Trump Media & Technology Group Corp 10-K/A for FY2022
Trump Media & Technology Group Corp. (DJT)
10-K/A
2024-01-09
For: 2022-12-31
View Original
Added on
April 07, 2026
About this 10-K/A
Trump Media & Technology Group Corp filed this 10-K/A on January 9, 2024, covering the fiscal year ended December 31, 2022 (FY2022).
Headline figures
Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $15.64M
- compared with a net loss of $1.95M a year earlier
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment Number 2)
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file
number: 001-40779
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
Miami, (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
(305 ) 735-1517
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
Trading Symbol(s) |
Name of each exchange on which registered: | ||
and one-half of one redeemable Warrant |
||||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
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 Yes ☒ No ☐
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 and post such files). 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 definition 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 |
☐ | |||
☒ |
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in ☒ No ☐
Rule 12b-2 of
the Exchange Act). Yes If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant
to §240.10D-1(b) . ☐
The aggregate market value of the outstanding shares of the registrant’s Class A common stock, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing price for the Class A common stock on June 30, 2022, as reported on the Nasdaq Global Market was $698,073,000 .
As of December 29, 2023, there were 30,023,186 shares of Class A common stock, par value $0.0001 per share, and 7,187,500 shares of Class B common stock, par value $0.0001 per share, of the registrant issued and outstanding.
Table of Contents
EXPLANATORY NOTE
This Amendment No. 2 to Form .
10-K
(the “Second Amendment”) amends the Annual Report on Form 10-K
for the fiscal year ended December 31, 2022, originally filed on April 26, 2023 (the “Original 10-K”),
as amended on October 30, 2023 (the “First Amendment”), of Digital World Acquisition Corp. (“DWAC”). DWAC is filing the Second Amendment solely to amend Item 15(a)(1) of the First Amendment to include (i) an updated Report of Independent Registered Public Accounting Firm and (ii) updated disclosure under Note 2. Restatement of Previously Issued Financial Statements
This Second Amendment should be read in conjunction with the Original
10-K
and the First Amendment. Except as specifically set forth in this Second Amendment and the First Amendment, the Original 10-K
has not been amended or updated to reflect events occurring after April 26, 2023. Item 15. |
Exhibit and Financial Statement Schedules. |
(a) The following documents are filed as part of this Report:
(1) Financial Statements
Page |
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F-1 |
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F-3 |
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F-4 |
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F-5 |
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F-7 |
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F-8 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Digital World Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Digital World Acquisition Corp. (the Company) as of December 31, 2022, and 2021, and the related statements of operations, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, it is uncertain that the Company will consummate a business merger in the allotted time. If a business merger is not consummate but the specified date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company has incurred and expects to incur significant cost in pursuit of its acquisition plans. These factors raise a substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Restatement
As discussed in Note 2 to the financial statements, the 2022 and 2021 financial statements have been restated to correct certain misstatements related to errors for the accounting of certain expenses in the proper period.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
F-1
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Adeptus Partners, LLC
We have served as the Company’s auditor since 2023.
October 27, 2023,
PCAOB ID: 3686
F-2
DIGITAL WORLD ACQUISITION CORP.
BALANCE SHEETS
December 31, |
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2022 |
2021 |
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(restated) |
(restated) |
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ASSETS |
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Current assets |
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Cash |
$ | $ | ||||||
Prepaid assets |
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Total Current Assets |
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Prepaid assets |
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Cash Held in Trust Account |
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TOTAL ASSETS |
$ |
$ |
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LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT |
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Current liabilities |
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Accrued expenses |
$ | $ | ||||||
Note payable Sponsor |
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Income taxes – payable |
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Franchise tax payable |
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Working capital loans |
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Advances – related party |
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Total Current Liabilities |
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Deferred underwriter fee payable |
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TOTAL LIABILITIES |
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Commitments and Contingencies |
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Class A common stock subject to possible redemption, $ |
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Stockholders’ Deficit |
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Preferred stock, $ |
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Class A common stock, $ issued and outstanding, excluding |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
Total Stockholders’ Deficit |
( |
) | ( |
) | ||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT |
$ |
$ |
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The accompanying notes are an integral part of these financial statements.
F-
3
DIGITAL WORLD ACQUISITION CORP.
STATEMENTS OF OPERATIONS
For the Year ended December 31, |
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2022 |
2021 |
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(restated) |
(restated) |
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Formation and operating costs |
$ | $ | ||||||
Legal investigations costs |
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Franchise tax expense |
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Loss from operating costs |
( |
) |
( |
) | ||||
Other income and expenses: |
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Interest earned on cash held in Trust Account |
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Loss before income taxes |
( |
) | ( |
) | ||||
Income tax expense |
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Net loss |
$ |
( |
) |
$ |
( |
) | ||
Weighted average shares outstanding of Class A common stock |
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Basic and diluted net loss per Class A common stock |
$ |
( |
) |
$ |
( |
) | ||
Weighted average shares outstanding of Class B common stock |
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Basic and diluted net loss per Class B common stock |
$ |
( |
) |
$ |
( |
) | ||
The accompanying notes are an integral part of these financial statements.
F-
4
DIGITAL WORLD ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
Class A Common Stock |
Class B Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
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Shares |
Amount |
Shares |
Amount |
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| Balance – December 31, 2021 (restated) |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
| Net loss |
( |
) | ( |
) | ||||||||||||||||||||||||
| Remeasurement of Class A common stock to redemption value |
( |
) | ( |
) | ||||||||||||||||||||||||
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| Balance – December 31, 2022 (restated) |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
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F-
5
DIGITAL WORLD ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
Class A Common Stock |
Class B Common Stock |
Additional Paid-In |
Accumulated |
Total Stockholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Deficit |
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| Balance – December 31, 2020 |
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| Issuance of Class B common stock to sponsor (1)(2) |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
| Class A common stock accretion to redemption value |
— | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Issuance of Class A common stock to investor, net of offering costs |
— | — | — | |||||||||||||||||||||||||
| Issuance of Class A common stock to representative |
( |
) | ||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | ( |
) | ( |
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| Balance – December 31, 2021 (restated) |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
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| (1) | The shares and the associated amounts have been retroactively restated to reflect the |
| (2) | On September 2, 2021, the Sponsor surrendered an aggregate of |
The accompanying notes are an integral part of these financial statements.
