest may decrease or increase significantly. As a result, following such liquidation, we may receive less interest on the funds held in the Trust Account, which would reduce the dollar amount public shareholders would receive upon
any redemption or liquidation of the Company.
Optional Extension
On November 8, 2023, our board of directors approved the Optional Extension, which extended the date by which we are required to complete our Business Combination
until December 12, 2023. As a result of the approval of the Optional Extension, pursuant to the Non-Redemption Agreements, the Sponsor has agreed to transfer an
aggregate of approximately 166,666 additional Class B ordinary shares to the Investors on or promptly after the consummation of the Business Combination.
Results of Operations
For the three and nine months ended September 30, 2023, we had net income of $275,282 and $3,517,704, respectively, which consisted of earnings on
investments held in Trust Account of $562,845 and $4,778,599, respectively, partially offset by general and administrative expenses of $287,563 and $1,260,895 (including formation expenses), respectively.
For the three and nine months ended September 30, 2022, we had net income of $806,946 and $673,102, respectively, which consisted of earnings on
investments held in Trust Account of $1,058,884 and $1,398,343, respectively, partially offset by general and administrative expenses of $251,938 and $725,241 (including formation expenses), respectively.
All activity from April 8, 2021 (inception) through September 30, 2023, relates to our formation and our Public Offering and subsequent to our Public Offering, the search for a target for our Business
Combination. We will not generate any operating revenues until after the completion of our Business Combination, at the earliest.
Liquidity and Capital Resources
The registration statement for our Public Offering was declared effective by the SEC on November 8, 2021. On November 12, 2021, we consummated our Public Offering of 23,000,000 Units, inclusive of the
underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Public Offering, we consummated the sale of
4,733,333 Private Placement Warrants to our Sponsor at a price of $1.50 per warrant, generating gross proceeds of $7,100,000. Simultaneously with the closing of the Public Offering and Private Placement, our Sponsor loaned us $4,600,000 under the
Sponsor Loan.
Following the Public Offering, the sale of the Private Placement Warrants and the issuance of the proceeds under the Sponsor Loan, a total of $234,600,000 was placed in the Trust Account, which
consisted of $225,400,000 from the proceeds from the Public Offering, $4,600,000 from the proceeds of the sale of the Private Placement Warrants and $4,600,000 from the proceeds from the Sponsor Loan. We incurred $13,148,152 in transaction costs,
including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $498,152 of other costs.
Our liquidity needs up to September 30, 2023 had been satisfied through (i) a payment from the Sponsor along with certain funds controlled by Data Point
Capital of $25,000 to cover certain offering and formation costs in exchange for the issuance of the Founder Shares to the Sponsor and (ii) the receipt of loans to us of up to $300,000 by the Sponsor under an unsecured promissory note. The unsecured
promissory note was non-interest bearing and was due at the earlier of December 31, 2021 and the closing of the Public Offering. As of September 30, 2023, no amounts were outstanding under the unsecured promissory note. 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 our officers and directors may, but are not obligated to, provide us working capital loans. As of September 30, 2023, and
through the date of this filling, there were no amounts outstanding under any working capital loans.
For the nine months ended September 30, 2023, net cash used in operating activities was $366,062, consisting of net income of $3,517,704, earnings on
investments held in Trust Account of $4,778,599 and changes in operating assets and liabilities of $894,833.
For the nine months ended September 30, 2022, net cash used in operating activities was $306,422, consisting of net income of $673,102 and earnings on
investments held in Trust Account of $1,398,343 and changes in operating assets and liabilities of $418,819.
As of September 30, 2023 and December 31, 2022, we had cash and investments held in the Trust Account of $43,769,608 and $237,982,862, respectively. We may withdraw interest earned to pay our income
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 (which interest shall be net of taxes payable and excluding deferred underwriting
commissions) to complete our Business Combination. To the extent that our share capital is used, in whole or in part, as consideration to complete a 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.
As of September 30, 2023 and December 31, 2022, we had cash of $580,237 and $946,299 held outside of the Trust Account, respectively. 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 offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate
documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors
may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts or, in the case of Working Capital Loans, such loans may be converted into warrants of the Company at the
option of the lender. In the event that a Business Combination does not close, we may use a portion of the cash held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment.
