Digital World Acquisition (DWAC) - 2022 Q4 - Annual Report

IPO and Financial Proceeds - The company completed its initial public offering on September 8, 2021, raising gross proceeds of $287,500,000 from the sale of 28,750,000 units at a price of $10.00 per unit[23]. - A total of $293,250,000 was placed in the trust account, which includes $283,906,250 from the IPO proceeds and $9,343,750 from the private sale of placement units[25]. - The company has $300,330,651 available for an initial business combination as of December 31, 2022, before payment of $10,062,500 in deferred underwriting fees[77]. - The company incurred transaction costs of $15,668,029 related to the initial public offering, including $3,593,750 in underwriting fees[191]. Merger Agreement and Business Combination - The company entered into a Merger Agreement for the TMTG Business Combination on October 20, 2021, with an amendment on May 11, 2022[27]. - The Merger Agreement may be terminated if the TMTG Business Combination is not consummated by the Outside Date, which can be extended under certain conditions[36]. - The company anticipates the TMTG Business Combination will be consummated on or before the Outside Date, with efforts currently limited to organizational activities and investigating potential business combinations[50]. - The company has extended the period to consummate an initial business combination by up to 12 additional months, from September 8, 2022, to September 8, 2023[48]. - The company has until June 8, 2023, to consummate a business combination, with a possibility of extending this deadline[198]. PIPE Investment and Shareholder Approval - PIPE Investors committed to purchase 1,000,000 shares of Series A Convertible Preferred Stock for a total of $1,000,000,000, with an initial conversion price of $33.60 per share[28]. - The PIPE closing is contingent upon the effectiveness of the Initial Resale Registration Statement, which has not yet been declared effective by the SEC[37]. - The company has received termination notices from certain PIPE Investors who initially agreed to purchase up to 251,500 shares of Series A Convertible Preferred Stock[35]. - Stockholder approval is required for mergers with a target, while asset purchases and stock purchases not involving a merger do not require approval[100]. - A majority of outstanding shares must vote in favor of the initial business combination for it to be approved, requiring at least 837,939 public shares (2.9% of 28,745,952) to be voted in favor[110]. Financial Condition and Risks - For the year ended December 31, 2022, the company reported a net loss of $15,221,263, primarily due to formation and operating expenses of $18,499,257, partially offset by income on trust assets of $4,257,469[185]. - The company has identified a material weakness in its internal control over financial reporting as of December 31, 2022[29]. - There is substantial doubt about the company's ability to continue as a "going concern"[29]. - The company may face increased competition to find attractive targets for initial business combinations, potentially raising costs[29]. - Recent increases in inflation and interest rates could complicate the consummation of an initial business combination[29]. Internal Controls and Compliance - The company is required to provide audited financial statements of the prospective target business to stockholders, which may limit the pool of potential targets[145]. - The company must comply with the Sarbanes-Oxley Act regarding internal control procedures, which may increase the time and costs necessary to complete any business combination[146]. - The company concluded that its disclosure controls and procedures were not effective as of December 31, 2022, due to a material weakness in internal control over financial reporting related to accounting for accruals[213]. - The inherent limitations of internal control mean that it may not prevent or detect errors or misstatements in financial statements[213]. Redemption Rights and Shareholder Actions - Public stockholders can redeem shares at a price equal to the amount in the trust account divided by the number of outstanding public shares, subject to certain limitations[106]. - The company must maintain net tangible assets of at least $5,000,001 to complete the initial business combination or conduct redemptions[114]. - If the initial business combination is not approved, public stockholders who elected to redeem their shares will not be entitled to any redemption[121]. - The company will provide at least 20 business days for public stockholders to redeem shares if conducting redemptions under tender offer rules[112]. Management and Operational Structure - The company has three officers who are not obligated to devote specific hours to its matters, and it does not plan to have full-time employees before completing its initial business combination[142]. - The company has agreed to pay $15,000 per month for administrative support and office space to an affiliate of its sponsor[84]. - The company’s management is focused on ensuring that transactions are recorded accurately to permit the preparation of financial statements in accordance with GAAP[219].