ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of Each Class: |
Trading Symbol(s) |
Name of Each Exchange on Which Registered: | ||
one-half of one Redeemable Warrant |
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Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
PAGE |
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Item 1. |
1 |
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Item 1A. |
31 |
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Item 1B. |
33 |
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Item 2. |
33 |
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Item 3. |
33 |
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Item 4. |
33 |
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34 |
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Item 5. |
34 |
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Item 6. |
34 |
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Item 7. |
35 |
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Item 7A. |
38 |
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Item 8. |
38 |
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Item 9. |
39 |
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Item 9A. |
39 |
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Item 9B. |
39 |
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Item 9C. |
39 |
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40 |
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Item 10. |
40 |
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Item 11. |
45 |
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Item 12. |
46 |
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Item 13. |
47 |
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Item 14. |
49 |
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51 |
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Item 15. |
51 |
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Item 16. |
51 |
• | our ability to complete our initial business combination, such as the TMTG Business Combination (as defined below); |
• | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
• | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
• | our potential ability to obtain additional financing to complete our initial business combination; |
• | the ability of our officers and directors to generate a number of potential acquisition opportunities; |
• | our pool of prospective target businesses; |
• | our public securities’ potential liquidity and trading; |
• | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or |
• | our financial performance. |
• | “anchor investors” are to (i) accounts or funds managed by Radcliffe Capital Management, L.P., (ii) Meteora Capital Partners, LP (an affiliate of Glazer Capital LLC), (iii) Castle Creek Strategies (and sub-funds associated with Castle Creek), (iv) The K2 Principal Fund L.P., (v) Context Partners Master Fund LP, (vi) Boothbay Absolute Return Strategies, LP (or its affiliate Boothbay Diversified Alpha Master Fund LP, commonly controlled by Boothbay Fund Management LLC), (vii) investment funds and accounts managed by Shaolin Capital Management, LLC, (viii) Hudson Bay Master Fund Ltd. and/or its affiliates, (ix) Saba Capital Master Fund, Ltd., Saba Capital Master Fund II, Ltd., Saba Capital Master Fund III, LP and Saba Capital SPAC Opportunities, Ltd., (x) D. E. Shaw Valence Portfolios, L.L.C. and (xi) Yakira Capital Management, Inc. (none of which are affiliated with any member of our |
management, our sponsor or any other anchor investor), each of which entered into an Investment Agreement pursuant to which it expressed an interest to purchase up to 8.3% of the units sold in our initial public offering; |
• | “board of directors” or “board” are to the board of directors of the Company; |
• | “Closing” are to the consummation of the transactions contemplated by the Merger Agreement; |
• | “common stock” are to our Class A common stock and our Class B common stock, collectively; |
• | “Continental” are to Continental Stock Transfer & Trust Company, trustee of our trust account and warrant agent of our public warrants; |
• | “DGCL” are to the Delaware General Corporation Law; |
• | “DWAC System” are to the Depository Trust Company’s Deposit/Withdrawal At Custodian System; |
• | “Effective Time” are to the effective time of the Merger in accordance with the Merger Agreement; |
• | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
• | “Extension” are to the extension of the deadline by which the Company must complete its business combination; |
• | “FINRA” are to the Financial Industry Regulatory Authority; |
• | “founder shares” are to shares of our Class B common stock initially purchased by our sponsor in a private placement prior to our initial public offering, and the shares of our Class A common stock issuable upon the conversion thereof; |
• | “GAAP” are to the accounting principles generally accepted in the United States of America; |
• | “IFRS” are to the International Financial Reporting Standards, as issued by the International Accounting Standards Board; |
• | “initial business combination” are to a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses; |
• | “initial public offering” are to the initial public offering that was consummated by the Company on September 8, 2021; |
• | “initial stockholders” are to our sponsor and any other holders of our founder shares (including the holders of the representative shares) prior to our initial public offering (or their permitted transferees), not including the anchor investors who purchase units in the offering, if any; |
• | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
• | “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012; |
• | “management” or our “management team” are to our officers and directors; |
• | “Merger” are to the merger of Merger Sub with and into TMTG, with TMTG continuing as the surviving corporation and as a wholly-owned subsidiary of the Company, in accordance with the terms of the Merger Agreement; |
• | “Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of October 20, 2021, entered by and among the Company, Merger Sub, TMTG, and other parties named therein; |
• | “Merger Sub” are to DWAC Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of the Company; |
• | “Nasdaq” are to the Nasdaq Stock Market; |
• | “Outside Date” are to September 20, 2022; |
• | “PCOAB” are to the Public Company Accounting Oversight Board (United States); |
• | “PIPE Investment” are to that certain private placement in the aggregate amount of approximately $1,000,000,000, to be consummated concurrently with the TMTG Business Combination, pursuant to those certain securities purchase agreements (the “SPA”) with certain institutional investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase up to an aggregate of 1,000,000 shares of Digital World’s Series A Convertible Preferred Stock for a purchase price of $1,000 per share (the “PIPE”). The shares are initially convertible into 29,761,905 shares of common stock, subject to upward adjustment as described herein. |
• | “placement units” are to the units purchased by our sponsor, with each placement unit consisting of one placement share and one-half of one placement warrant; |
• | “placement shares” are to the shares of our Class A common stock included within the placement units purchased by our sponsor in the private placement; |
• | “placement warrants” are to the warrants included within the placement units purchased by our sponsor in the private placement; |
• | “private placement” are to the private placement of 1,133,484 placement units at a price of $10.00 per unit, for an aggregate purchase price of $11,334,840, which occurred simultaneously with the completion of our initial public offering; |
• | “public shares” are to shares of our Class A common stock sold as part of the units in our initial public offering (whether they are purchased in the offering or thereafter in the open market); |
• | “public stockholders” are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” shall only exist with respect to such public shares; |
• | “public warrants” are to our redeemable warrants sold as part of the units in our initial public offering (whether they are purchased in the offering or thereafter in the open market, including warrants that may be acquired by our sponsor or its affiliates in the offering or thereafter in the open market); |
• | “Registration Statement” are to the Form S-1 initially filed with the SEC on May 26, 2021, as amended; |
• | “Report” are to this Annual Report on Form 10-K for the fiscal year ended December 31, 2021; |
• | “representative” are to EF Hutton, division of Benchmark Investments, LLC, who was the representative of the underwriters in our initial public offering; |
• | “representative shares” are to the 143,750 shares of our Class A common stock issued to the representative and/or its designees at the closing of our initial public offering; |
• | “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002; |
• | “SEC” are to the U.S. Securities and Exchange Commission; |
• | “Securities Act” are to the Securities Act of 1933, as amended; |
• | “sponsor” are to ARC Global Investments II LLC, a Delaware limited liability company; |
• | “TMTG” are to Trump Media & Technology Group Corp., a Delaware corporation; |
• | “TMTG Stock” are to shares of TMTG common stock; |
• | “TMTG Stockholders” are to holders of TMTG Stock as of immediately prior to the Effective Time; |
• | “TMTG Business Combination” or the “Transactions” are to the Merger and other transactions contemplated by the Merger Agreement; |
• | “trust account” are to the trust account in which an amount of $293,250,000 ($10.20 per unit) from the net proceeds of the sale of the units and placement units in the initial public offering was placed following the closing of the initial public offering. |