At September 30, 2023 and at December 31, 2022, other than the $4,600,000 Sponsor Loan, we did not have other long-term debt, capital lease obligations, operating lease obligations or long-term
liabilities.
Going Concern Considerations
In connection with the assessment of going concern considerations in accordance with the FASB ASC Subtopic 205-40, “Presentation of Financial Statements
- Going Concern,” as a result of the Optional Extension, we have until December 12, 2023, with the option to extend two additional times, for an additional month each time, upon approval of our board of directors, up until February 12, 2024 to
consummate a Business Combination. It is currently uncertain that we will be able to consummate a Business Combination by this time. If our Business Combination cannot be completed prior to December 12, 2023, or upon the approval of our board of
directors, February 12, 2024, we will cease operations except for the purpose of winding-up, redeem our new outstanding public shares, and liquidate and dissolve unless, prior to such date, we receive an extension approval from our shareholders
electing to further extend the date on which a Business Combination must be consummated.
As of September 30, 2023, we have working capital deficit of $441,240. We may need to raise additional funds from our Sponsor and/or third parties in
order to meet the expenditures required for operating our business. If our estimates of the costs of undertaking in-depth due diligence and negotiating the Business Combination is less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to a Business Combination. The Sponsor is not under any obligation to advance funds to, or to invest in, us. If we are unable to raise additional funds, we may be required to take
additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any assurance that new
financing will be available to us on commercially acceptable terms, if at all. If a Business Combination is not consummated by December 12, 2023, with the option to extend up to
February 12, 2024, and our shareholders have not amended the Second A&R M&A to further extend the Extended Combination Period, we will cease operations except for the purpose of winding up, redeem the outstanding Public Shares, and
liquidate and dissolve. These conditions raise substantial doubt about our ability to continue as a going concern through one year from the date these condensed financial statements are filed.
We continue our search for a target and will continue pursuing all options to complete a Business Combination by December 12, 2023 and, if our board of directors approves the two additional one month extension options, until February 12, 2024. It is uncertain whether we will be able to consummate a Business
Combination by December 12, 2023 or by February 12, 2024 if the two additional extension options are exercised by the board of directors, or whether the current funds that we have will be sufficient to consummate a Business Combination. If a
Business Combination is not consummated by the applicable time period noted above and the Public Shareholders do not otherwise approve an additional extension beyond February 12, 2024, there will be a mandatory liquidation and subsequent
dissolution of the Company. These unaudited condensed 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.
Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of working capital loans (and any Class A ordinary shares issuable upon the exercise of the
Private Placement Warrants and warrants that may be issued upon conversion of the working capital loans) are entitled to registration rights pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three
demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our Business Combination.
However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder
Shares, until the earliest of (A) one year after the completion of our Business Combination and (B) subsequent to our Business Combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for
share sub‑divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after our Business Combination, or (y) the date on which we complete a
liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property, and (ii) in the case of the Private Placement
Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of our Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriter a 45-day option from the date of the Public Offering to purchase on a pro rata basis up to 3,000,000 additional Units to cover over-allotments, if any, at the Public Offering
price, less the underwriting discounts and commissions. The over-allotment option was exercised in full on November 12, 2021.
The underwriter was entitled to an underwriting discount of $0.20 per Unit, or $4.6 million in the aggregate, paid upon the closing of the Public Offering. An additional fee of $0.35 per Unit, or $8.05
million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter 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
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:
On May 10, 2023, we held an Extraordinary General Meeting of shareholders (the “Extraordinary General Meeting”) at which our shareholders voted to approve, by special resolution, the proposal to amend
and restate our amended and restated memorandum and articles of association (the “Second A&R M&A”), to extend the date by which we 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 Public Offering, from May 12, 2023 to November 12, 2023, with the option to extend an additional three times
by an additional month each time, at the option of our board of directors, until February 12, 2024. We 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, we recognized the offering cost 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.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the accompanying Financial Statements.