F-
6
DIGITAL WORLD ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
For the Year end December 31, |
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2022 |
2021 |
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(restated) |
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Cash flows from operating activities: |
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Net loss |
$ |
( |
) |
$ |
( |
) | ||
Adjustments to reconcile net income to net cash used in operating activities: |
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Interest earned on cash and marketable securities held in Trust Account |
( |
) |
( |
) | ||||
Changes in operating assets and liabilities: |
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Accrued expenses |
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Income taxes payable |
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Prepaid insurance |
( |
) | ||||||
Franchise tax payable |
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Net cash used in operating activities |
( |
) |
( |
) | ||||
Cash flows from investing activities: |
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Investment of cash in Trust Account |
( |
) |
( |
) | ||||
Cash withdrawn from Trust Account for redemptions |
— |
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Net cash used in investing activities |
( |
) |
( |
) | ||||
Cash flows from financing activities: |
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Proceeds from sale of Units |
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Proceeds from sale of private placement warrants |
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Proceeds from Sponsor note |
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Repayment of Sponsor note |
( |
) | ||||||
Due from Sponsor |
( |
) | ||||||
Payment of due from Sponsor |
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Payment of offering costs |
( |
) | ||||||
Proceeds from working capital loan |
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Proceeds from advances – related party |
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Redemption of shares |
( |
) |
— |
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Proceeds from issuance of Class B common stock to Sponsor |
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Net cash provided by financing activities |
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Net change in cash |
( |
) |
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Cash at beginning of period |
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Cash at end of period |
$ |
$ |
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Non-cash investing and financing activities: |
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Deferred underwriting fee payable |
$ |
$ |
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Remeasurement of Class A common stock |
$ |
$ |
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The accompanying notes are an integral part of these financial statements.
F-
7
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND GOING CONCERN
Digital World Acquisition Corp. (the “Company”) is a blank check company incorporated in the State of Delaware on December 11, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with
or more businesses or entities (“Business Combination”). Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on middle-market emerging growth technology-focused companies in the Americas, in the SaaS and Technology or Fintech and Financial Services sector.
As of December 31, 2022, the Company had not yet commenced operations. All activity through December 31, 2022 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below and the search for targets for its initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates
non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering and the concurrent Private Placement (as defined below). The Company has selected December 31 as its fiscal year end. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The registration statement for the Company’s Initial Public Offering was declared effective on September 2, 2021 (the “Registration Statement”). On September 8, 2021, the Company consummated the Initial Public Offering of
units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $
per Unit, generating gross proceeds of $
, and incurred offering costs of $
, consisting of deferred underwriting commissions of $
(see Note
4
), fair value of the representative shares (as defined in Note
8
) of $
, fair value of shares issued to the anchor investors of the Company’s Initial Public Offering of $
, fair value of shares transferred to officers and directors of $
, and other offering costs of $
. The Units sold in the Initial Public Offering included Units that were subject to a
option granted to the underwriter to purchase up to an additional
Units at the Initial Public Offering price to cover over-allotment, which was exercised in full in connection with the consummation of the Initial Public Offering.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
units (the “Placement Units”) at a price of $
per Placement Unit in a private placement (“Private Placement”) to the Company’s sponsor, ARC Global Investments II LLC (the “Sponsor”), generating gross proceeds of $
, which is described in Note
5
.
Following the closing of the Initial Public Offering on September 8, 2021, an amount of $
($
per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Placement Units was placed in a trust account (the “Trust Account”) located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in money market funds meeting the conditions of paragraph (d) of Rule
2a-7
of the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination, (ii) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation (“Amended and Restated Certificate of Incorporation”) (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial Business Combination or certain amendments to its Amended and Restated Certificate 8
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
of Incorporation prior thereto or to redeem
% of the Public Shares if the Company does not complete its initial Business Combination within the Combination Period (as defined below) or (B) with respect to any other provision relating to stockholders’ rights or
pre-Business
Combination activity and (iii) the redemption of
% of the Public Shares if the Company is unable to complete an initial Business Combination within the Combination Period (subject to the requirements of applicable law).
The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $
upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination, unless otherwise required by applicable law, regulation or stock exchange
rules.
If
The stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $
per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per- share amount to be distributed to stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
All of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Company’s Business Combination and in connection with certain amendments to the Company’s Amended and Restated Certificate of Incorporation. In accordance with the rules of the U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of a company require common stock subject to redemption to be classified outside of permanent equity. Because of the redemption feature noted above, the shares of Class A common stock are subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital). While redemptions cannot cause the Company’s net tangible assets to fall below $
, the Public Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption event
takes place.
9
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
If a stockholder vote is not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, offer such redemption pursuant to the tender offer rules of the SEC, and file tender offer documents containing substantially the same information as would be included in a proxy
statement
with the SEC prior to completing a Business Combination.The Sponsor and the Company’s officers and directors have agreed (a) to vote any shares of Class B common stock of the Company (the “Founder Shares”), the shares of Class A common stock included within the Placement Units (the “Private Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) waive their redemption rights with respect to any Founder Shares, Private Shares held by them and any Public Shares purchased during or after the Initial Public Offering in connection with the completion of the Business Combination, (c) not to waive their redemption rights with respect to any Founder Shares, Private Shares held by them and any Public Shares purchased during or after the Initial Public Offering in connection with a stockholder vote to approve an amendment to the Amended and Restated Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial Business Combination or certain amendments to its Amended and Restated Certificate of Incorporation prior thereto or to redeem
% of the Public Shares if the Company does not complete an initial Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or
pre-initial
Business Combination activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares and Private Shares held by them if the Company fails to complete its initial Business Combination within the Combination Period, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete its initial Business Combination within the Combination Period. The Company’s anchor investors have agreed to (1) vote any Founder Shares held by them in favor of the initial Business Combination, (2) waive their redemption rights with respect to any Founder Shares held by them in connection with the completion of the Company’s initial Business Combination, and (3) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if the Company fails to complete its initial Business Combination within the Combination Period.
On November 22, 2022, the Company held a special meeting of stockholders. At the meeting, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware extending, upon the request of the Sponsor and approval by the Board, the period of time for the Company to consummate an initial business combination up to four times, each by an additional three months, for an aggregate of 12 additional months (which is from September 8, 2022 up to September 8, 2023).
In
connection with the special meeting of stockholders, stockholders holding
shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s trust account. As a result, $
(approximately $
per share) was removed from the Company’s trust account to pay such holders.