• | “underwriters” are to the underwriters of our initial public offering, for which the representative is acting as representative; |
• | “units” are to the units sold in our initial public offering, which consist of one public share and one-half of one public warrant; |
• | “warrants” are to our redeemable warrants, which includes the public warrants as well as the placement warrants and any warrants issued upon conversion of working capital loans; and |
• | “we,” “us,” “Company,” “our company,” “DWAC” or “Digital World” are to Digital World Acquisition Corp. |
Item 1. |
Business. |
• | if the dollar volume-weighted average price (“VWAP”) of DWAC’s common stock equals or exceeds $15.00 per share for any 20 trading days within any 30 trading day period, the Purchaser shall issue to the TMTG Stockholders an aggregate of 15,000,000 Earnout Shares; |
• | if the VWAP of DWAC’s common stock equals or exceeds $20.00 per share for any 20 trading days within any 30 trading day period, the Purchaser shall issue to the TMTG Stockholders an aggregate of 15,000,000 Earnout Shares; and |
• | if the VWAP of DWAC’s common stock equals or exceeds $30.00 per share for any 20 trading days within any 30 trading day period, the Purchaser shall issue to the TMTG Stockholders an aggregate of 10,000,000 Earnout Shares. |
• | receipt of the DWAC stockholder approval; |
• | receipt of the TMTG Stockholder Approval; |
• | expiration of any applicable waiting period under any antitrust laws; |
• | receipt of requisite consents from governmental authorities to consummate the Transactions, and receipt of specified requisite consents from other third parties to consummate the Transactions; |
• | the absence of any law or order that would prohibit the consummation of the Merger or other transactions contemplated by the Merger Agreement; |
• | upon the Closing, after giving effect to the completion of the Redemption, DWAC shall have net tangible assets of at least $5,000,001; |
• | upon the Closing DWAC shall have cash, including funds remaining in DWAC’s trust account and the proceeds of any PIPE Investment, after giving effect any Redemptions but prior to the payment of DWAC’s unpaid expenses or liabilities, of at least equal to $60,000,000; |
• | the absence of any pending claim, demand, action, litigation complaint, or other proceeding by or before a governmental authority seeking to enjoin the consummation of the Merger and the other Transactions; |
• | the members of the Post-Closing Board shall have been elected or appointed as of the Closing; |
• | the effectiveness of theForm S-4; and |
• | DWAC and TMGT shall have both received confirmation from Nasdaq that DWAC’s Class A common stock and warrants shall be eligible for continued listing on the Nasdaq Global Market. |
• | the representations and warranties of TMTG being true and correct in material respects as of the date of the Merger Agreement and as of the Closing; |
• | TMTG having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Merger Agreement required to be performed or complied with on or prior to the date of the Closing; |
• | absence of any material adverse effect with respect to TMTG and its subsidiaries, taken as a whole, since the date of the Merger Agreement which is continuing and uncured; |
• | DWAC having received a copy of the TMTG’s charter certified by the Secretary of State of the State of Delaware no more than ten business days prior to the Closing date; |
• | DWAC having received a copy of the Escrow Agreement, duly executed by the Seller Representative and the escrow agent; |
• | DWAC having received a duly executed opinion from TMTG’s counsel addressed to DWAC and dated as of the Closing date; |
• | DWAC having received a customary Non-Competition Agreement and a Lock-up Agreement executed by the Significant Company Holders of TMTG; and |
• | DWAC shall have received evidence reasonably acceptable to DWAC that TMTG shall have converted, terminated, extinguished and cancelled in full any outstanding convertible securities or commitments therefor, other than the TMTG options and the TMTG restricted stock units. |
• | the representations and warranties of DWAC being true and correct in material respects as of the date of the Merger Agreement and as of the Closing; |
• | DWAC having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Merger Agreement required to be performed or complied with on or prior to the date of the Closing; |
• | absence of any material adverse effect with respect to DWAC and its subsidiaries, taken as a whole, since the date of the Merger Agreement which is continuing and uncured; |
• | TMTG having received a copy of the Escrow Agreement, duly executed by DWAC and the escrow agent; and |
• | TMTG having received a customary Non-Competition Agreement and a Lock-up Agreement executed by the Significant Company Holders of TMTG. |
• | By mutual written consent of DWAC and TMTG; |
• | by either DWAC or TMTG if any of the conditions to Closing have not been satisfied or waived by the Outside Date, provided that DWAC shall have the right to extend the Outside Date if it obtains an extension of the deadline by which it must complete its business combination (an “Extension”) for an additional period the shortest of (i) three months, (ii) the period ending on the last day for DWAC to consummate a business combination after such Extension and (iii) such period as determined by DWAC; |
• | by either DWAC or TMTG if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such order or other action has become final and non-appealable; |
• | by either DWAC or TMTG of the other party’s uncured breach (subject to certain materiality qualifiers); |
• | by DWAC if there has been an event after the signing of the Merger Agreement that has had a material adverse effect on TMTG and its subsidiaries taken as a whole that is continuing and uncured; |
• | by either DWAC or TMTG if the DWAC Special Meeting is held and the DWAC stockholder approval is not received; |
• | by either DWAC or TMTG if a special meeting of TMTG Stockholders is held and the TMTG Stockholder Approval is not received; and |
• | by the mutual and reasonable written consent of DWAC and TMTG in the event that that any required approval of the SEC or any other governmental authority cannot be obtained by the Outside Date, as such date may be extended. |
• | Established Deal Sourcing Network. follow-on business arrangements. These contacts and sources include those in government, private and public companies, private equity and venture capital funds, investment bankers, attorneys and accountants. |
• | Status as a Publicly Listed Acquisition Company |
• | Target Size : |
• | Businesses with Revenue and Earnings Growth Potential . follow-on acquisitions resulting in increased operating leverage. |
• | Businesses with Potential for Strong Free Cash Flow Generation . |
• | Strong Management . |
• | Benefit from Being a Public Company . |
• | Defensible Market Position. |
• | subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and |
• | cause us to depend on the marketing and sale of a single product or limited number of products or services. |
Type of Transaction |
Whether Stockholder Approval is Required | |
Purchase of assets |
No | |
Purchase of stock of target not involving a merger with the company |
No | |
Merger of target into a subsidiary of the company |
No | |
Merger of the company with a target |
Yes |
• | we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding (other than in a public offering); |
• | any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common stock or voting power of 5% or more; or |
• | the issuance or potential issuance of common stock will result in our undergoing a change of control. |
• | conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and |
• | file proxy materials with the SEC. |
• | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
• | file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
Item 1A. |
Risk Factors. |
• | we are a blank check company with no revenue or basis to evaluate our ability to select a suitable business target; |
• | we may not be able to select an appropriate target business or businesses and complete our initial business combination in the prescribed time frame; |
• | if the funds held outside of our trust account are insufficient to allow us to operate until at least September 8, 2022 (or March 8, 2023, if we have extended the maximum time), our ability to fund our search for a target business or businesses or complete an initial business combination may be adversely affected; |
• | our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, since we will cease all operations except for the purpose of liquidating if we are unable to complete an initial business combination by September 8, 2022 (or March 8, 2023, if we have extended the maximum time); |
• | our ability to identify a target and to consummate an initial business combination may be adversely affected by economic uncertainty and volatility in the financial markets, including as a result of the military conflict in Ukraine; |
• | our expectations around the performance of a prospective target business or businesses may not be realized; |
• | we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination; |
• | our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination; |
• | we may not be able to obtain additional financing to complete our initial business combination or reduce the number of stockholders requesting redemption; |
• | we may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time; |
• | you may not be given the opportunity to choose the initial business target or to vote on the initial business combination; |
