United States securities and exchange commission logo
November 14, 2023
Christopher Gaertner
Chief Financial Officer
DHC Acquisition Corp.
1900 West Kirkwood Blvd.
Suite 1400B
Southlake, TX 76092
Re: DHC Acquisition
Corp.
Registration
Statement on Form S-4 filed October 17, 2023
Filed October 17,
2023
File No. 333-275058
Dear Christopher Gaertner:
We have reviewed your
registration statement and have the following comments.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe a comment applies to your
facts and circumstances
or do not believe an amendment is appropriate, please tell us why in
your response.
After reviewing any amendment to your registration statement and
the information you
provide in response to this letter, we may have additional comments.
Registration Statement on Form S-4 filed October 17, 2023
Questions and Answers
What equity stake will current shareholders of DHC and BEN hold in New
BEN after the
closing?, page 9
1. We note that your
disclosure does not take into account redemptions but provides a cross
reference to the
Unaudited Pro Forma Condensed Combined Financial Statements. Please
additionally provide a
cross reference to your sensitivity analysis reflecting DHC
shareholders equity
ownership at minimum, maximum, and interim levels of redemption.
Christopher Gaertner
FirstName LastNameChristopher Gaertner
DHC Acquisition Corp.
Comapany 14,
November NameDHC
2023 Acquisition Corp.
November
Page 2 14, 2023 Page 2
FirstName LastName
Risk Factors
Risks Related to DHC's Business and the Business Combination, page 49
2. We note that you are seeking to extend your termination date to May 4,
2024, a date
which is 38 months from your initial public offering. We also note
that you are listed on
The Nasdaq Capital Market and that Nasdaq IM-5101-2 requires that a
special purpose
acquisition company complete one or more business combinations within
36 months of
the effectiveness of its IPO registration statement. Please revise to
explain that the
proposal to extend your termination deadline to May 4, 2024, does not
comply with this
rule, or advise. Further, disclose the risks of your non-compliance
with this rule, including
that your securities may be subject to suspension and delisting from
The Nasdaq Capital
Market.
3. With a view toward disclosure, please tell us whether your sponsor is
controlled by, or has
substantial ties with a non-U.S. person. If so, also include risk
factor disclosure that
addresses how this fact could impact your ability to complete your
initial business
combination. For instance, discuss the risk to investors that you may
not be able to
complete an initial business combination with a U.S. target company
should the
transaction be subject to review by a U.S. government entity, such as
the Committee on
Foreign Investment in the United States (CFIUS), or ultimately
prohibited. Disclose that
as a result, the pool of potential targets with which you could
complete an initial business
combination may be limited. Further, disclose that the time necessary
for government
review of the transaction or a decision to prohibit the transaction
could prevent you from
completing an initial business combination and require you to
liquidate. Disclose the
consequences of liquidation to investors, such as the losses of the
investment opportunity
in a target company, any price appreciation in the combined company,
and the warrants,
which would expire worthless.
The Initial Shareholders who own DHC Ordinary Shares and Private Warrants will
not . . ., page
52
4. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
5. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
6. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Christopher Gaertner
FirstName LastNameChristopher Gaertner
DHC Acquisition Corp.
Comapany 14,
November NameDHC
2023 Acquisition Corp.
November
Page 3 14, 2023 Page 3
FirstName LastName
Risks Relating to Ownership of New BEN s Common Stock Following the Business
Combination
The market price and trading volume of New BEN Common Stock and New BEN Public
Warrants may be highly volatile... , page 65
7. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution. Please include consistent revisions in each
presentation of the
sensitivity analysis.
8. We note that DHC has experienced a significant number of redemptions
and could
experience further redemptions in connection with the business
combination. Please add a
risk factor highlighting the impact that additional redemptions may
have on your ability to
fund the surviving company, including the likelihood that you will be
unable to raise
additional capital on favorable terms. Discuss the downward pressure
potential sales of
securities following additional capital raising transactions may have
on the trading price
of the combined entity.
Proposal 1 - The Business Combination Proposal
Opinion of the DHC Financial Advisor, page 107
9. Please disclose an explanation as to the reason the board sought to
obtain a fairness
opinion from Houlihan Capital.