On September 8, 2022, the Company issued a promissory note in the aggregate principal amount of $
10
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
The Company has until June 8, 2023 (or September 8, 2023, if extended), to
consummate a Business Combination (the “Combination Period”).
If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than
business days thereafter, redeem
% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $
,
divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than $
.
The Sponsor
has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $
per share (whether or not the underwriters’ over-allotment option is exercised in full), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the company’s independent registered accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern Consideration
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Account Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” as stated above, the Company has until June 8, 2023 (or September 8, 2023, if extended) to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company has incurred and expects to incur significant costs in pursuit of its acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements. As a result, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Proposed Business Combination
The Company entered into an Agreement and Plan of Merger, dated as of October 20, 2021 (as amended by the First Amendment to Agreement and Plan of Merger, dated May 11, 2022, and as it may be further amended
11
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
or supplemented from time to time, the “Merger Agreement”) with DWAC Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Trump Media & Technology Group Corp., a Delaware corporation (“TMTG”), the Sponsor, in the capacity as the representative for certain stockholders of the Company, and TMTG’s General Counsel, in the capacity as the representative for stockholders of TMTG.
Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, (i) upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into TMTG (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”), with TMTG continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of the Company. In the Merger, (i) all shares of TMTG common stock (together, “TMTG Stock”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than those properly exercising any applicable dissenters rights under Delaware law) will be converted into the right to receive the Merger Consideration (as defined below); (ii) each outstanding option to acquire shares of TMTG common stock (whether vested or unvested) will be assumed by the Company and automatically converted into an option to acquire shares of the Company common stock, with its price and number of shares equitably adjusted based on the conversion ratio of the shares of TMTG common stock into the Merger Consideration and (iii) each outstanding restricted stock unit of TMTG shall be converted into a restricted stock unit relating to shares of the Company’s common stock. At the Closing, the Company will change its name to “Trump Media & Technology Group Corp.”
The aggregate merger consideration to be paid pursuant to the Merger Agreement to holders of TMTG common stock as of immediately prior to the Effective Time (“TMTG Stockholders” and, together with the holders of TMTG options and restricted stock units immediately prior to the Effective Time, the “TMTG Security Holders”) will be an amount equal
by-laws
and the Company’s Initial Public Offering prospectus. The Merger Consideration will be subject to a post-Closing true up On December
shares of common stock. The closing of the PIPE is conditioned on the concurrent closing of the Transactions and other closing conditions as set forth in the SPA.
Pursuant to the SPAs, each of the PIPE Investors may terminate its respective SPA, among other things, if the closing of the PIPE has not occurred on or prior to September 20, 2022. As a result, the Company received termination notices from certain PIPE Investors, who originally agreed to purchase up to
Stock.
F-
12
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the financial statements of the Company as of and for the three months ended March 31, 2023, the Company determined that there were errors related to the accounting for certain expenses in the proper period in the previously issued 2022 and 2021 financial statements as well as the unaudited interim financial information for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company determined that the errors were material to its previously issued financial statements. Therefore, the Company concluded that the previously issued financial statements should be restated. Specifically, there was an improper cutoff of accrued expenses and related party payables at each balance sheet date, resulting in payables not being recorded in the correct period. Consequently, this led to inaccuracies in the reported formation and operating costs in each statement of operations. Furthermore, reclassification adjustments were made for accrued expenses and income tax payables at certain balance sheet dates to improve disclosure and ensure period-to-period comparability. Similar adjustments were applied to formation and operating costs, as well as legal investigation expenses in certain statements of operations, again to enhance disclosure and comparability. Finally, an adjustment was made to the Class A common stock subject to possible redemption as of June 30, 2022, to accurately reflect the impact of interest earned on cash held in the Trust Account, net of the applicable tax expense.
The relevant unaudited interim financial information for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022 is included in Note 1
0
, Quarterly Financial Information (Unaudited). The
following tables summarize the effect of the restatement on each financial statement line items as of the dates, and for the period, indicated:
As previously reported |
Adjustments |
As restated |
||||||||||
Balance sheet as of December 31, 2022 |
||||||||||||
Accrued expenses |
||||||||||||
Income tax payable |
— | |||||||||||
Related party advance |
||||||||||||
Total current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Accumulated deficit |
( |
) |
( |
) | ( |
) | ||||||
Total Stockholders’ Deficit |
( |
) |
( |
) | ( |
) | ||||||
Statement of Operations for the year ended December 31, 2022 |
||||||||||||
Legal investigations costs |
— | |||||||||||
Formation and operating costs |
( |
) |
||||||||||
Loss from operation costs |
( |
) |
( |
) | ( |
) | ||||||
Loss before income taxes |
( |
) |
( |
) | ( |
) | ||||||
Net loss |
( |
) |
( |
) | ( |
) | ||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) |
( |
) | ||||||
Statement of Changes in Stockholders’ Deficit for the year ended December 31, 2022 |
||||||||||||
Net loss |
( |
) |
( |
) | ( |
) | ||||||
Total accumulated deficit |
( |
) |
( |
) | ( |
) | ||||||
Total stockholders’ deficit |
( |
) |
( |
) | ( |
) | ||||||
Statement of Cash Flows for the year ended December 31, 2022 |
||||||||||||
1
3DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
As previously reported |
Adjustments |
As restated |
||||||||||
Net loss |
( |
) |
( |
) | ( |
) | ||||||
Accrued expenses |
||||||||||||
Related party advance |
||||||||||||
Net cash provided by operating activities |
||||||||||||
As previously reported |
Adjustments |
As restated |
||||||||||
Balance sheet as of September 30, 2022 |
||||||||||||
Accrued expenses |
( |
) | ||||||||||
Income tax payable |
||||||||||||
Related party advance |
— |
|||||||||||
Total current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total Stockholders’ Deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Operations for the three months ended September 30, |
||||||||||||
Legal investigations costs |
— |
|||||||||||
Formation and operating costs |
( |
) |
||||||||||
Loss from operation costs |
( |
) |
( |
) |
( |
) | ||||||
Loss before income taxes |
( |
) |
( |
) |
( |
) | ||||||
Income tax expense |
( |
) |
( |
) |
( |
) | ||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) |
( |
) | ||||||
Statement of Operations for the nine months ended September 30, 2022 |
||||||||||||
Legal investigations costs |
— |
|||||||||||