• | trust account funds may not be protected against third party claims or bankruptcy; |
• | the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination; |
• | our financial performance following a business combination with an entity may be negatively affected by their lack of an established record of revenue, cash flows and experienced management; |
• | if we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination; |
• | changes in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws or regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations; |
• | changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination; |
• | as the number of special purpose acquisition companies increases, there may be more competition to find an attractive target for an initial business combination; this could increase the costs associated with completing our initial business combination and may result in our inability to find a suitable target for our initial business combination; |
• | we may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability; |
• | resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business; |
• | we may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all; |
• | we may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us, which may include acting as a financial advisor in connection with an initial business combination or as placement agent in connection with a related financing transaction. Our underwriters are entitled to receive deferred underwriting commissions that will be released from the trust account only upon a completion of an initial business combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such additional services to us after the initial public offering, including, for example, in connection with the sourcing and consummation of an initial business combination; |
• | since our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may acquire during or after our initial public offering), and because our sponsor, officers and directors may profit substantially even under circumstances in which our public stockholders would experience losses in connection with their investment, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination; |
• | the value of the founder shares following completion of our initial business combination is likely to be substantially higher than the nominal price paid for them, even if the trading price of our common stock at such time is substantially less than $10.20 per share; and |
• | if we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately $10.20 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. |
Item 1B. |
Unresolved Staff Comments. |
Item 2. |
Properties. |
Item 3. |
Legal Proceedings. |
Item 4. |
Mine Safety Disclosures. |
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. |
Item 6. |
[Reserved]. |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk. |
Item 8. |
Financial Statements and Supplementary Data. |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. |
Controls and Procedures. |
Item 9B. |
Other Information. |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Item 10. |
Directors, Executive Officers and Corporate Governance |
Name |
Age |
Position | ||||
Patrick Orlando |
49 | Chairman and Chief Executive Officer | ||||
Luis Orleans-Braganza |
52 | Chief Financial Officer | ||||
Lee Jacobson |
56 | Director | ||||
Bruce J. Garelick |
52 | Director | ||||
Justin Shaner |
40 | Director | ||||
Eric Swider |
49 | Director | ||||
Rodrigo Veloso |
43 | Director |
• | the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us; |
• | pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
• | setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; |
• | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
• | obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence; |
• | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
• | reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise |
material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
• | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
• | reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers; |
• | reviewing on an annual basis our executive compensation policies and plans; |
• | implementing and administering our incentive compensation equity-based remuneration plans; |
• | assisting management in complying with our proxy statement and annual report disclosure requirements; |
• | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
• | if required, producing a report on executive compensation to be included in our annual proxy statement; and |
• | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Item 11. |
Executive Compensation |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
• | each person known by us to be the beneficial owner of more than 5% of our outstanding common stock; |
• | each of our executive officers and directors that beneficially owns our common stock; and |
• | all our executive officers and directors as a group. |
Class A Common Stock |
Class B Common Stock (2) |
Approximate Percentage of Outstanding Common Stock |
||||||||||||||||||
Name and Address of Beneficial Owner (1) |
Number of Shares Beneficially Owned |
Approximate Percentage of Class |
Number of Shares Beneficially Owned |
Approximate Percentage of Class |
||||||||||||||||
Patrick Orlando (3) |
1,133,484 | 3.8 | % | 5,490,000 | 76.0 | % | 17.8 | % | ||||||||||||
Luis Orleans-Braganza |
— | — | 10,000 | * | * | |||||||||||||||
Lee Jacobson |
— | — | 7,500 | * | * | |||||||||||||||
Bruce J. Garelick |
— | — | 7,500 | * | * | |||||||||||||||
Justin Shaner |
— | — | 7,500 | * | * | |||||||||||||||
Eric Swider |
— | — | 7,500 | * | * | |||||||||||||||
Rodrigo Veloso |
— | — | 7,500 | * | * | |||||||||||||||
All directors and executive officers as a group (7 individuals) |
1,133,484 | 3.8 | % | 5,537,500 | 77.0 | % | 17.9 | % | ||||||||||||
Other 5% Stockholders |
||||||||||||||||||||
ARC Global Investments II LLC (the Sponsor) (3) |
1,133,484 | 3.8 | % | 5,490,000 | 76.0 | % | 17.8 | % |
* | Less than 1% |
(1) | Unless otherwise noted, the business address of each of the following entities or individuals is c/o Digital World Acquisition Corp., 78 SW 7th Street, Miami, Florida 33130. |
(2) | Interests shown consist solely of founder shares, classified as shares of Class B common stock. Such shares are convertible into shares of Class A common stock on a one-for-one |
(3) | ARC Global Investments II LLC, our Sponsor, is the record holder of the securities reported herein. Patrick Orlando, our Chairman and Chief Executive Officer, is the managing member of our sponsor. By virtue of this relationship, Mr. Orlando may be deemed to share beneficial ownership of the securities held of record by our sponsor ponsor. Mr. Orlando disclaims any such beneficial ownership except to the extent of his pecuniary interest. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence. |
Item 15. |
Exhibit and Financial Statement Schedules |
(a) |
The following documents are filed as part of this Report: |
(1) |
Financial Statements |
(2) |
Financial Statement Schedules |
(3) |
Exhibits |
Item 16. |
Form 10-K Summary. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # |
F-2 |
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FINANCIAL STATEMENTS: |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
ASSETS |
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Current assets |
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Cash |
$ | |||
Prepaid assets |
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|
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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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|
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||
Current liabilities |
||||
Accrued expenses |
$ | |||
Franchise tax payable |
||||
|
|
|||
Total Current Liabilities |
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Deferred underwriter fee payable |
||||
|
|
|||
TOTAL LIABILITIES |
||||
|
|
|||
Commitments and Contingencies |
||||
Class A common stock subject to possible redemption, $ |
||||
|
|
|||
Stockholders’ Deficit |
||||
Preferred stock, $ |
||||
Class A common stock, $ |
||||
Class B common stock, $ |
||||
Additional paid-in capital |
||||
Accumulated deficit |
( |
) | ||
|
|
|||
Total Stockholders’ Deficit |
( |
) | ||
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ |
|||
|
|
Year Ended December 31, 2021 |
||||
Formation and operating costs |
$ | |||
Franchise tax expense |
||||
|
|
|||
Loss from operation costs |
( |
) | ||
Other income and expenses: |
||||
Interest earned on cash held in Trust Account |
||||
|
|
|||
Net loss |
$ |
( |
) | |
|
|
|||
Weighted average shares outstanding of Class A common stock |
||||
|
|
|||
Basic and diluted net income per Class A common stock |
$ |
( |
) | |
|
|
|||
Weighted average shares outstanding of Class B common stock |
||||
|
|
|||
Basic and diluted net income per Class B common stock |
$ |
( |
) | |
|
|
Class A Common Stock |
Class B Common Stock |
Additional Paid-In |
Accumulated |
Total Stockholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Deficit |
||||||||||||||||||||||
Balance – December 31, 2020 |
— | — | ||||||||||||||||||||||||||
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 |
— | — | ||||||||||||||||||||||||||
Issuance of Class A common stock to representative |
— | — | ( |
) | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance – December 31, 2021 |
$ |
$ |
$ |
( |
) | $ |
( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
Year Ended December 31, 2021 |
||||
Cash flows from operating activities: |
||||
Net loss |
$ | ( |
) | |
Adjustments to reconcile net income to net cash used in operating activities: |
||||
Interest earned on cash and marketable securities held in Trust Account |