10. We note that you reference forecasts prepared by BEN management, which
your financial
advisor relied upon when preparing its fairness opinion. Please revise
to include those
projections, along with any key assumptions underlying the provided
projections. If
multiple sets of projections were prepared, please clearly disclose
this, along with the
reason for relying upon the selected projections.
11. Please disclose the assumptions and limitations of the publicly traded
companies that were
identified for the Guideline Public Company Analysis by Houlihan
Capital. For example,
disclose whether the type of transaction was considered in selecting
the companies. We
note that the majority of the companies included in the analysis
undertook a firm
commitment underwritten offering rather than a SPAC initial business
combination.
Disclose whether you excluded companies that met the criteria and
explain why each
company was excluded. Finally, disclose the estimated enterprise value
for each selected
company in the analysis and disclose whether Houlihan Capital applied
any discount
factor to companies at a more advanced stage of development than BEN.
12. We note that the forecasts prepared by BEN management assume the
company will reach
an implied ARR between $101,007,594 and $118,832,464 by fiscal year
2025. Please
disclose how the board determined that this rate of sustained growth
was reasonable
considering that BEN has yet to generate material revenues. Your
disclosure should
Christopher Gaertner
DHC Acquisition Corp.
November 14, 2023
Page 4
clearly describe the basis for projecting this revenue growth and any
contingencies that
would affect it materializing.
Interests of Certain Persons in the Business Combination, page 112
13. Please highlight the risk that the sponsor will benefit from the
completion of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
14. Please clarify, if true, that the initial shareholders, the sponsor
and its affiliates can earn a
positive rate of return on their investment, even if other DHC public
shareholders
experience a negative rate of return in the post-business combination
company.
15. Please quantify the aggregate dollar amount and describe the nature of
what the sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Include the current value of securities held, loans extended, fees
due, and out-of-pocket
expenses for which the sponsor and its affiliates are awaiting
reimbursement. Provide
similar disclosure for the company s officers and directors, if
material.
Information about BEN, page 166
16. You state that BEN is "a next-generation provider of conversational AI
avatar platforms."
Please revise to provide a clear and concise overview of BEN's current
and future business
operations and include a timeline for generating revenue. Discuss the
product offerings,
use cases, and end customers and distinguish clearly between the
products and services
that currently comprise BEN's operations and any future business
activities or aspects of
the business that are to be phased in at a later date. Disclose that
BEN generated no
revenues in 2023 and minimal revenues in 2022 which was attributable
to BEN's beta
testing of its mobile advertising platform which appears to be
unrelated to the
conversational AI avatar platform.
Our History, page 167
17. We note that you have recently refocused your product development.
Please revise to
disclose, if true, that you are no longer pursuing the revenue
generating mobile advertising
platform described in your results of operations on page 182.
Our Growth Strategies, page 172
FirstName LastNameChristopher Gaertner
18. We note your reference to long-term definitive agreements with
industry leaders like
Comapany NameDHC
CareGard. Acquisition
Please Corp.
describe the material terms of this agreement and
file it as an exhibit.
Refer to Item 601(b)(10)
November 14, 2023 Page 4 of Regulation S-K.
FirstName LastName
Christopher Gaertner
FirstName LastNameChristopher Gaertner
DHC Acquisition Corp.
Comapany 14,
November NameDHC
2023 Acquisition Corp.
November
Page 5 14, 2023 Page 5
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
BEN
Results of Operations
Comparison of the Six Months Ended June 30, 203 and 2022
General and administrative expenses, page 182
19. We note your general and administrative expenses increased 640%
compared to the prior
year, primarily due to $4.3 million increase in stock-based
compensation. Expand your
disclosure to clarify the nature of this increase in stock-based
compensation. Refer to Item
303(b)(2) of Regulation S-K.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information,
page 197
20. Please revise the notes to explain the nature of each adjustment in
addition to their effect
on the pro forma amounts. For example, adjustment K is establishing a
liability for unpaid
transaction fees which should be clearer as it results in a
significant obligation and causes
a working capital deficit. Another example is adjustment H which is
due to modification
of BENs capital structure (i.e., conversion of DHC Class B stock into
DHC Class A). In
this regard, the note should explain why the adjustment is occurring
and why the
accumulated deficit is being adjusted.
