UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-39936

DIAMONDHEAD HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Delaware		85-3460766
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

250 Park Ave. 7th Floor

New York, New York

10177

(Address of principal executive offices)

(Zip Code)

(212) 572-6260

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of Class A common stock, $0.0001 par value and one-fourth of one redeemable warrant	DHHCU	The Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per share	DHHC	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share	DHHCW	The Nasdaq Stock Market LLC

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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 ☐

As of August 16, 2021, a total of 34,500,000 shares of Class A common stock, par value $0.0001 per share, and a total of 8,625,000 shares of Class B common stock, par value $0.0001 per share, were issued and outstanding.


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements	1

	Condensed Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	1

	Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2021	2

	Unaudited Condensed Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2021	3

	Unaudited Condensed Statement of Cash Flows for the Six Months Ended June 30, 2021	4

	Notes to Unaudited Condensed Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II. OTHER INFORMATION		24

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

SIGNATURES		26

+
	June 30, 2021		December 31, 2020
	(unaudited)
Assets:
Current assets:
Cash	$	414,744	$	16,110
Prepaid expenses		352,584		—
Total current assets		767,328		16,110
Deferred offering costs		—		275,140
Investments held in Trust Account		345,008,873		—
Total Assets	$	345,776,201	$	291,250

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	67,001	$	724
Accrued expenses		78,835		136,250
Franchise tax payable		51,667		1,168
Note payable - related party		—		130,000
Total current liabilities		197,503		268,142
Deferred underwriting commissions		12,075,000		—
Derivative warrant liabilities		15,901,000		—
Total liabilities		28,173,503		268,142

Commitments and Contingencies (Note 6)

Class A common stock, $0.0001 par value; 31,260,269 and 0 shares subject to possible redemption at $10.00 per share at June 30, 2021 and December 31, 2020, respectively		312,602,690		—

Stockholders' Equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued and outstanding		—		—
Class A common stock, $0.0001 par value; 300,000,000 shares authorized; 3,239,731 and 0 shares issued and outstanding (excluding 31,260,269 and 0 shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively		324		—
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 8,625,000 shares issued and outstanding		863		863
Additional paid-in capital		9,044,801		24,137
Accumulated deficit		(4,045,980)		(1,892)
Total stockholders’ equity		5,000,008		23,108
Total Liabilities and Stockholders' Equity	$	345,776,201	$	291,250


	For the Three		For the Six
	Months Ended		Months Ended
	June 30, 2021		June 30, 2021

General and administrative expenses	$	124,777	$	767,137
Franchise tax expense		49,315		97,584
Loss from operations		(174,092)		(864,721)
Change in fair value of derivative warrant liabilities		(6,988,000)		(2,739,170)
Financing costs - derivative warrant liabilities		—		(449,070)
Income from investments held in Trust Account		5,243		8,873
Net loss	$	(7,156,849)	$	(4,044,088)

Weighted average shares outstanding of Class A redeemable common stock		31,968,089		31,826,280
Basic and diluted net income per share, Class A redeemable common stock	$	—	$	—
Basic and diluted weighted average shares outstanding of non-redeemable common stock		11,156,911		10,732,060
Basic and diluted net loss per share, non-redeemable common stock	$	(0.64)	$	(0.38)


	Common Stock										Total
	Class A			Class B			Additional Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance - December 31, 2020	—	$	—	8,625,000	$	863	$	24,137	$	(1,892)	$	23,108
Sale of shares in initial public offering, gross	34,500,000		3,450	—		—		337,234,050		—		337,237,500
Offering costs	—		—	—		—		(19,114,492)		—		(19,114,492)
Excess of cash received over fair value of private placement warrants	—		—	—		—		3,500,670		—		3,500,670
Common stock subject to possible redemption	(31,975,954)		(3,198)	—		—		(319,756,342)		—		(319,759,540)
Net income	—		—	—		—		—		3,112,761		3,112,761
Balance - March 31, 2021 (unaudited)	2,524,046	$	252	8,625,000	$	863	$	1,888,023	$	3,110,869	$	5,000,007
Common stock subject to possible redemption	715,685		72	—		—		7,156,778		—		7,156,850
Net loss	—		—	—		—		—		(7,156,849)		(7,156,849)
Balance - June 30, 2021 (unaudited)	3,239,731	$	324	8,625,000	$	863	$	9,044,801	$	(4,045,980)	$	5,000,008