Formation and operating costs |
( |
) |
||||||||||
Loss from operation costs |
( |
) |
( |
) |
( |
) | ||||||
Loss before income taxes |
( |
) |
( |
) |
( |
) | ||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) |
( |
) | ||||||
Statement of Changes in Stockholders’ Deficit for nine months ended |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Total accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total stockholders’ deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Cash Flows for the nine months ended September 30, 2022 |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Accrued expenses |
( |
) |
||||||||||
Income tax payable |
— |
|||||||||||
Net cash provided by operations |
( |
) |
( |
) |
( |
) | ||||||
Related party advance |
— |
|||||||||||
Net cash provided by financing activities |
||||||||||||
14
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
As previously reported |
Adjustments |
As restated |
||||||||||
Balance sheet as of June 30, 2022 |
||||||||||||
Accrued expenses |
||||||||||||
Income tax payable |
||||||||||||
Related party advance |
— | |||||||||||
Total current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Class A common stock subject to possible redemption |
||||||||||||
Accumulated deficit |
( |
) |
( |
) | ( |
) | ||||||
Total Stockholders’ Deficit |
( |
) |
( |
) | ( |
) | ||||||
Statement of Operations for the three months ended June 30, 2022 |
||||||||||||
Legal investigations costs |
— | |||||||||||
Formation and operating costs |
( |
) |
||||||||||
Loss from operation costs |
( |
) |
( |
) | ||||||||
Loss before income taxes |
( |
) |
( |
) | ||||||||
Income tax expense |
( |
) |
( |
) | ||||||||
Net loss |
( |
) |
( |
) | ||||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) | ||||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) | ||||||||
Statement of Operations for the six months ended June 30, 2022 |
||||||||||||
Legal investigations costs |
— |
|||||||||||
Formation and operating costs |
( |
) |
||||||||||
Franchise tax |
— |
|||||||||||
Loss from operation costs |
( |
) |
( |
) | ( |
) | ||||||
Loss before income taxes |
( |
) |
( |
) | ( |
) | ||||||
Income tax expense |
( |
) |
( |
) | ||||||||
Net loss |
( |
) |
( |
) | ( |
) | ||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) | ||||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) | ||||||||
Statement of Changes in Stockholders’ Deficit for six months ended June 30, |
||||||||||||
Net loss |
( |
) |
( |
) | ( |
) | ||||||
Remeasurement of Class A common stock to redemption value |
( |
) |
( |
) |
( |
) | ||||||
Total accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total stockholders’ deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Cash Flows for the six months ended June 30, 2022 |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Accrued expenses |
( |
) | ||||||||||
Income tax payable |
— |
|||||||||||
Net cash provided by operations |
( |
) |
( |
) |
( |
) | ||||||
Related party advance |
— |
|||||||||||
Net cash provided by financing activities |
||||||||||||
15
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
As previously reported |
Adjustments |
As restated |
||||||||||
Balance sheet as of March 31, 2022 |
||||||||||||
Accrued expenses |
||||||||||||
Related party advance |
— |
|||||||||||
Total current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total Stockholders’ Deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Operations for the three months ended March 31, 2022 |
||||||||||||
Legal investigations costs |
— |
|||||||||||
Formation and operating costs |
( |
) |
||||||||||
Loss from operation costs |
( |
) |
( |
) |
( |
) | ||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) |
( |
) | ||||||
Statement of Changes in Stockholders’ Deficit for three months ended March 31, 2022 |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Total accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total stockholders’ deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Cash Flows for the three months ended March 31, 2022 |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Accrued expenses |
||||||||||||
Net cash provided by operations |
( |
) |
( |
) |
( |
) | ||||||
Related party advance |
— |
|||||||||||
Net cash provided by financing activities |
||||||||||||
16
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
As previously reported |
Adjustments |
As restated |
||||||||||
Balance sheet as of December 31, 2021 |
||||||||||||
Accrued expenses |
||||||||||||
Related party advance |
— |
|||||||||||
Total current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total Stockholders’ Deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Operations for the year ended December 31, 2021 |
||||||||||||
Formation and operating costs |
||||||||||||
Franchise tax |
— |
|||||||||||
Loss from operation costs |
( |
) |
( |
) |
( |
) | ||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class A common stock |
( |
) |
( |
) |
( |
) | ||||||
Basic and diluted net loss per Class B common stock |
( |
) |
( |
) |
( |
) | ||||||
Statement of Changes in Stockholders’ Deficit for the year ended December 31, 2021 |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Total accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total stockholders’ deficit |
( |
) |
( |
) |
( |
) | ||||||
Statement of Cash Flows for the year ended December 31, 2021 |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Accrued expenses |
||||||||||||
Net cash provided by operations |
( |
) |
( |
) |
( |
) | ||||||
Related party advance |
— |
|||||||||||
Net cash provided by financing activities |
||||||||||||
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with rules and regu
lations of the Securities and Exchange Commission (the “SEC”).
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the
Securities
Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. 17
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Offering Costs Associated with the Initial Public Offering
Offering
, fair value of shares issued to the anchor investors of the Company’s Initial Public Offering of $
.
Class A Common Stock Subject to Possible Redemption
As
4
, all of the Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes.
18
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined United States is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were p
enalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Net Loss Per Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. The Company applies the
two-class
method in calculating income loss per share of common stock. Accretion associated with the redeemable shares of Class A common stock is excluded from income loss per common share as the redemption value approximates fair
value.
The
Concentration of Credit Risk
Financial
Fair Value of Financial Instruments
The
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially recorded at fair value on the grant date and
re-valued
at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are 19
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
classified in the balance sheet as current or
non-current
based on whether or not net-cash
settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for the warrants in accordance with the guidance contained in ASC 815-40. The Company has determined that the warrants qualify for equity treatment in the Company’s financial statements. Recently Issued Accounting Standards
Management
Risks and Uncertainties
Management
COVID-19
pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Inflation Reduction Act of 2022
On
Any
Combination.
NOTE 4. INITIAL PUBLIC OFFERING
On
.
20
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Each
-half
of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase 8
). As
of September 8, 2021, the Company incurred offering costs of $
, consisting of deferred underwriting commissions of $
, fair value of the representative shares (as defined in Note 8) of $
, fair value of shares issued to the anchor investors of the Company’s Initial Public Offering of $
NOTE 5. PRIVATE PLACEMENT
Simultaneously
Unit (or $
over the proceeds of the Private Placement were subsequently transferred back to the Company’s operating account and returned to the Sponsor.