( |
) | ||
Changes in operating assets and liabilities: |
||||
Accrued expenses |
||||
Prepaid insurance |
( |
) | ||
Franchise tax payable |
||||
|
|
|||
Net cash used in operating activities |
( |
) | ||
|
|
|||
Cash flows from investing activities: |
||||
Investment of cash in Trust Account |
( |
) | ||
|
|
|||
Net cash used in investing activities |
( |
) | ||
|
|
|||
Cash flows from financing activities: |
||||
Proceeds from sale of Units |
||||
Proceeds from sale of private placement units |
||||
Proceeds from Sponsor note |
||||
Repayment of Sponsor note |
( |
) | ||
Due from Sponsor |
( |
) | ||
Payment of due from Sponsor |
||||
Payment of offering costs |
( |
) | ||
Proceeds from issuance of Class B common stock to Sponsor |
||||
|
|
|||
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: |
||||
Initial classification of shares of Class A common stock subject to possible redemption |
$ | |||
|
|
|||
Deferred underwriting fee payable |
$ | |||
|
|
Gross Proceeds |
$ |
|||
Less: |
||||
Proceeds allocated to public warrants |
( |
) | ||
Class A common stock issuance costs |
( |
) | ||
Plus: |
||||
Remeasurement of carrying value to redemption value |
||||
Class A common stock subject to possible redemption |
$ |
|||
• | 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 $ |
• | 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. |
For the Year Ended December 31, 2021 |
||||
Deferred tax assets: |
||||
Net operating losses |
$ | |||
Start up costs |
||||
Total deferred tax assets |
||||
Valuation Allowance |
( |
) | ||
Deferred tax asset, net of allowance |
$ | |||
For the Year Ended December 31, 2021 |
||||
Federal |
||||
Current |
$ | |||
Deferred |
( |
) | ||
State and local |
||||
Current |
||||
Deferred |
( |
) | ||
Change in valuation allowance |
||||
Income tax provision |
$ | |||
For the Year Ended December 31, 2021 |
||||
U.S. federal statutory rate |
% | |||
State tax, net of federal benefit |
% | |||
Valuation allowance |
( |
)% | ||
Income tax provision |
||||
Exhibit No. |
Description | |
32.2 | Certification of the Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350** | |
99.1 | Audit Committee Charter (2) | |
99.2 | Compensation Committee Charter (2) | |
101.INS | Inline XBRL Instance Document* | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document* | |
101.LAB | Inline XBRL Taxonomy Label Linkbase Document* | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Document* | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | |
104 | Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).* |
* | 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 relevant exhibits to the Company’s Registration Statement on Form S-1, filed with the SEC on May 26, 2021. |
(2) | Incorporated herein by reference to relevant exhibits to the Company’s Registration Statement on Form S-1/A, filed with the SEC on July 26, 2021. |
(3) | Incorporated herein by reference to relevant exhibits to the Company’s Registration Statement on Form S-1/A, filed with the SEC on August 20, 2021. |
(4) | Incorporated herein by reference to relevant exhibits to the Company’s Registration Statement on Form 8-K, filed with the SEC on September 9, 2021. |
(5) | Incorporated herein by reference to relevant exhibits to the Company’s Registration Statement on Form 8-K, filed with the SEC on October 26, 2021. |
(6) | Incorporated herein by reference to relevant exhibits to the Company’s Registration Statement on Form 8-K, filed with the SEC on December 6, 2021. |
DATE: April 13, 2022 | DIGITAL WORLD ACQUISITION CORP. | |||
By: | /s/ Patrick Orlando | |||
Name: | Patrick Orlando | |||
Title: | Chief Executive Officer (Principal Executive Officer) |
Name |
Position |
Date | ||
/s/ Patrick Orlando Patrick Orlando |
Chief Executive Officer (Principal Executive Officer) |
April 13, 2022 | ||
/s/ Luis Orleans-Braganza Luis Orleans-Braganza |
Chief Financial Officer (Principal Financial and Accounting Officer) |
April 13, 2022 | ||
/s/ Lee Jacobson Lee Jacobson |
Director | April 13, 2022 | ||
/s/ Bruce J. Garelick Bruce J. Garelick |
Director | April 13, 2022 | ||
/s/ Justin Shaner Justin Shaner |
Director | April 13, 2022 | ||
/s/ Eric Swider Eric Swider |
Director | April 13, 2022 | ||
/s/ Rodrigo Veloso Rodrigo Veloso |
Director | April 13, 2022 |
Exhibit 4.5
DESCRIPTION OF THE REGISTRANTS SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
As of December 31, 2021, Digital World Acquisition Corp. (we, our, us or the Company) had the following three classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act): (i) its units, consisting of one share of Class A common stock (as defined below) and one-half of one redeemable warrant, with each whole warrant (as defined below) entitling the holder thereof to purchase one share of Class A common stock (the units), (ii) its Class A common stock, $0.0001 par value per share (Class A common stock), and (iii) its redeemable public warrants, with each whole warrant exercisable for one share of Class A common stock for $11.50 per share (the warrants).
Pursuant to our amended and restated certificate of incorporation, our authorized capital stock consists of 211,000,000 shares of common stock, including 200,000,000 shares of Class A common stock, $0.0001 par value and 10,000,000 shares of Class B common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes the material terms of our capital stock and does not purport to be complete. It is subject to, and qualified in its entirety by reference to, our amended and restated certificate of incorporation, our bylaws and our warrant agreement, each of which is incorporated by reference as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2021 (the Report) of which this Exhibit 4.5 is a part.
Defined terms used herein but not otherwise defined shall have the meaning ascribed to such terms in the Report.
DESCRIPTION OF SECURITIES
Units
Each unit consists of one share of Class A common stock and one-half of one redeemable warrant. Only whole warrants are exercisable. Each whole warrant entitles the holder to purchase one share of Class A common stock. Pursuant to the warrant agreement, a warrant holder may exercise his, her or its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
Common Stock
Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Unless specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the consummation of our initial business combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment.
Because our amended and restated certificate of incorporation authorizes the issuance of up to 200,000,000 shares of Class A common stock and 10,000,000 shares of Class B common stock, if we were to enter into an initial business combination, we may (depending on the terms of such an initial business combination) be required to increase the number of shares of common stock which we are authorized to issue at the same time as our stockholders vote on the initial business combination to the extent we seek stockholder approval in connection with our initial business combination.
In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after the first full fiscal year that we in existence. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws, unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.20 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and placement shares and any public shares held by them in connection with the completion of our initial business combination. Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by applicable law or stock exchange requirements, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated certificate of incorporation requires these tender offer documents to contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SECs proxy rules. If, however, a stockholder approval of the transaction is required by applicable law or stock exchange requirements, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. If we submit our initial business combination to our public stockholders for a vote, our sponsor, the other initial stockholders, our officers and our directors have agreed to vote their respective founder shares, placement shares and any public shares held by them in favor of our initial business combination.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares of common stock sold in our initial public offering, which we refer to as the Excess Shares. However, we would not be restricting our stockholders ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our stockholders inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete the initial business combination. And, as a result, such stockholders will continue to hold that number of shares exceeding 15% and, in order to dispose such shares would be required to sell their stock in open market transactions, potentially at a loss.
Pursuant to our amended and restated certificate of incorporation, if we are unable to complete our initial business combination within 12 months (or up to 18 months, if we extend the time to complete a business combination) from the closing of our initial offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the 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 on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our sponsor, officers and directors have entered into a letter agreement with us,
pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares and placement shares held by them if we fail to complete our initial business combination within the applicable 12 months (or up to 18 months, if we extend the time to complete a business combination) period from the closing of our initial public offering. However, if our initial stockholders acquire public shares in or after our initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the prescribed time period.
