425: DHC Acquisition Corp. Files Pro Forma Financials Following Business Combination Agreement with Brand Engagement Network Inc.

DHC Acquisition Corp. voluntarily files unaudited pro forma consolidated financial information reflecting the proposed merger with Brand Engagement Network Inc. (BEN) for the year ended December 31, 2023.

Summary

• DHC Acquisition Corp. has filed unaudited pro forma consolidated financial information related to its business combination agreement with Brand Engagement Network Inc. (BEN).
• The filing includes a pro forma balance sheet as of December 31, 2023, and a pro forma statement of operations for the year then ended, prepared as if the merger occurred on January 1, 2023.
• The business combination will result in DHC changing its name to Brand Engagement Network Inc. (New BEN).
• The transaction is expected to be accounted for as a reverse recapitalization, with BEN treated as the accounting acquirer.
• Upon consummation of the Business Combination, all holders of BEN Common Stock will have the right to receive a number of shares of New BEN Common Stock at a deemed value of $10.00 per share after giving effect to the Exchange Ratio, resulting in an estimated 25,641,300 shares of New BEN Common Stock being issued to equity holders of BEN immediately prior to the Closing.
• The pro forma combined company's share ownership includes BEN stockholders (67.4%), DHC's public shareholders (1.6%), DHC sponsor and affiliate (21.8%), Interim Financing (1.8%), AFG (6.8%), and Advisors (0.6%).
• The pro forma combined net loss for the year ended December 31, 2023, is approximately $21.17 million, or $0.63 per share.

Sentiment

Score: 5

Explanation: The document is neutral in tone, primarily presenting financial information related to the merger. The significant net loss is a concern, but the potential benefits of the merger and AFG partnership are also noted.

Positives

• The business combination is expected to provide BEN with access to public markets and additional capital.
• AFG's reseller agreement and investment provide additional revenue opportunities and financial support.
• The pro forma financial information provides transparency into the combined company's financial position.

Negatives

• The pro forma combined company reported a net loss of $21.17 million for the year ended December 31, 2023.
• DHC shareholders redeemed 1,921,922 shares of DHC Class A shares in connection with the special meeting of DHC shareholders held on March 5, 2024, reducing the cash available to the combined company.
• The transaction costs associated with the merger are significant, with an additional $4.7 million accrued for estimated direct and incremental transaction costs.

Risks

• The unaudited pro forma financial information is based on estimates and assumptions that are subject to change.
• The combined company's future performance is subject to various risks and uncertainties, including market conditions and competition.
• The AFG Warrant is excluded from the unaudited pro forma condensed combined financial information.
• The actual facts may differ from the assumptions, which could materially impact the amounts and shares outstanding in the unaudited pro forma condensed combined financial information.

Future Outlook

The document does not provide specific forward-looking statements beyond the completion of the business combination and the expected use of cash proceeds for general corporate purposes.

Industry Context

The filing reflects a trend of SPACs (Special Purpose Acquisition Companies) merging with private companies to bring them to the public market. The success of the combined entity will depend on BEN's ability to execute its business plan and generate revenue.

Comparison to Industry Standards

• It is difficult to compare the pro forma results directly to industry standards without knowing the specific industry segment in which Brand Engagement Network operates.
• However, the pro forma net loss suggests that the combined company will need to improve its financial performance to be competitive with other publicly traded companies in its sector.
• Comparable companies in the marketing and advertising technology space often trade at multiples of revenue, so revenue growth will be a key metric to watch.

Stakeholder Impact

• Shareholders of DHC and BEN will become shareholders of New BEN.
• Employees of BEN will become employees of New BEN.
• Customers of BEN will be served by New BEN.
• The merger may impact suppliers and creditors of DHC and BEN.

Next Steps

• The business combination is expected to close, resulting in DHC changing its name to Brand Engagement Network Inc. (New BEN).
• New BEN will use the remaining cash proceeds for general corporate purposes.
• AFG will act as the exclusive reseller of certain Products of the Company on terms and conditions set forth therein.

Key Dates