The
b
usiness c
ombination except to permitted transferees and are entitled to registration rights. If the Company does not complete a b
usiness c
ombination within the Combination Period, the proceeds from the sale of the Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the warrants included in the Placement Units (the “Placement Warrants”) will expire worthless. NOTE 6. RELATED PARTY TRANSACTIONS
Class B Common stock
During
With
which
F-
21
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
the
results in all of the Company stockholders having the right to exchange their shares of common stock for cash, securities or other property. With certain limited exceptions, the Placement Units, Placement Shares, Placement Warrants and the Class A common stock underlying the Placement Warrants, will not be transferable, assignable or saleable by the Sponsor or its permitted transferees until 30 days after the completion of the initial Business Combination.
Administrative Services Arrangement
An
affiliate of the Sponsor h
as agreed, commencing from the date when the Company’s Registration Statement was declared effective through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company has agreed to pay the affiliate of the Sponsor $ per month for these services. $
and $
$176,000 and $11,000 was unpaid as of December 31, 2022 and 2021, respectively.
Related Party Loans
In
e of t
he Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, initially up to $non-interest
bearing, unsecured and will be payable upon the consummation of a Business Combination.
As of December 31, 2022 and December 31, 2021, there were $
and $
outstanding under this loan, respectively. See Note
1
for subsequent events related to this note.1
On
were outstanding.
On
September
8, 2022, the Company issued a promissory note (the “Note”) in the aggregate principal amount of $22
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
repayable
in full upon the earlier of (i) the date on which the Company consummates its initial Business Combination and
(ii) the date that the winding up of the Company is effective
.Advances — related parties
During
2022, the Sponsor paid, on behalf of the Company,
$
to a vendor for costs incurred by the Company.
As of December 31, 2022, the Company’s obligation to the Sponsor for such payment was outstanding.
See Note 10 for subsequent events related to this advance.
During
2022, a Board member paid, on behalf of the Company, $
to a vendor for costs incurred by the Company. As of December 31, 2022, the Company’s obligation to the Board Member for such payment was outstanding.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Registration Rights
The
well as the holder
s of the Placement Units (and underlying securities) and any securities issued in payment of Working Capital Loans made to the Company, are entitled to registration rights pursuant to an agreement signed on the effective date of the Initial Public Offering. The holders of a majority of these securities are entitled to make up to that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. Notwithstanding anything to the contrary, the underwriters (and/or their designees) may participate in a “piggy-back” registration only during the seven year period beginning on the effective date of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Notwithstanding anything to the contrary, under FINRA Rule 5110, the underwriters and/or their designees may only make a demand registration (i) on one occasion and (ii) during the five-year period beginning on the effective date of the registration statement relating to the Initial Public Offering, and the underwriters and/or their designees may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the registration statement relating to the Initial Public Offering.
Underwriting Agreement
The
The
agreement.
F-
23
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Right of First Refusal
Subject
after the date of the consummation of the Business Combination, a right of first refusal to act as sole book runner, and/or sole placement agent, at the representative’s sole discretion, for each and every future public and private equity and
Legal Matters
The Company is cooperating with a FINRA inquiry concerning events (specifically, a review of trading) that preceded the public announcement of the Merger Agreement. According to FINRA’s request, the inquiry should not be construed as an indication that FINRA has determined that any violations of Nasdaq rules or federal securities laws have occurred, nor as a reflection upon the merits of the securities involved or upon any person who effected transactions in such securities.
The
Company is also cooperating with an SEC investigation, including responding to several document requests and subpoenas from the SEC to the Company and certain of its directors seeking various documents and information regarding, among other things, meetings of the Company’s Board of Directors; communications with and the evaluation of potential targets, including TMTG; communications relating to TMTG; agreements with and payments made to certain advisors; investors, including investor meetings and agreements; the appointment of certain of the Company’s officers and directors; policies and procedures relating to trading; and documents sufficient to identify banking, telephone, and email addresses; the Company’s due diligence regarding TMTG, communications regarding and due diligence of potential targets other than TMTG; and relationships between and among the Company (and/or certain of its officers and directors) and other entities (including the Sponsor and certain advisors, including the Company’s underwriter and financial advisor in its Initial Public Offering). According to the SEC’s request and subpoena, the investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of the Company or any person, entity, or security. Any resolution of the inquiry or investigation, as well as proceedings by the SEC, FINRA, or other governmental or regulatory authorities, could result in the imposition of significant fines, penalties, injunctions, prohibitions on the conduct of the Company’s business, damage to its reputation and other sanctions against it, including restrictions on its activities. See Note 11 – Subsequent Events.
The SEC also issued an order of examination pursuant to Section 8(e) of the Securities Act, with respect to the Form S-4 relating to the Transactions with TMTG, and a further subpoena in support thereof. This subpoena seeks additional documents and information with respect to, among other things, communications regarding and due diligence of potential targets other than TMTG, relationships between and among the Company (and/or certain of its officers and directors) and other entities (including the Sponsor) and certain advisors, including the Company’s underwriter and financial advisor in its Initial Public Offering), the holders of ownership interests in the Sponsor, certain elements of the transaction history for equity in the Sponsor, and certain forward-looking information about TMTG referenced in the Form S-4. Any resolution of the investigation could result in the imposition of significant penalties, injunctions, prohibitions on the conduct of the Company’s business, damage to its reputation and other sanctions against it. In addition, the Section 8(e) order of examination of the Form S-4 can be expected to delay effectiveness of the Form S-4, which could materially delay, materially impede, or prevent the consummation of the Transactions. See Note 11 – Subsequent Events.
In addition, the Company and each member of its board of directors received grand jury subpoenas seeking certain of the same documents demanded in the above-referenced SEC subpoenas, along with requests relating to
F-
2
4DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
the Company’s S-1 filings, communications with or about multiple individuals, and information regarding Rocket One Capital. The Company has been informed that on June 27, 2022, TMTG received a subpoena from the SEC seeking documents relating to, among other things, the Company and other potential counterparties for a business transaction involving TMTG. The Company has also been informed that on
June
30, 2022, TMTG was served with a subpoena, issued by a federal grand jury sitting in the Southern District of New York, seeking a subset of the same or similar documents demanded in subpoenas to the Company and its directors. Certain current and former TMTG personnel have also recently received individual grand jury subpoenas. These subpoenas, and the underlying investigations by the SEC and the U.S. Department of Justice, can be expected to delay effectiveness of the Form S-4, which could materially delay, materially impede, or prevent the consummation of the
Transactions
. Directors’ and Officers’ Insurance Policy
The
coverage under the D&O policy is $
See Note 11 – Subsequent Events.