In the event of a liquidation, dissolution or winding up of the company after an initial business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, upon the completion of our initial business combination, subject to the limitations described herein.
Redeemable Warrants
Each whole warrant entitles the registered holder to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of our initial public offering and 30 days after the completion of our initial business combination. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.
The warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We will not be obligated to deliver any shares of 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 with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable and we 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. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
We have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
Once the warrants become exercisable, we may call the warrants for redemption:
| in whole and not in part; |
| at a price of $0.01 per warrant; |
| upon not less than 30 days prior written notice of redemption given after the warrants become exercisable (the 30-day redemption period) to each warrant holder; and |
| if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before we send the notice of redemption to the warrant holders. |
If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of Class A common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of Class A common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering.
If we call the warrants for redemption as described above, our management will have the option to require any holder that wishes to exercise its warrant to do so on a cashless basis. In determining whether to require all holders to exercise their warrants on a cashless basis, our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value for this purpose shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received upon exercise of the warrants, including the fair market value in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business combination. If we call our warrants for redemption and our management does not take advantage of this option, our sponsor and its permitted transferees would still be entitled to exercise their placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.
A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such persons affiliates), to the warrant agents actual knowledge, would beneficially own in excess of 4.9% or 9.8% (or such other amount as a holder may specify) of the shares of Class A common stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of our Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of Class A common stock.
Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
In case of any reclassification or reorganization of the outstanding shares of Class A common stock (other than those described above or that solely affects the par value of such shares of Class A common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding shares of Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event.
The warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant agreement, which has been filed as an exhibit to this Report for a complete description of the terms and conditions applicable to the warrants. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement, or defective provision, but requires the approval by the holders of at least a majority of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants.
In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our sponsor or its affiliates, without taking into account any founder shares held by our sponsor or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the Market Value is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one (1) vote for each share held of record on all matters to be voted on by stockholders.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number of shares of Class A common stock to be issued to the warrant holder.
Exhibit 31.1
CERTIFICATIONS
I, Patrick Orlando, certify that:
1. | I have reviewed this 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 registrants other certifying officer and I are 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, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313); |
c) | Evaluated the effectiveness of the registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: April 13, 2022 | By: | /s/ Patrick Orlando | ||||
Patrick Orlando | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, | Luis Orleans-Braganza, certify that: |
1. | I have reviewed this 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 registrants other certifying officer and I are 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, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313); |
c) | Evaluated the effectiveness of the registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: April 13, 2022 | By: | /s/ Luis Orleans-Braganza | ||
Luis Orleans-Braganza | ||||
Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
Exhibit 32.1
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 the Annual Report on Form 10-K of Digital World Acquisition Corp. (the Company) for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the Report), I, Patrick Orlando, Chief Executive Officer, 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: April 13, 2022 | By: | /s/ Patrick Orlando | ||
Patrick Orlando | ||||
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 the Annual Report on Form 10-K of Digital World Acquisition Corp. (the Company) for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the Report), I, Luis Orleans-Braganza, 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: April 13, 2022 | By: | /s/ Luis Orleans-Braganza | ||
Luis Orleans-Braganza | ||||
Chief Financial Officer | ||||
(Principal Financial Officer) |
BALANCE SHEET (Parenthetical) |
Dec. 31, 2021
$ / shares
shares
|
---|---|
Preferred stock, par value (per share) | $ / shares | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 |
Preferred stock, shares issued | 0 |
Preferred stock, shares outstanding | 0 |
Common shares, par value (per share) | $ / shares | $ 0.0001 |
Class A Common Stock | |
Common shares, par value (per share) | $ / shares | $ 0.0001 |
Common shares, shares authorized | 200,000,000 |
Class A Common Stock Not Subject to Redemption | |
Common shares, shares issued | 1,277,234 |
Common shares, shares outstanding | 1,277,234 |
Class A Common Stock Subject to Redemption | |
Temporary equity, par value (per share) | $ / shares | $ 0.0001 |
Temporary equity, shares authorized | 200,000,000 |
Temporary equity, shares outstanding | 28,750,000 |
Class B Common Stock | |
Common shares, par value (per share) | $ / shares | $ 0.0001 |
Common shares, shares authorized | 10,000,000 |
Common shares, shares issued | 7,187,500 |
Common shares, shares outstanding | 7,187,500 |
STATEMENT OF OPERATIONS |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
$ / shares
shares
| |
Formation and operating costs | $ 1,191,593 |
Franchise tax expense | 200,000 |
Loss from operation costs | (1,391,593) |
Other income and expenses: | |
Interest earned on cash held in Trust Account | 7,098 |
Net loss | $ (1,384,495) |
Class A Common Stock | |
Other income and expenses: | |
Weighted average shares outstanding, basic | shares | 9,404,134 |
Weighted average shares outstanding, diluted | shares | 9,404,134 |
Net income per common stock, basic | $ / shares | $ (0.08) |
Net income per common stock, diluted | $ / shares | $ (0.08) |
Class B Common Stock | |
Other income and expenses: | |
Weighted average shares outstanding, basic | shares | 7,187,500 |
Weighted average shares outstanding, diluted | shares | 7,187,500 |
Net income per common stock, basic | $ / shares | $ (0.08) |
Net income per common stock, diluted | $ / shares | $ (0.08) |
STATEMENT OF CHANGES STOCKHOLDERS' DEFICIT - 12 months ended Dec. 31, 2021 - USD ($) |
Total |
Additional Paid-in Capital [Member] |
Accumulated Deficit |
Class A Common Stock Not Subject to Redemption
Common Stock [Member]
|
Common Class B [Member]
Common Stock [Member]
|
||||
---|---|---|---|---|---|---|---|---|---|
Balance at the beginning at Dec. 31, 2020 | $ 0 | $ 0 | |||||||
Balance at the beginning (in shares) at Dec. 31, 2020 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of Class B common stock to sponsor | [1],[2] | 25,000 | 24,281 | 0 | $ 719 | ||||
Issuance of Class B common stock to sponsor (in shares) | [1],[2] | 7,187,500 | |||||||
Class A common stock accretion to redemption value | (19,980,528) | (12,796,508) | (7,184,020) | ||||||
Issuance of Class A common stock to investor | 11,334,840 | 11,334,727 | 0 | $ 113 | |||||
Issuance of Class A common stock to investor (in shares) | 1,133,484 | ||||||||
Issuance of Class A common stock to representative | 1,437,500 | (1,437,514) | $ 14 | ||||||
Issuance of Class A common stock to representative (in shares) | 143,750 | ||||||||
Net loss | (1,384,495) | (1,384,495) | |||||||
Balance at the end at Dec. 31, 2021 | $ (10,005,183) | $ 0 | $ (10,006,029) | $ 127 | $ 719 | ||||
Balance at the end (in shares) at Dec. 31, 2021 | 1,277,234 | 7,187,500 | |||||||
|
STATEMENT OF CHANGES STOCKHOLDERS' DEFICIT (Parenthetical) |
Jul. 01, 2021 |
---|---|
Common Class B [Member] | |
Stock split | 3 |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS 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 one 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. At December 31, 2021, the Company had not yet commenced any operations. All activity through December 31, 2021 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 28,750,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $287,500,000, and incurred offering costs of $23,566,497, consisting of deferred underwriting commissions of $10,062,500 (see Note 3), fair value of the representative shares (as defined in Note 7) of $1,437,500, fair value of Anchor Investor shares of $7,677,450, fair value of shares transferred to officers and directors of $221,018, and other offering costs of $4,168,029. The Units sold in the Initial Public Offering included Units that were subject to a 45-day option granted to the underwriter to purchase up to an additional 3,750,000 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 1,133,484 units (the “Placement Units”) at a price of $10.00 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 $11,334,840, which is described in Note 4. Following the closing of the Initial Public Offering on September 8, 2021, an amount of $293,250,000 ($10.20 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 of Incorporation prior thereto or to redeem 100% 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 100% 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 $5,000,001 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 Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent. The stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.20 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, 470-20. Because of the redemption feature noted above, the shares of Class A common stock are subject to ASC 480-10-S99. paid-in capital). While redemptions cannot cause the Company’s net tangible assets to fall below $5,000,001, the Public Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption event takes place. 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 100% 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. The Company will have until September 8, 2022 (or up to March 8, 2023 if the Company extends the maximum time to complete a Business Combination) 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 100% 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 $100,000), 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 $10.20. 