Mezzanine Equity, Members' Equity and Stockholders' Equity |
12 Months Ended | |||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||
Mezzanine Equity, Members' Equity and Stockholders' Equity [Abstract] | ||||||||||||||||||
Members' Equity, Mezzanine Equity and Stockholders' Equity |
All of the Company’s outstanding preferred units are classified in mezzanine equity as they can be redeemed in a deemed liquidation of the Company outside of the
Company’s control. Additionally, prior to the Corporate Reorganization, the Company had certain non-voting common units that could have been redeemed outside the Company’s control, and therefore, were classified in mezzanine equity (the “Redeemable
Common Units Mezzanine”). In April 2020, the
Company redeemed 1,000 Series C Preferred Units for $1,000,000 plus accrued unpaid preferred distributions of $62,500.
Pursuant to the Corporate Reorganization effective January 25, 2021, the Company is authorized to issue 350,000,000 shares of common stock, par value of $0.01 per share,
consisting of 289,000,000 shares of Class A common stock and 61,000,000 shares of Class B common stock. The Board of Directors of the Company (the “Board of Directors”) has the authority to issue one or more series of preferred stock, par value $0.01 per share, without
stockholder approval.
As a result of the Corporate Reorganization, all of the outstanding non-voting common units and Series A Preferred Units of DFH LLC converted into 21,255,329 shares of the Company’s Class A common stock and all of the outstanding common units of DFH LLC converted into 60,226,153 shares of the Company’s Class B common stock. On
January 27, 2021, the Company redeemed
all of the outstanding Series C Preferred Units for $26,000,000, including $500,000 of discounted costs, plus accrued unpaid preferred distributions of $200,000.
Following the Corporate Reorganization, the Company owns all of the voting membership interest of DFH LLC.
Redeemable Series B Preferred Units of DFH LLC
As of December 31, 2021 and 2020, the Company had 7,143 and 7,143, respectively, of Redeemable Series B Preferred Units (“Series B
Preferred Units”) issued and outstanding with a carrying value of $7,095,178 and $6,333,036, respectively. In the event of a liquidation, dissolution or winding up of DFH LLC, the Series B Preferred Units have a liquidation preference of $1,000 per unit and are senior to common units. The Series B Preferred Units have an 8% annual cumulative preferred distribution on the
liquidation preference that is payable if and when distributions are declared. The Series B Preferred units do not participate in discretionary distributions, and each unit has the right to one vote on any matter presented for a vote of the members of DFH LLC. As of December 31, 2021 and 2020, these units have an aggregate unpaid amount of
cumulative preferred distributions of $2,864,834 and $2,102,692,
respectively, which is $401.07 and $294.37, respectively, per unit.
The Series B Preferred Units can be redeemed at
DFH LLC’s option for $1,000 per unit
plus any accrued and unpaid preferred distributions per unit at any time prior to December 31, 2022. The units may also be redeemed at the option of the holder upon a sale of DFH LLC for $1,000 per unit plus any accrued and unpaid preferred distributions. As the units are not currently
probable of becoming redeemable outside the Company’s control, no accretion has been recorded.
Series A Convertible
Preferred Stock of the Company
On September 29, 2021, the Company filed a
Certificate of Designations with the State of Delaware establishing 150,000 shares of Series A Convertible Preferred Stock with an
initial liquidation preference of $1,000 per share and a par value $0.01 per share (the “Convertible Preferred Stock”) and sold 150,000 shares of
Convertible Preferred Stock for an aggregate purchase price of $150,000,000. The Company used the proceeds from the sale of the
Convertible Preferred Stock to fund a portion of the MHI acquisition (See Note 2).
Pursuant to the Certificate of Designations, the
Convertible Preferred Stock ranks senior to the Company’s Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Upon a liquidation, dissolution or winding up of the Company, each share of
Convertible Preferred Stock will be entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus
all accrued and unpaid dividends thereon. In addition, the Convertible Preferred Stock has the following terms:
Pursuant to the terms of
the Certificate of Designations, unless and until approval of the Company’s stockholders is obtained as contemplated by Nasdaq listing rules, no shares of Class A common stock will be issued or delivered upon conversion of any Convertible Preferred
Stock to the extent that such issuance would (i) result in the holder beneficially owning in excess of 19.99% of the outstanding Class A
common stock as of the date of the Certificate of Designations or (ii) exceed 19.99% of the outstanding shares of Class A and Class B
common stock combined as of the date of the Certificate of Designations.
In addition, in
connection with the sale of the Convertible Preferred Stock, on September 29, 2021, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company
granted the Purchasers certain registration rights. Under the Registration Rights Agreement, the Company is required to register the Convertible Preferred Stock owned by the Purchasers and the shares of Class A common stock issuable upon conversion
of such shares equal to 19.99% of the outstanding shares of Class A common stock for resale within the earlier of (i) three business days after the filing of the Company’s Form 10-K for the fiscal year ended December 31, 2021 and (ii) six months after September 29, 2021. If the Company fails to comply with its registration requirements under the Registration Rights Agreement, the
Purchasers, in addition to any regular dividends, will be entitled to an additional 2% per annum dividend for an additional quarter
period on the Convertible Preferred Stock if the breach is cured within 30 days and for each additional 30 day period in which the Company fails to cure such breach, each Purchaser will be entitled to an additional 2% per annum for an additional quarter period until cured. In addition, the Purchaser has rights to demand the registration of the Convertible Preferred Stock and the shares
of Class A common stock in certain instances.
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