The
Company is subject to litigation, disputes and claims in the normal course of its business.
Except as noted above, the Company is
not
aware of any matters which could be material to the financial statements.
NOTE 8. STOCKHOLDERS’ DEFICIT
Preferred Stock
Class
A Common Stock
Class
B Common Stock
and
F-
25
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
excluding the Placement Shares). Shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the initial Business Combination on a basis, subject to certain adjustments.
one-for-one
Warrants
liquidation.
The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of Class A common stock issuable upon exercise of the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
Once the warrants become exercisable, the Company may redeem the warrants:
• |
in whole and not in part; |
| • | at a price of $ |
| • | at any time after the warrants become exercisable; |
| • | upon not less than |
| • | if, and only if, the reported last sale price of the Class A common stock equals or exceeds $ share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for any |
| • | if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants. |
If the Company calls the warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities, for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less
effective
F-
26
DIGITAL
WORLD ACQUISITION CORP. NOTES TO FINANCIAL STATEMENTS
issue
The Private
Warrants
, as well as an
y warrants underlying additional units the Company issues to the Sponsor, officers, directors, initial stockholders or their affiliates in payment of Working Capital Loans made to the Company, will be identical to the Public Warrants and may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of
the Company’s initial
Business Combination and will be entitled to registration rights.NOTE 9. TAXES
The Company’s net deferred tax assets are as follows:
December 31, 2022 |
December 31, 2021 |
|||||||
Deferred tax assets: |
||||||||
Net operating losses |
$ | $ | ||||||
Start-up costs |
||||||||
Total deferred tax assets |
||||||||
Valuation Allowance |
( |
) | ( |
) | ||||
Deferred tax asset, net of allowance |
$ | $ | ||||||
Below is breakdown of the income tax provision.
For the Year Ended December 31, 2022 |
For the Year Ended December 31, 2021 |
|||||||
Federal |
||||||||
Current |
$ |
( |
) | $ |
( |
) | ||
Deferred |
||||||||
State and local |
||||||||
Current |
( |
) | ( |
) | ||||
Deferred |
||||||||
Change in valuation allowance |
||||||||
Income tax provision |
$ |
$ |
||||||
27
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
As
of December 31, 2022 and 2021, the Company had $
In assessing the r4,695,494 and $494,552 ,
e
alization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2022 and 2021, the change in the valuation allowance was $respectively.
A
follows:
For the Year Ended December 31, 2022 |
For the Year Ended December 31, 2021 |
|||||||
Federal income taxes at |
% | % | ||||||
State tax, net of Federal benefit |
% | % | ||||||
Change in valuation allowance |
( |
)% | ( |
)% | ||||
Provision for income tax |
( |
)% | ||||||
The effective tax rate differs from the statutory tax rate of 21
for the year ended December 31, 2022 and 2021, due to the
change in the
valuation allowance. The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns since inception remain open to examination by the taxing authorities. The Company considers Florida to be a significant state tax jurisdiction.
Note 10 — QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
As
further described in Note 2, the previously reported financial information for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022 have been restated. Relevant restated financial information for the first, second and third quarters of 2022 is included in this Annual Report on Form 10-K/A in the tables that follow. The unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. See Note 2 for additional information.
28
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DIGITAL WORLD ACQUISITION CORP.
BALANCE SHEETS
As Restated |
||||||||||||
September 30, 2022 |
June 30, 2022 |
March 31, 2022 |
||||||||||
ASSETS |
||||||||||||
Current assets |
||||||||||||
Cash |
$ |
$ |
$ |
|||||||||
Prepaid assets |
||||||||||||
Total Current Assets |
||||||||||||
Prepaid assets |
||||||||||||
Investments held in Trust Account |
||||||||||||
TOTAL ASSETS |
$ |
$ |
$ |
|||||||||
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||||||
Current liabilities |
||||||||||||
Accrued expenses |
$ |
$ |
$ |
|||||||||
Note payable – Sponsor |
||||||||||||
Income taxes payable |
||||||||||||
Franchise tax payable |
||||||||||||
Working capital loans |
||||||||||||
Advances – related parties |
||||||||||||
Total Current Liabilities |
||||||||||||
Deferred underwriting fee payable |
||||||||||||
TOTAL LIABILITIES |
||||||||||||
Commitments and Contingencies |
||||||||||||
Class A common stock subject to possible redemption, $ par value, per share) |
||||||||||||
Stockholders’ Deficit |
||||||||||||
Preferred stock, $ par value; |
||||||||||||
Class A common stock, $ par value; |
||||||||||||
Class B common stock, $ par value; |
||||||||||||
Additional paid-in capital |
||||||||||||
Accumulated deficit |
( |
) |
( |
) |
( |
) | ||||||
Total Stockholders’ Deficit |
( |
) |
( |
) |
( |
) | ||||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT |
$ |
$ |
$ |
|||||||||
29
DIGITAL WORLD ACQUISITION
CORP
. NOTES TO FINANCIAL
S
TATEMENTS
DIGITAL WORLD ACQUISITION COR
P
. STATEMENTS OF OPERATIONS
As Restated |
||||||||||||||||||||
Three Months Ended March 31, 2022 |
Three Months Ended June 30, 2022 |
Six Months Ended June 30, 2022 |
Three Months Ended September 30, 2022 |
Nine Months Ended September 30, 2022 |
||||||||||||||||
Formation and operating costs |
||||||||||||||||||||
Legal investigations costs |
||||||||||||||||||||
Franchise tax expense |
||||||||||||||||||||
Loss from operating costs |
||||||||||||||||||||
Other income and expenses: |
||||||||||||||||||||
Interest earned on investments held in Trust Account |
||||||||||||||||||||
Loss before income taxes |
( |
) |
( |
) |
( |
) |
( |
) |
) | |||||||||||
Income tax expense |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||
Weighted average shares outstanding of Class A common stock |
||||||||||||||||||||
Weighted average shares outstanding of Class B common stock |
||||||||||||||||||||
Basic and diluted net loss per Class A common stock |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||
Basic and diluted net loss per Class B common stock |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||
30
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DIGITAL WORLD ACQUISITION
C
ORP
. STATEMENTS OF CHANGES IN STOCKHOLDERS’ D
E
FICIT
As Restated |
||||||||||||||||||||||||||||
Class A Common Stock |
Class B Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance – December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Balance – March 31, 2022 |
( |
) |
( |
) | ||||||||||||||||||||||||
Net loss |
( |
) |
( |
) | ||||||||||||||||||||||||
Remeasurement of Class A common stock to redemption value |
( |
) |
( |
) | ||||||||||||||||||||||||
Balance – June 30, 2022 |
( |
) |
( |
) | ||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Remeasurement of Class A common stock to redemption value |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Contribution |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Balance – September 30, 2022 |