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 $10.20 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 of 1933, as amended (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 Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (as defined in Note 5). As of December 31, 2021, there were no amounts outstanding under any Working Capital Loan. In November 2021, the Sponsor committed to provide loans of up to an aggregate of $1,000,000 to the Company through September 8, 2022, which loans will be non-interest bearing, unsecured and will be payable upon the consummation of a Business Combination. However, 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 September 8, 2022 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. Management has determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the caring amounts of assets or liabilities should the Company be required to liquidate after September 8, 2022. Proposed Business Combination On October 20, 2021, the Company entered into an Agreement and Plan of Merger (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 Chief Legal Officer, 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 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 to $875,000,000, subject to adjustments for TMTG’s closing debt, net of cash and unpaid transaction expenses (the “Merger Consideration”), plus the additional contingent right to receive certain earnout shares after the Closing. The Merger Consideration to be paid to TMTG Stockholders will be paid solely by the delivery of new shares of the Company’s common stock, with each valued at the price per share at which each share of the Company’s common stock is redeemed or converted pursuant to the redemption by the Company of its public stockholders in connection with the Company’s initial Business Combination, as required by the Company’s Amended and Restated Certificate of Incorporation, by-laws and the Company’s Initial Public Offering prospectus. The Merger Consideration will be subject to a post-Closing true up 90 days after the Closing. On December 4, 2021, in support of the TMTG Business Combination, the Company entered into securities purchase agreements (the “SPAs”) with certain institutional accredited investors (the “PIPE Investors”), pursuant to which the investors agreed to purchase an aggregate o f 1,000,000 shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”), for a purchase price of $ 1,000 per share of Preferred Stock, for an aggregate commitment of $ 1,000,000,000 in a private placement (the “PIPE”) to be consummated concurrently with the TMTG Business Combination. The shares of Preferred Stock have an initial conversion price per share of $ 33.60 and are initially convertible into an aggregate of 29,761,905 shares of common stock. The closing of the PIPE is conditioned on the concurrent closing of the TMTG Business Combination and other closing conditions as set forth in the SPA. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. 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”). 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. 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 costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering. These costs were charged to stockholders’ equity upon the completion of the Initial Public Offering. On September 8, 2021, offering costs in the aggregate of $15,668,029 were charged to stockholders’ equity (consisting of deferred underwriting commission of $10,062,500, fair value of the representative shares of $1,437,500 and other cash offering costs of $4,168,029). Class A Common Stock Subject to Possible Redemption As discussed in Note 3, all of the 28,750,000 shares of Class A common stock sold as part of the Units in the Initial Public Offering 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 Business Combination and in connection with certain amendments to the Company’s Amended and Restated Certificate of Incorporation. The Class A common stock subject to possible redemption reflected on the balance sheet as of December 31, 2021 is reconciled in the following table:
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. 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 Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be 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 no unrecognized tax benefits as of December 31, 2021 and amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has identified the United States and Florida as major tax jurisdictions. The Company is subject to examination by these taxing authorities since inception. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. 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 calculation of diluted loss per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. As of December 31, 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At December 31, 2021, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. 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 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 does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. Risks and Uncertainties Management is currently evaluating the impact of the
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. |
INITIAL PUBLIC OFFERING |
12 Months Ended |
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Dec. 31, 2021 | |
INITIAL PUBLIC OFFERING | |
INITIAL PUBLIC OFFERING | NOTE 3. INITIAL PUBLIC OFFERING On September 8, 2021, the Company consummated its Initial Public Offering of 28,750,000 Units, at $10.00 per Unit, generating gross proceeds of $287,500,000. Each Unit consists of one share of Class A common stock and of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share (see Note 7). As of September 8, 2021, the Company incurred offering costs of approximately $15,668,029, consisting of deferred underwriting commissions of $10,062,500, fair value of representative shares of $1,437,500 and other offering costs of $4,168,029. |
PRIVATE PLACEMENT |
12 Months Ended |
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Dec. 31, 2021 | |
PRIVATE PLACEMENT | |
PRIVATE PLACEMENT | NOTE 4. PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 1,133,484 Placement Units at a price of $10.00 per Placement Unit (or $11,334,840 in the aggregate). The Sponsor initially transferred $13,203,590 to the Trust Account on September 8, 2021. The excess proceeds ($1,869,110) over the proceeds of the Private Placement were transferred back to the Company’s operating account and returned to the Sponsor. The proceeds from the sale of the Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. The Placement Units are identical to the Units sold in the Initial Public Offering, except that the Placement Units and their component securities will not be transferable, assignable or salable until 30 days after the consummation of the initial Business Combination except to permitted transferees and are entitled to registration rights. If the Company does not complete a Business Combination 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. |
RELATED PARTY TRANSACTIONS |
12 Months Ended |
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Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 5. RELATED PARTY TRANSACTIONS Class B Common stock During the year ended December 31, 2021, the Company issued an aggregate of 8,625,000 shares of Class B common stock or Founder Shares to the Sponsor for an aggregate purchase price of $25,000 in cash. On July 2, 2021, the Sponsor transferred 10,000 Founder Shares to its Chief Financial Officer and 7,500 Founder Shares to each of its independent directors. The Company estimated the fair value of these transferred shares to be $221,000. On September 2, 2021, the Sponsor surrendered to the Company an aggregate of 1,437,500 shares of Class B common stock for cancellation for no consideration, resulting in an aggregate of 7,187,500 shares of Class B common stock issued and outstanding. The number of Founder Shares issued represented 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the initial stockholders do not purchase any Public Shares in the Initial Public Offering and excluding the Placement Units and underlying securities). All shares and associated amounts have been retroactively restated to reflect the surrender of these shares. With certain limited exceptions, the shares of Class B common stock are not transferable, assignable by the Sponsor until the earlier to occur of: (A) six months after the completion of the Company’s initial Business Combination and (B) subsequent to the Company’s initial Business Combination, (x) if the reported last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that 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. Promissory Note — Related Party On December 11, 2020, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000, of which $0 was outstanding under the note as of December 31, 2021. The note was non-interest bearing and payable on the earlier of (i) September 30, 2021 or (ii) the consummation of the Initial Public Offering.Administrative Services Arrangement An affiliate of the Sponsor has 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 $15,000 per month for these services. $56,000 of expense was recorded for the year ended December 31, 2021. Related Party Loans In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the 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, up to $1,500,000 of notes may be converted upon consummation of a Business Combination into additional units at a price of $10.00 per unit. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. In November 2021, the Sponsor committed to provide loans of up to an aggregate of $1,000,000 to the Company through September 8, 2022, which loans will be non-interest bearing, unsecured and will be payable upon the consummation of a Business Combination. |
COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6. COMMITMENTS AND CONTINGENCIES Registration Rights The holders of the Founder Shares, the holders of representative shares as well as the holders 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 three demands 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 underwriters purchased the 3,750,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriters are entitled to a cash underwriting discount of: (i) one point twenty-five percent (1.25%) of the gross proceeds of the Initial Public Offering, or $3,593,750, with the underwriters’ over-allotment having been exercised in full; (ii) zero point five percent (0.50%) of the total number of shares of Class A common stock issued in the Initial Public Offering, or 143,750 shares of Class A common stock. In addition, the underwriters are entitled to a deferred underwriting commissions of three point five percent ( 3.50%) of the gross proceeds of the Initial Public Offering, or $ 10,062,500 upon closing of the Business Combination. The deferred underwriting commissions will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement. Right of First Refusal Subject to certain conditions, the Company granted the underwriter, for a period of 24 months 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 debt offering, including all equity linked financings for the Company or any of its successors or subsidiaries. In accordance with FINRA Rule 5110(g)(6)(A), such right of first refusal shall not have a duration of more than three years from the effective date of the Registration Statement. |
STOCKHOLDERS' EQUITY |
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Dec. 31, 2021 | |||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | NOTE 7. STOCKHOLDERS’ EQUITY Preferred Stock Class A Common Stock Class B Common Stock one-for-one Warrants 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:
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 than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and the $ 18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price. The Private Warrants, as well as any 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. |
TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TAXES | NOTE 8. TAXES The Company’s net deferred tax assets is as follows:
Below is breakdown of the income tax provision.