Inflation
We do not believe that inflation had a material impact on our business or operating results during the period presented.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are
allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply
with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the Financial Statements may not be comparable to companies that comply with new or revised
accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act,
if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404
of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be
adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis)
and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will
apply for a period of five years from the completion of our Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
| ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
| ITEM 4. |
CONTROLS AND PROCEDURES.
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Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Due to identified
material weaknesses in our internal control over financial reporting identified in current and previous reporting periods, as described below, our principal executive officer and principal financial officer concluded that our disclosure controls and
procedures were not effective as of September 30, 2023.
Notwithstanding the conclusion by our principal executive officer and principal financial officer that our disclosure controls and procedures as of
September 30, 2023 were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting described below, management believes that the unaudited condensed financial statements and related financial
information included in this Quarterly Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
Material Weakness
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. As previously disclosed in our Quarterly Report for the fiscal quarter ended June 30, 2023 as filed
with the SEC on August 14, 2023, management identified a deficiency in internal control over financial reporting relating to the accounting for complex financial instruments, which constituted a material weakness. In addition, during the current
reporting period management identified a deficiency in internal control over financial reporting related to the review and approval of adjustment to journal entries. As of September 30, 2023, the identified material weaknesses in our internal
controls over financial reporting have not yet been remediated.
Remediation Plan
Management plans to remediate the material weaknesses by 1) incorporating additional controls and procedures over the review of complex financial
instrument valuations, 2) increasing communication among our personnel and third-party professionals with whom we consult regarding accounting applications and 3) incorporating additional procedures over the review of the general ledger and the
review and approval of adjustment to journal entries. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Changes in Internal Control Over Financial Reporting
Except for the remediation plan in connection with the material weaknesses described above, there was no change in our internal control over financial
reporting that occurred during the fiscal quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
| ITEM 1. |
LEGAL PROCEEDINGS.
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None.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the “Risk Factors” sections of our Annual Report on Form 10-K filed
with the SEC on April 17, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial
may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, other than as set forth
below:
Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to
additional trading restrictions.
We cannot assure you that our securities will continue to be listed on Nasdaq in the future or prior to our Business Combination. In order to continue listing our securities on Nasdaq prior to our
Business Combination, we must maintain certain financial, distribution and share price levels, such as a minimum market capitalization (generally $50,000,000) and a minimum number of holders of our securities (generally 400 total holders).
Additionally, our Units will not be traded after completion of our Business Combination and, in connection with our Business Combination, we will be required to demonstrate compliance with Nasdaq initial listing requirements, which are more rigorous
than Nasdaq continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share, our shareholders’ equity would generally
be required to be at least $4 million and we would be required to have a minimum of 300 round lot holders of our unrestricted securities (with at least 50% of such round-lot holders holding unrestricted securities with a market value of at least
$2,500). We may not be able to meet those listing requirements at that time, especially given the redemptions made in connection with the Extension Proposal and if there are a significant number of redemptions in connection with our Business
Combination.
On August 21, 2023, we received the MVLS Letter from the Nasdaq Staff notifying us that that we are not in compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires that our listed securities
maintain a minimum MVLS of $50 million. The MVLS Letter further provided that, pursuant to Nasdaq Listing Rule 5810(c)(3)(C), we are entitled to the MVLS Compliance Period until February 20, 2024 to regain compliance with Nasdaq Listing Rule
5450(b)(2)(A). If our MVLS is $50 million or more for a minimum of ten consecutive business days during the MVLS Compliance Period, Nasdaq will provide us written confirmation of compliance. If we fail to regain compliance with the continued listing
standards of The Nasdaq Global Market prior to the expiration of the MVLS Compliance Period, Nasdaq will provide us notice that our securities are subject to delisting.
On October 12, 2023, we received the Total Holders Letter from the Nasdaq Staff notifying us that we are not in compliance with the Minimum Total Holders Rule, which requires that we maintain a minimum of 400 total
holders for continued listing on the Nasdaq Global Market. In accordance with Nasdaq Listing Rule 5810(c)(2)(A)(i), the Total Holders Letter states that we have until the Total Holders Compliance Date, or, November 27, 2023, to submit a plan to
regain compliance with the Minimum Total Holders Rule. If Nasdaq accepts our plan, Nasdaq may grant us an extension of up to 180 calendar days from the date of the Total Holders Letter to evidence compliance with the Minimum Total Holders Rule. If
Nasdaq does not accept our plan, we will have the opportunity to appeal the decision in front of a Nasdaq Hearings Panel.