BEN Executive Compensation, page 220
21. Please revise to include compensation for BEN's two most highly
compensated executive
officers other than the principal executive officer, who were serving
as executive officers
at the end of 2022. Refer to Item 402(m)(2)(ii) of Regulation S-K.
22. You disclose that Tyler Luck, your sole executive officer, received no
compensation in
2022. Please revise to include any amounts that were provided to Mr.
Luck by a third
party where the purpose of the transaction was to furnish compensation
to him. Further,
Item 402(m) of Regulation S-K requires the compensation for two of the
most highly
compensated executive officers other than the principal executive
officer. We note, for
example, that Paul Chang, serves as BEN s Global President. Please
provide a detailed
analysis as to why you believe that Mr. Chang does not qualify as an
executive officer
under Rule 405. Please confirm that you included the compensation for
all executive
officers, including any vice president in charge of a principal
business unit, division or
function.
Security Ownership of Certain Beneficial Owners and Management, page 235
23. Please identify the natural persons who have voting or dispositive
power with respect
to the shares held by DHC Sponsor LLC, Aristeia Capital, L.L.C., and
Millenium
Management LLC.
Christopher Gaertner
FirstName LastNameChristopher Gaertner
DHC Acquisition Corp.
Comapany 14,
November NameDHC
2023 Acquisition Corp.
November
Page 6 14, 2023 Page 6
FirstName LastName
Report of Independent Registered Public Accounting Firm, page F-46
24. Please have your auditors revise their audit report to include the
city and state from which
the auditor's report has been issued. Refer to PCAOB AS 3101.10.c.
Consolidated Statements of Operations, page F-48
25. Please explain the nature of the Gain on debt extinguishment of
$548,563 recognized in
2022. In this regard, we note your total liabilities as of December
31, 2021 was $290,261.
Unaudited Condensed Consolidated Balance Sheets, page F-63
26. We note that the number of common shares issued and outstanding as of
June 30, 2023 as
presented in the balance sheet does not match the number of common
shares as of June
30, 2023 as presented in the Unaudited Consolidated Statements of
Changes in
Stockholders Equity (Deficit) on page F-65. Please advise or revise
accordingly.
Notes to Unaudited Condensed Consolidated Financial Statements
Note C - Acquisitions , page F-72
27. Please address the following items related to your transaction with DM
Lab:
Describe and disclose the nature of the Developed technology
that was acquired in
this transaction. Tell us whether the technology has been
commercialized.
Explain in sufficient detail how you determined the Developed
technology to be
initially recognized at $17,678,370. Refer to FASB ASC 805-50-30.
Explain how you determined the fair value of your common shares
to be $1 per share
at the date of this transaction. Please reconcile this value to
the $0.0154 per share that
was determined in the valuation analysis that you received in
2022 as disclosed on
page F-57.
Explain how you determine that the Developed Technology
intangible asset should
have a useful life of 15 years. Tell us how you considered the
effects obsolescence,
competition, and rapid changes that may be occurring in the
development of software
products. That is, given the history of rapid changes in
technology, software often has
had a relatively short useful life.
Note L - Subsequent Events, page F-77
28. We note your disclosure that you have made progress towards your
intention to acquire a
company, and that, as of September 2023, you have successfully
completed the due
diligence process and both parties have executed a definitive purchase
agreement. Please
provide us with a comprehensive analysis that specifically addresses
(i) the remaining
steps to complete the merger, (ii) whether the assets and assumed
liabilities to be acquired
meet the definition of a business, (iii) significance of the acquiree
and (iv) whether the
consummation of the business acquisition is probable. Refer to Rule
8-04 of Regulation S-
X. Please also address the need for pro forma financial information
pursuant to Rule 8- 05
Christopher Gaertner
DHC Acquisition Corp.
November 14, 2023
Page 7
of Regulation S-X.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Please contact Ryan Rohn at 202-551-3739 or Stephen Krikorian at
202-551-3488 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Austin Pattan at 202-551-6756 or Jan Woo at 202-551-3453 with any other
questions.
Sincerely,
FirstName LastNameChristopher Gaertner
Division of
Corporation Finance
Comapany NameDHC Acquisition Corp.
Office of Technology
November 14, 2023 Page 7
cc: Kevin Cooper
FirstName LastName