As of December 31, 2021, the Company had $192,902 of U.S. federal and state operating loss carryovers that do not expire and are available to offset future taxable income. In assessing the realization 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, 2021, the change in the valuation allowance was $329,408. A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
The effective tax rate differs from the statutory tax rate of 21% for the year ended December 31, 2021, due to the valuation allowance recorded on the Company’s net operating losses and state taxes. 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. |
SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9. SUBSEQUENT EVENTS In accordance with ASC Topic 855, “Subsequent Events”, 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, 2021, up to the date the Company issued the financial statements. Based upon this review the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
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Emerging Growth Company | 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. 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. |
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Use of Estimates | 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. |
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Offering Costs Associated with the Initial Public Offering | Offering Costs Associated with the Initial Public Offering Offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering. These costs were charged to stockholders’ equity upon the completion of the Initial Public Offering. On September 8, 2021, offering costs in the aggregate of $15,668,029 were charged to stockholders’ equity (consisting of deferred underwriting commission of $10,062,500, fair value of the representative shares of $1,437,500 and other cash offering costs of $4,168,029). |
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Class A Common Stock Subject to Possible Redemption | Class A Common Stock Subject to Possible Redemption As discussed in Note 3, all of the 28,750,000 shares of Class A common stock sold as part of the Units in the Initial Public Offering 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 Business Combination and in connection with certain amendments to the Company’s Amended and Restated Certificate of Incorporation. The Class A common stock subject to possible redemption reflected on the balance sheet as of December 31, 2021 is reconciled in the following table:
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Income Taxes | 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. 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 Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be 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 no unrecognized tax benefits as of December 31, 2021 and amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has identified the United States and Florida as major tax jurisdictions. The Company is subject to examination by these taxing authorities since inception. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. |
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Net Loss Per Share | 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 calculation of diluted loss per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. As of December 31, 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented. |
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Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At December 31, 2021, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. |
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Derivative Financial Instruments | 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 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. |
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Recently Issued Accounting Standards | Recently Issued Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. |
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Risks and Uncertainties | Risks and Uncertainties Management is currently evaluating the impact of the
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. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Class A common stock subject to possible redemption | The Class A common stock subject to possible redemption reflected on the balance sheet as of December 31, 2021 is reconciled in the following table:
|
TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Company's Net Deferred Tax Assets | The Company’s net deferred tax assets is as follows:
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Summary of Income Tax Provision | Below is breakdown of the income tax provision.
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Summary of Reconciliation of Federal Income Tax Rate | A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
Sep. 08, 2021 |
Dec. 31, 2021 |
---|---|---|
Unrecognized Tax Benefits | $ 0 | |
Unrecognized tax benefits accrued for interest and penalties | 0 | |
Federal depository insurance coverage | $ 250,000 | |
Initial Public Offering | ||
Offering costs | $ 15,668,029 | |
Deferred underwriting commissions | 10,062,500 | |
Fair value of the representative shares | 1,437,500 | |
Other offering costs | $ 4,168,029 | |
Class A Common Stock Subject to Redemption | Initial Public Offering | ||
Number of shares issued | 28,750,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Class A Common Stock Subject To Possible Redemption (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Temporary Equity [Line Items] | |
Class A common stock issuance costs | $ (4,168,028) |
Remeasurement of carrying value to redemption value | 19,980,528 |
Common Class A [Member] | |
Temporary Equity [Line Items] | |
Gross Proceeds | 287,500,000 |
Proceeds allocated to public warrants | (9,727,562) |
Class A common stock issuance costs | (22,528,112) |
Remeasurement of carrying value to redemption value | 38,005,674 |
Class A common stock subject to possible redemption | $ 293,250,000 |
INITIAL PUBLIC OFFERING (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 08, 2021 |
Dec. 31, 2021 |
|
Class A Common Stock | ||
Subsidiary, Sale of Stock [Line Items] | ||
Proceeds from Issuance Initial Public Offering | $ 287,500,000 | |
Initial Public Offering | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of units sold | 28,750,000 | |
Purchase price, per unit | $ 10.00 | |
Proceeds from Issuance Initial Public Offering | $ 287,500,000 | |
Offering costs | 15,668,029 | |
Deferred underwriting commissions | 10,062,500 | |
Fair value of the representative shares | 1,437,500 | |
Other offering costs | $ 4,168,029 | |
Initial Public Offering | Public Warrants | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of warrants in a unit | 0.5 | |
Initial Public Offering | Class A Common Stock | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares in a unit | 1 | |
Initial Public Offering | Class A Common Stock | Public Warrants | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares issuable per warrant | 1 | |
Exercise price of warrants | $ 11.50 |
PRIVATE PLACEMENT (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 08, 2021 |
Dec. 31, 2021 |
|
Subsidiary, Sale of Stock [Line Items] | ||
Restrictions on transfer period of time after business combination completion | 30 days | |
Private Placement [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Restrictions on transfer period of time after business combination completion | 30 days | |
Private Placement [Member] | Sponsor | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of units sold | 1,133,484 | |
Purchase price, per unit | $ 10.00 | |
Gross proceeds from sale of units | $ 11,334,840 | |
Cash deposited into Trust Account by related party | 13,203,590 | |
Exceeds proceeds allocated over the proceeds of the Private Placement | $ 1,869,110 |
RELATED PARTY TRANSACTIONS - Founder Shares (Details) |
12 Months Ended | ||
---|---|---|---|