We intend to actively monitor our MVLS during the Compliance Period, and may, if appropriate, evaluate available options including applying for a transfer to The Nasdaq Capital Market to resolve the deficiency and
regain compliance with the MVLS requirement. We also intend to submit our compliance plan by the Total Holders Compliance Date and will evaluate available options to regain compliance with the Minimum Total Holders Rule. While we are exercising diligent efforts to maintain the listing of our securities on The Nasdaq Global Market, there can be no assurance that we will be able to regain or maintain compliance with the continued
listing standards of The Nasdaq Global Market.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could
face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of
trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered
securities.” Because our Units, Class A ordinary shares and Public Warrants are listed on Nasdaq, our Units, Class A ordinary shares and Public Warrants qualify as covered securities under the statute. Although the states are preempted from
regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank
check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as
covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
We have identified material weaknesses in our internal controls over financial reporting. The material
weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of
our internal controls and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial
reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As previously disclosed in our Quarterly Report for the fiscal quarter ended June 30, 2023, we identified a material weakness in our internal control
over financial reporting related to the accounting for complex financial instruments. During the current reporting period ended September 30, 2023, we identified an additional material weakness in internal control over financial reporting related
to the review and approval of adjusting journal entries. As a result of the identified material weaknesses, our management concluded that our internal controls over financial reporting was not effective as of September 30, 2023.
To respond to the material weaknesses, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal controls over financial
reporting. Our plans at this time include incorporating additional controls and procedures over the review of complex financial instrument valuations, increasing communication among our personnel and third-party professionals with whom we consult
regarding accounting applications and incorporating additional procedures over the review of the general ledger and the review and approval of adjustment to journal entries. The elements of our remediation plan can only be accomplished over time, and
we can offer no assurance that these initiatives will ultimately have the intended effects.
Any failure to maintain such internal controls could adversely impact our ability to report our financial position and results from operations on a
timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or
investigations by the stock exchange on which our ordinary shares is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal controls could also cause
investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any
additional material weaknesses will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening
our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
| ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
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Unregistered Sales
None.
Use of Proceeds
On November 8, 2021, our registration statement on Form S-1 (File No. 333-260456) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 23,000,000 Units,
inclusive of the underwriters’ election to exercise their option to purchase an additional 3,000,000 Units, at an offering price to the public of $10.00 per Unit for an aggregate offering price of $230,000,000, with each Unit consisting of one Class
A ordinary share of the Company at $0.0001 par value and one-half of one warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share.
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.
In connection with the shareholder vote to approve the Extension Proposal in the Extraordinary General Meeting on May 10, 2023, the holders of 18,940,598 Class A ordinary shares exercised their right to
redeem such shares at a per share redemption price of approximately $10.51 for an aggregate redemption amount of approximately $199.0 million.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
| ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES.
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None.
| ITEM 4. |
MINE SAFETY DISCLOSURES.
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Not applicable.
| ITEM 5. |
OTHER INFORMATION.
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No.
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Description of Exhibit
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Second Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.1 filed with the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2023 (File No.
001-41041))
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Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS*
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Inline XBRL Instance Document
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101.CAL*
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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101.SCH*
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Inline XBRL Taxonomy Extension Schema Document
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101.DEF*
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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Inline XBRL Taxonomy Extension Labels Linkbase Document
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101.PRE*
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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104*
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Cover Page Interactive Data File
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* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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DP CAP ACQUISITION CORP I
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Date: November 14, 2023
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By:
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/s/ Scott Savitz
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Name:
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Scott Savitz
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Title:
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Chief Executive Officer and Chairman
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By:
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/s/ Bruce Revzin
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Date: November 14, 2023
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Name:
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Bruce Revzin
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Title:
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Chief Financial Officer
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(Principal Accounting and Financial Officer)
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32