Digital World Acquisition (DWAC) - 2021 Q4 - Annual Report

IPO and Trust Account - 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[22]. - A total of $293,250,000 was placed in a trust account, which includes $283,906,250 from the IPO proceeds and $9,343,750 from the private sale of placement units[24]. - The company has available funds for an initial business combination amounting to $293,257,098 before the payment of $10,062,500 in deferred underwriting fees[112]. - A total of $293,250,000 from the initial public offering proceeds was placed in a U.S.-based trust account, which may only be invested in U.S. government securities or money market funds[207]. - The company incurred offering costs of $15,668,029, including deferred underwriting commissions of $10,062,500[208]. Merger Agreement and Consideration - The merger consideration for TMTG stockholders is set at $875,000,000, subject to adjustments for TMTG's closing debt and transaction expenses[30]. - The merger agreement requires approval from both DWAC's and TMTG's stockholders[42]. - The merger agreement is contingent upon DWAC having at least $60,000,000 in cash at closing, including funds from its trust account and proceeds from any PIPE investment[48]. - The merger agreement allows for a lock-up period for significant stockholders, preventing them from selling shares for six months post-closing or until certain stock price conditions are met[59]. - Five percent (5%) of the merger consideration will be held in escrow for twelve months post-closing to cover any purchase price adjustments and indemnification claims[32]. PIPE Investment - TMTG has entered into securities purchase agreements with PIPE investors for up to $1,000,000,000, which will be used to support the business combination[61]. - The preferred stock issued to PIPE investors is convertible into approximately 29,761,905 shares of common stock, with an initial conversion price of $33.60 per share[61]. - The PIPE is expected to generate approximately $1.25 billion in net proceeds, after deducting estimated transaction fees and related expenses[79]. Business Combination and Target Acquisition - The company plans to target businesses with a total enterprise value between $400 million and $2 billion, focusing on SaaS and FinTech sectors[93]. - The company aims to acquire businesses with strong revenue and earnings growth potential through new product development and synergistic acquisitions[93]. - The company intends to acquire businesses that have a defensible market position and demonstrated competitive advantages[95]. - The company must complete one or more business combinations with an aggregate fair market value of at least 80% of the assets held in the trust account at the time of signing a definitive agreement[121]. - The company intends to acquire 50% or more of the outstanding voting securities of the target business to avoid registration as an investment company under the Investment Company Act[122]. Stockholder Approval and Redemption Rights - Stockholder approval will be required for certain types of transactions, such as mergers where the company does not survive[133]. - A majority of the outstanding shares of common stock must vote in favor of the initial business combination for it to be approved, requiring at least 982,701 shares (3.4% of 28,750,000 public shares) if only the minimum quorum is present[145]. - The anticipated per-share redemption price for public stockholders upon completion of the initial business combination is approximately $10.20[140]. - Public stockholders are restricted from seeking redemption rights for more than 15% of the shares sold in the initial public offering, which amounts to 4,312,500 shares[151]. - The company may conduct redemptions without stockholder votes under certain conditions, but will seek approval if required by law or stock exchange rules[141]. Financial and Operational Considerations - The company has not paid any cash dividends on its common stock to date and does not intend to do so prior to the completion of its initial business combination[203]. - As of December 31, 2021, the company had approximately $327,731 in cash held outside the trust account to fund costs associated with its dissolution plan[165]. - The company faces intense competition from established entities, including other blank check companies and private equity groups, which may limit its ability to acquire larger target businesses due to financial resource constraints[179]. - The company currently has two officers who are not obligated to devote specific hours, and it does not intend to have full-time employees before completing its initial business combination[180]. - The company may face challenges in identifying suitable target businesses due to competition and the potential lack of financial statements prepared in accordance with GAAP or IFRS[183]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[107]. - The company will remain an emerging growth company until it reaches total annual gross revenue of at least $1.07 billion or the market value of its Class A common stock exceeds $700 million[110]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements, which may affect the attractiveness of its securities to investors[185]. - As a smaller reporting company, the company is not required to provide extensive disclosures, including uncertainties that could materially affect its operations[189]. - The company must maintain net tangible assets of at least $5,000,001 before or upon consummation of the initial business combination[149].