Sep. 02, 2021
shares
|
Jul. 02, 2021
USD ($)
shares
|
Dec. 31, 2021
USD ($)
d
$ / shares
shares
|
|
Related Party Transaction [Line Items] | |||
Restrictions on transfer period of time after business combination completion | 30 days | ||
Class B Common Stock | |||
Related Party Transaction [Line Items] | |||
Numbers of shares surrendered for no consideration | 1,437,500 | ||
Common shares, shares issued | 7,187,500 | 7,187,500 | |
Common shares, shares outstanding | 7,187,500 | 7,187,500 | |
Sponsor | Class B Common Stock | |||
Related Party Transaction [Line Items] | |||
Numbers of shares surrendered for no consideration | 1,437,500 | ||
Founder Shares | Sponsor | Class B Common Stock | |||
Related Party Transaction [Line Items] | |||
Number of shares issued | 8,625,000 | ||
Aggregate purchase price | $ | $ 25,000 | ||
Numbers of shares surrendered for no consideration | 1,437,500 | ||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20.00% | ||
Restrictions on transfer period of time after business combination completion | 6 months | ||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12.00 | ||
Threshold trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | d | 20 | ||
Threshold consecutive trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | d | 30 | ||
Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 150 days | ||
Share transfer between related parties, Value | $ | $ 221,000 | ||
Founder Shares | Sponsor | Class B Common Stock | Chief Financial Officer [Member] | |||
Related Party Transaction [Line Items] | |||
Number of shares transferred by sponsor | 10,000 | ||
Founder Shares | Sponsor | Class B Common Stock | Director [Member] | |||
Related Party Transaction [Line Items] | |||
Number of shares transferred by sponsor | 7,500 |
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Nov. 30, 2021 |
Dec. 11, 2020 |
|
Promissory Note with Related Party | |||
Related Party Transaction [Line Items] | |||
Maximum borrowing capacity of related party promissory note | $ 300,000 | ||
Outstanding balance | $ 0 | ||
Administrative Support Agreement | |||
Related Party Transaction [Line Items] | |||
Expenses per month | 15,000 | ||
Expenses recorded | 56,000 | ||
Working capital loans | |||
Related Party Transaction [Line Items] | |||
Outstanding balance | 0 | ||
Maximum loans convertible into units | $ 1,500,000 | ||
Price per unit | $ 10.00 | ||
Sponsor | |||
Related Party Transaction [Line Items] | |||
Working Capital Loan Warrant | $ 1,000,000 |
COMMITMENTS AND CONTINGENCIES (Details) |
12 Months Ended | |
---|---|---|
Sep. 08, 2021
shares
|
Dec. 31, 2021
USD ($)
Item
shares
|
|
Subsidiary, Sale of Stock [Line Items] | ||
Maximum number of demands for registration of securities | Item | 3 | |
Percentage of cash underwriting discount based on gross proceeds from IPO | 1.25% | |
Aggregate cash underwriting discount if over-allotment is exercised in full | $ | $ 3,593,750 | |
Percentage of deferred underwriting commission based on gross proceeds from IPO | 3.50% | |
Deferred underwriting commission | $ | $ 10,062,500 | |
Period of right of first refusal from the closing of business combination | 24 months | |
Common Class A [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Percentage of shares issuable based on stock issued in IPO | 0.50% | |
Number of shares issuable | shares | 143,750 | |
Over-Allotment Option [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of units sold | shares | 3,750,000 |
STOCKHOLDERS' EQUITY - Preferred Stock Shares (Details) |
Dec. 31, 2021
$ / shares
shares
|
---|---|
Stockholders' Equity Note [Abstract] | |
Preferred shares, shares authorized | 1,000,000 |
Preferred stock, par value, (per share) | $ / shares | $ 0.0001 |
Preferred shares, shares issued | 0 |
Preferred shares, shares outstanding | 0 |
STOCKHOLDERS' EQUITY - Common Stock Shares (Details) |
12 Months Ended | ||
---|---|---|---|
Sep. 02, 2021
shares
|
Dec. 31, 2021
USD ($)
Vote
$ / shares
shares
|
Sep. 08, 2021
shares
|
|
Class of Stock [Line Items] | |||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Class A Common Stock | |||
Class of Stock [Line Items] | |||
Common shares, shares authorized (in shares) | 200,000,000 | ||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Common shares, votes per share | Vote | 1 | ||
Class A common stock subject to possible redemption, issued (in shares) | 143,750 | 28,750,000 | |
Issuance of Class A common stock to representative | $ | $ 1,437,500 | ||
Issuance of Class A common stock to representative (in shares) | 1,277,234 | ||
Class A Common Stock Not Subject to Redemption | |||
Class of Stock [Line Items] | |||
Common shares, shares issued (in shares) | 1,277,234 | ||
Common shares, shares outstanding (in shares) | 1,277,234 | ||
Class A Common Stock Subject to Redemption | |||
Class of Stock [Line Items] | |||
Class A common stock subject to possible redemption, outstanding (in shares) | 28,750,000 | ||
Class B Common Stock | |||
Class of Stock [Line Items] | |||
Common shares, shares authorized (in shares) | 10,000,000 | ||
Common shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Common shares, shares issued (in shares) | 7,187,500 | 7,187,500 | |
Common shares, shares outstanding (in shares) | 7,187,500 | 7,187,500 | |
Transferred shares to qualified institutional buyers | 1,650,000 | ||
Ratio to be applied to the stock in the conversion | 20 | ||
Numbers of shares surrendered for no consideration | 1,437,500 |
STOCKHOLDERS' EQUITY - Warrants (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021
$ / shares
| |
Class of Warrant or Right [Line Items] | |
Adjustment one of redemption price of stock based on market value and newly issued price (as a percent) | 115.00% |
Restrictions on transfer period of time after business combination completion | 30 days |
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00 | |
Class of Warrant or Right [Line Items] | |
Redemption trigger price will be adjusted (per share) | $ 18.00 |
Adjustment one of redemption price of stock based on market value and newly issued price (as a percent) | 180.00% |
Public Warrants | |
Class of Warrant or Right [Line Items] | |
Warrant exercise period condition one | 30 days |
Public Warrants expiration term | 5 years |
Threshold trading days for redemption of public warrants | 20 days |
Share Price | $ 9.20 |
Percentage of gross new proceeds to total equity proceeds used to measure dilution of warrant | 60 |
Restrictions on transfer period of time after business combination completion | 30 days |
Public Warrants | Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00 | |
Class of Warrant or Right [Line Items] | |
Redemption price per public warrant (in dollars per share) | $ 0.01 |
Warrant redemption condition minimum share price | $ 18.00 |
Threshold trading days for redemption of public warrants | 20 days |
Redemption period | 30 days |
TAXES - Summary of Company's Net Deferred Tax Assets (Detail) |
Dec. 31, 2021
USD ($)
|
---|---|
Deferred Tax Assets, Net [Abstract] | |
Net operating losses | $ 45,896 |
Start up costs | 283,512 |
Total deferred tax assets | 329,408 |
Valuation Allowance | (329,408) |
Deferred tax asset, net of allowance | $ 0 |
TAXES - Summary of Income Tax Provision (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Federal | |
Current | $ 0 |
Deferred | (290,744) |
State and local | |
Current | 0 |
Deferred | (38,664) |
Change in valuation allowance | 329,408 |
Income tax provision | $ 0 |
TAXES - Summary of Reconciliation of Federal Income Tax Rate (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
U.S. federal statutory rate | 21.00% |
State tax, net of federal benefit | 2.79% |
Valuation allowance | (23.79%) |
Income tax provision | 0.00% |
TAXES - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Change in valuation allowance | $ 329,408 |
Federal statutory income tax rate | 21.00% |
Domestic And State Authority Member [Member] | |
Operating loss carry forwards | $ 192,902 |