( |
) |
( |
) | ||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Remeasurement of Class A common stock to redemption value |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Balance – December 31, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
31
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
As Restated |
||||||||||||
Three Months Ended March 31, 2022 |
Six Months Ended June 30, 2022 |
Nine Months Ended September 30, 2022 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||
Interest earned on cash and marketable securities held in the Trust Account |
( |
) |
( |
) |
( |
) | ||||||
Changes in assets and liabilities: |
||||||||||||
Accrued expenses |
||||||||||||
Income taxes payable |
— |
|||||||||||
Prepaid insurance |
||||||||||||
Franchise tax payable |
||||||||||||
Net cash used in operating activities |
( |
) |
( |
) |
( |
) | ||||||
Cash flows from investing activities: |
||||||||||||
Cash deposited into Trust Account |
— |
— |
( |
) | ||||||||
Net cash used in investing activities |
— |
— |
( |
) | ||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from working capital loan |
||||||||||||
Proceeds from advances – related parties |
||||||||||||
Proceeds from Sponsor note |
— |
— |
||||||||||
Net cash provided by financing activities |
||||||||||||
Net change in cash |
( |
) |
( |
) |
( |
) | ||||||
Cash at beginning of period |
||||||||||||
Cash at end of period |
$ |
$ |
$ |
|||||||||
Non-cash investing and financing activities: |
||||||||||||
Remeasurement of Class A common stock |
$ |
$ |
$ |
|||||||||
NOTE 11. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subse
quent Eve
nts”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2022. Based upon this review the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements, except as noted below. On April 5, 2023, Company entered
into
an Administrative Support Agreement with Renatus LLC (“Renatus”), an advisory group owned by Eric Swider, the Interim Chief Executive Officer and director of the Company, pursuant to which, the Com
p
any agrees to pay Renatus a monthly fee of $liquidation.
On
April 21, 2023, the Company issued two promissory notes (one for $
with
32
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
completing
a Business Combination. Each of the two notes bears
), rounded up to the nearest whole num
ber of
units.
The above promissory note for $625,700
replaces
the working capital loan for the same amount. See Note 5. The above promissory note for $500,000 425,835 . There was no change to the amount outstanding. See Note 5.
replaces
the advance – related party for $On June 2, 2023, the Company, issued a promissory note in the aggregate principal amount of $
(the “$10 Million Note,” together with the $2 Million Note, the “Notes”) to Renatus. The proceeds of the Notes will be used to pay costs and expenses in connection with completing the Business Combination.
Each of the Notes bears
), rounded up to the nearest whole number of units.
The issuances of the Notes were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
As of October 24, 2023, approximately $
million had been borrowed by the Company.
SEC Settlement
On July 3, 2023, the Company reached an agreement in principle (the “Settlement in Principle”) in connection with the Investigation. The Settlement in Principle was subject to approval by the SEC.
On July 20, 2023, the SEC approved the Settlement in Principle, announcing settled charges against Digital World and entered a cease-and-desist order (the “Order”) finding that Digital World violated certain antifraud provisions of the Securities Act and the Exchange Act, in connection with Digital World’s IPO filings on Form S-1 and the Form S-4 concerning certain statements, agreements and omissions relating to the timing and discussions Digital World had with TMTG regarding the proposed business combination. In the Order, Digital World agreed (i) that any amended Form S-4 filed by Digital World will be materially complete and accurate with respect to certain statements, agreements and omissions relating to the timing and discussions that Digital World had with TMTG regarding the proposed business combination and (ii) to pay a civil money penalty in an amount of $
million to the SEC promptly after the closing of
any mer
ger or a comparable business combination or transaction, whether with TMTG or any other entity.33
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Notice of delisting
On May 23, 2023, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”) because it had not yet filed its Quarterly Report on Form
10-Q
for the quarter ended March 31, 2023 (the “Q1 Form 10-Q”)
with the SEC. The Rule requires listed companies to timely file all required periodic financial reports with the SEC. Pursuant to Nasdaq rules, on July 24, 2023, the Company submitted to Nasdaq a plan to regain compliance with the Rule. On August 7, 2023, the Company received a notice from Nasdaq stating that Nasdaq has determined to grant an exception to enable the Company to regain compliance with the Rule. The terms of the exception are as follows: on or before November 20, 2023, the Company must file its amended Annual Report on Form
10-K
for the year ended December 31, 2022 and its Q1 Form 10-Q,
as required by the Rule. In the event the Company does not satisfy the terms of the exception, Nasdaq will provide written notification that the Company’s securities will be delisted. At that time, the Company may appeal Nasdaq’s determination to a Hearings Panel. On August 24, 2023, the Company announced that it received an expected letter from Nasdaq stating that the Company is not in compliance with the Rule because it has not yet filed its Quarterly Report on Form
10-Q
for the period ended June 30, 2023 (the “Second Quarter Form 10-Q”)
with the SEC. The Company has submitted to Nasdaq an updated compliance plan. Change in Trust Assets
On
August 25, 2023, the Company instructed Continental to liquidate the investments held in the trust account and move such cash proceeds to an interest bearing deposit account. As of the date hereof, interest earned on cash held in the trust account is approximately
% per annum.
Amendments to Merger Agreement
On August 9, 2023, the Company and TMTG entered into the Second Amendment to the Merger Agreement (the “Second Amendment”). Among other changes to governance and financial terms, the Second Amendment extends the Merger Agreement’s “Outside Date” to December 31, 2023, and provides for mutual supplemental due diligence ahead of the Company’s anticipated filing of an updated registration statement on Form S-4 with the SEC. For further information on the Second Amendment, please see the Company’s current report on Form 8-K filed with the SEC on August 9, 2023.
On September 29, 2023, the Company and TMTG entered into the Third Amendment to the Merger Agreement (the “Third Amendment”). The Third Amendment extends the period of time for the parties to complete mutual supplemental due diligence ahead of the Company’s anticipated filing of an updated registration statement on Form S-4 with the SEC. For further information on the Third Amendment, please see the Company’s current report on Form 8-K filed with the SEC on September 29, 2023.
