Brand Engagement Network Inc. current report, 25 July 2022

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SEC Form 8-K Summary

Registrant: DHC Acquisition Corp. (the filing text does not identify Brand Engagement Network Inc. as the registrant)

Report date: July 25, 2022

Business Context and Transaction

DHC Acquisition Corp., a Cayman Islands blank-check company, entered into a Business Combination Agreement with Glory Merger Subsidiary Corp. and With Purpose, Inc., doing business as GloriFi, Inc. The proposed transaction would combine DHC and GloriFi, with GloriFi surviving as a wholly owned subsidiary. DHC intends to domesticate as a Delaware corporation and change its name to “GloriFi, Inc.” or another mutually agreed name.

GloriFi shareholders would receive shares of DHC common stock based on an exchange ratio and could receive up to 40 million additional earnout shares upon achievement of specified share-price thresholds over a seven-year period following closing.

Financial Metrics and Liquidity

  • The filing does not provide revenue, profit, cash-flow, margin, debt, or operating-performance metrics for DHC or GloriFi.
  • Closing requires DHC to have at least $5 million of net tangible assets.
  • GloriFi must receive at least $60 million of unencumbered cash proceeds from financing transactions, with reasonable best efforts to complete the financing by September 30, 2022.
  • GloriFi’s closing condition requires at least $30 million of aggregate available cash, financing proceeds, and qualifying equity-facility commitments after accounting for shareholder redemptions and related amounts.
  • The filing does not provide a clear value for DHC’s trust account, expected redemptions, transaction valuation, exchange ratio, or pro forma capitalization.

Material Changes and Transaction Conditions

  • DHC’s Class A and Class B ordinary shares would convert into Delaware corporation common stock upon domestication; founder shares would convert into Class A common stock immediately before closing.
  • Closing is subject to shareholder approvals, an effective Form S-4 registration statement, regulatory approvals, expiration of the Hart-Scott-Rodino waiting period, Nasdaq approval, completion of the domestication, and customary representations and covenants.
  • An affiliate of GloriFi must complete a bank acquisition and enter into a marketing framework agreement with GloriFi, or GloriFi must enter into an acceptable agreement with a state- or federally chartered financial institution.
  • The transaction may be terminated if closing has not occurred by March 4, 2023, if required approvals are not obtained, if material breaches are not cured, or if GloriFi fails to obtain the required $60 million financing by September 30, 2022.
  • Key GloriFi stockholders representing at least two-thirds of its voting power agreed to support the transaction and not transfer their shares before closing, subject to exceptions.
  • The sponsor agreed to support the transaction and remain subject to transfer restrictions. Certain sponsor, director, officer, and GloriFi holder shares would generally be locked up until the earlier of 180 days after closing, specified share-price performance, or an applicable waiver.
  • Registration rights would permit certain holders to request up to three underwritten offerings in any 12-month period, subject to limitations.

Outlook, Risks, and Unusual Items

The filing contains transaction-related forward-looking statements regarding GloriFi’s products, market opportunity, customer growth, technology, financing, regulatory approvals, future performance, and the expected benefits of the business combination. These statements are not guarantees of future results.

  • Material risks include failure to obtain shareholder or regulatory approvals, inability to complete the transaction or financing, high redemption levels, failure to meet Nasdaq listing requirements, and inability to realize expected transaction benefits.
  • Additional risks include competition, customer acquisition and retention, growth management, employee retention, new product execution, legal proceedings, changing laws, the Russia-Ukraine conflict, and the COVID-19 pandemic.
  • The filing is primarily a transaction disclosure and does not provide historical or projected financial statements.

Important Facts for Investors to Verify

  • Confirm the correct registrant and transaction status; the provided filing is for DHC Acquisition Corp., not Brand Engagement Network Inc.
  • Review the Form S-4, proxy statement/prospectus, business combination agreement, and any subsequent amendments for valuation, exchange-ratio, capitalization, and dilution details.
  • Verify whether GloriFi obtained the required $60 million financing and whether the bank acquisition and marketing agreement conditions were satisfied.
  • Check DHC’s trust-account balance, shareholder redemption levels, and available closing cash against the $30 million and $5 million thresholds.
  • Confirm shareholder, regulatory, Nasdaq, and Hart-Scott-Rodino approvals and whether the transaction closed by the applicable deadline.
  • Review the earnout triggers, lock-up provisions, registration rights, and potential dilution from warrants, options, and earnout shares.