Cash Flows from Operating Activities:
Net loss	$	(4,044,088)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative warrant liabilities		2,739,170
Financing costs - derivative warrant liabilities		449,070
Income from investments held in Trust Account		(8,873)

Changes in operating assets and liabilities:
Prepaid expenses		(352,584)
Accounts payable		66,277
Accrued expenses		(127,415)
Franchise tax payable		50,499
Net cash used in operating activities		(1,227,944)

Cash Flows from Investing Activities
Cash deposited in Trust Account		(345,000,000)
Net cash used in investing activities		(345,000,000)

Cash Flows from Financing Activities:
Repayment of note payable		(130,000)
Proceeds received from initial public offering, gross		345,000,000
Proceeds received from private placement		8,900,000
Offering costs paid		(7,143,422)
Net cash provided by financing activities		346,626,578

Net increase in cash		398,634

Cash - beginning of the period		16,110
Cash - end of the period	$	414,744

Supplemental disclosure of noncash financing activities:
Offering costs included in accrued expenses	$	70,000
Deferred underwriting commissions	$	12,075,000
Offering costs charged to additional paid-in capital in connection with the initial public offering	$	588,562
Initial value of Class A common stock subject to possible redemption	$	316,157,260
Change in value of Class A common stock subject to possible redemption	$	(3,554,570)


	For the Three Months		For the Six Months
	Ended June 30, 2021		Ended June 30, 2021
Class A redeemable Common stock
Numerator: Earnings allocable to redeemable Common stock
Income from investments held in Trust Account	$	4,751	$	8,040
Less: Company's portion available to be withdrawn to pay taxes		(4,751)		(8,040)
Net income attributable	$	—	$	—
Denominator: Weighted-average Class A redeemable common stock
Basic and diluted weighted-average shares outstanding		31,968,089		31,826,280
Basic and diluted net income per share	$	0.00	$	0.00

Non-Redeemable Common Stock
Numerator: Net income minus Net Earnings
Net (loss) income	$	(7,156,849)	$	(4,044,088)
Net income allocable to Class A non-redeemable common stock		—		—
Non-redeemable net loss	$	(7,156,849)	$	(4,044,088)
Denominator: weighted average Non-redeemable common stock
Basic and diluted weighted average shares outstanding, Non-redeemable common stock		11,156,911		10,732,060
Basic and diluted net loss per share, Non-redeemable common stock	$	(0.64)	$	(0.38)


	Fair Value Measured as of June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets
Investments held in Trust Account	$	345,008,873	$	0	$	0	$	345,008,873
Liabilities:
Derivative public warrant liabilities	$	9,315,000	$	0	$	0	$	9,315,000
Derivative private warrant liabilities	$	0	$	0	$	6,586,000	$	6,586,000
Total fair value	$	354,323,873	$	0	$	6,586,000	$	360,909,873


	As of January 12, 2021		As of March 31, 2021		As of June 30, 2021
Exercise price	11.50		11.50		11.50
Stock Price	9.79		9.76		9.70
Option term (in years)	5.00		5.00		4.98
Volatility	19	%	14	%	18	%
Risk-free interest rate	0.7	%	1.0	%	0.9	%


Derivative warrant liabilities at January 1, 2021 - Level 3	$	—
Issuance of Derivative Warrants - Level 3		13,161,830
Transfer of Public Warrants to Level 1		(7,762,500)
Change in fair value of derivative warrant liabilities - Level 3		(1,661,330)
Derivative warrant liabilities at March 31, 2021 - Level 3	$	3,738,000
Change in fair value of derivative warrant liabilities - Level 3		2,848,000
Derivative warrant liabilities at June 30, 2021 - Level 3	$	6,586,000


No.		Description of Exhibit
31.1*		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
31.2*		Certification of Principal Financial 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
32.1**		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


	DIAMONDHEAD HOLDINGS CORP.

	By:	/s/ David T. Hamamoto
	Name:	David T. Hamamoto
	Title:	Chief Executive Officer (Principal Executive Officer)

SEC Form 10-Q filed by DiamondHead Holdings Corp.