The foregoing references and description of the Second and Third Amendments and the transactions contemplated thereby are not complete and are subject to, and qualified in their entirety by reference to, the actual agreements (as amended), copies of which are filed as Exhibits 10.1 with the Company’s Current Reports on Form 8-K filed on August 9, 2023 and September 29, 2023, respectively.
Extension of Date to Complete Business Combination
On September 6, 2023, the Company filed an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Extension Amendment”).
34
DIGITAL WORLD ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
The Extension Amendment extends, upon the approval by the Corporation’s board of directors, the date by which the Company has to consummate an initial business combination up to four times, each by an additional three months, for an aggregate of 12 additional months (i.e. from September 8, 2023 up to September 8, 2024) or such earlier date as determined by the Board.
PIPE terminations
As
of October 24, 2023, the Company had received termination notices from PIPE Investors representing approximately $
of the PIPE has been cancelled.
Extension and redemption
On
September 5, 2023, the Company held a special meeting of stockholders (the “Meeting”). At the Meeting, the Company’s stockholders approved the Extension Amendment extending, upon the approval by the Corporation’s board of directors, the date by which the Company has to consummate an initial business combination up to
times, each by an additional
) or such earlier date as determined by the Board (the “Extension Amendment Proposal”).
In connection with the Meeting, stockholders holding
per share) will be removed from the Company’s trust account to pay such holders, which amount is subject to final adjustments by the trustee.
Trust withdrawal for taxes
In
September 2023, the Company withdrew approximately $
million from the Trust to pay taxes.
Directors’ and Officers’ Insurance Policy
As
of October 24, 2023, the insurance company has advanced approximately $
million to certain individuals and entities.
Legal Matter
On October 20, 2023, Robert Lowinger (the “Plaintiff”) filed a complaint against Rocket One Capital, LLC (“Rocket One”), Michael Shvartsman, Bruce Garelick, and the Company in the U.S. District Court for the Southern District of New York. According to the complaint, the Company has been named as a party in the lawsuit because the Plaintiff is seeking relief for the benefit of the Company. In the complaint, the Plaintiff contends that, in 2021, Mr. Garelick and Rocket One were directors of the Company and that they purchased securities of the Company. The Plaintiff further alleges that within a (S.D.N.Y. Oct. 20, 2023).
six-month
period from the date of their purchases, both Mr. Garelick and Rocket One sold securities in the Company and realized profits from those sales. Additionally, the Plaintiff alleges that Mr. Shvartsman had a financial interest in the profits resulting from Rocket One’s purchases and sales of the Company’s securities. According to the Plaintiff, under Section 16(b) of the Exchange Act (15 U.S.C. §78p(b)), Rocket One, Mr. Shvartsman, and Mr. Garelick are each required to disgorge certain trading profits to the Company. As of the date of this report, the Company has not filed a response to the complaint. The case is Lowinger v. Rocket One Capital, LLC, et al., No. 1:23-cv-9243
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Table of Contents
EXHIBIT INDEX
Table of Contents
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). DWAC agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon its request. |
| (1) | Incorporated herein by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256472), filed with the SEC on May 26, 2021. |
| (2) | Incorporated herein by reference to Amendment No. 2 to the Company’s Registration Statement on Form S-1/A (File No. 333-256472), filed with the SEC on July 26, 2021. |
| (3) | Incorporated herein by reference to Amendment No. 4 to the Company’s Registration Statement on Form S-1/A (File No. 333-256472), filed with the SEC on August 20, 2021. |
| (4) | Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the SEC on September 9, 2021. |
| (5) | Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 26, 2021. |
| (6) | Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the SEC on December 6, 2021. |
| (7) | Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on April 13, 2022. |
| (8) | Incorporated by reference to the Company’s Registration Statement on Form S-4, filed with the SEC on May 16, 2022. |
| (9) | Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the SEC on November 30, 2022. |
| (10) | Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the SEC on September 9, 2022. |
| (11) | Incorporated herein by reference to the Company’s Current Report on Form 8-K, filed with the SEC on April 13, 2023. |
| (12) | Incorporated herein by reference to the Company’s Annual Report on Form 10-K, filed with the SEC on April 26, 2023. |
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DATE: January 9, 2024 |
DIGITAL WORLD ACQUISITION CORP. | |||||
| By: | /s/ Eric Swider | |||||
| Name: | Eric Swider | |||||
| Title: | Chief Executive Officer and Director (Principal Executive Officer) | |||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name |
Position |
Date | ||
| /s/ Eric Swider Eric Swider |
Chief Executive Officer (Principal Executive Officer) |
January 9, 2024 | ||
| /s/ Katherine Chiles Katherine Chiles |
Chief Financial Officer (Principal Financial and Accounting Officer) |
January 9, 2024 | ||
| /s/ Alexander Cano Alexander Cano |
President and Secretary |
January 9, 2024 | ||
| /s/ Frank Andrews Frank Andrews |
Non-Executive Chairman and Director |
January 9, 2024 | ||
| /s/ Edward Preble Edward Preble |
Director |
January 9, 2024 | ||
| /s/ Jeffrey Smith Jeffrey Smith |
Director |
January 9, 2024 | ||
Exhibit 31.1
CERTIFICATION OF THE
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
RULE 13a-14(a) AND RULE 15d-14(a)
UNDER THE
SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Eric Swider, certify that:
| 1. | I have reviewed this Amendment No. 2 to the Annual Report on Form 10-K of Digital World Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: January 9, 2024 |
By: |
/s/ Eric Swider | ||||
| Eric Swider | ||||||
| Chief Executive Officer | ||||||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
RULE 13a-14(a) AND RULE 15d-14(a)
UNDER THE
SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Katherine Chiles, certify that:
| 1. | I have reviewed this Amendment No. 2 to the Annual Report on Form 10-K of Digital World Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: January 9, 2024 |
By: |
/s/ Katherine Chiles | ||||
| Katherine Chiles | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF THE
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Amendment No. 2 to the Annual Report on Form 10-K of Digital World Acquisition Corp. (the “Company”) for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric Swider, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report. |
| Date: January 9, 2024 |
By: | /s/ Eric Swider | ||
| Eric Swider | ||||
| Chief Executive Officer | ||||
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Amendment No. 2 to the Annual Report on Form 10-K of Digital World Acquisition Corp. (the “Company”) for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Katherine Chiles, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the report. |
| Date: January 9, 2024 | By: | /s/ Katherine Chiles | ||||
| Katherine Chiles | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial Officer) |