{ "docId": "019dd923-622c-750b-8b98-185c8a5e84a0", "docSlug": "dbd70945c810", "documentTitle": "Digital World Acquisition Corp (DWAC)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2022-04-01 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 7, "pageCount": 27, "prevPage": 6, "nextPage": 8, "slideType": "villain_critique", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "This is a research note from Kerrisdale Capital criticizing DWAC/TMTG.", "elementsJson": [ "paragraph", "headline_text" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-185c8a5e84a0/7", "deckHref": "/decks/019dd923-622c-750b-8b98-185c8a5e84a0", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-185c8a5e84a0.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-185c8a5e84a0#slide-7", "components": [ { "bbox": null, "kind": "callout", "text": "Contrary to DWAC's perpetually future intentions, we believe it has never had any reasonable hope of filing an S-4 that the SEC would allow to go effective.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f41-721f-9e56-3e7fb6a965cb", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.165, "w": 0.764, "x": 0.118, "y": 0.735 }, "kind": "paragraph", "text": "While presently TMTG could be generously described as a fledgling company with a flawed prototype, prior to and at the time of merger signing – the period the SEC will be most concerned with – TMTG constituted even less, and this in itself is a significant regulatory hurdle. Indeed, in November 2021 – a month after the merger was signed -- TMTG's Investor Presentation essentially admitted that TMTG was no more than a shell company with no or nominal operations, stating that Trump and TMTG \"intend to create a media and technology company rooted in social media...\"(Emphasis added.) The presentation noticeably excludes mention of senior management as the current CEO and COO of TMTG were only named in December 2021, two months after the merger was signed. One of the main benefits oft cited for SPACs is the vehicle's ability to provide public investors earlier access to emerging growth companies. Accelerating a company's development through access to the public markets is one", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "01b40f59-0c36-438e-9251-f8c9fb0bb174", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.165, "w": 0.764, "x": 0.118, "y": 0.268 }, "kind": "paragraph", "text": "The answer becomes all too clear in DWAC's 10-K, filed on April 13, 2022 – by its own admission, DWAC has not filed any S-4 (confidential or otherwise) with the SEC. The company repeatedly claims that it \"intends to file with the SEC the Form S-4, which will include a preliminary proxy statement of the Company, and a prospectus in connection with the proposed Merger...please see the Form S-4 which the Company intends to file after the filing of this [10-K].\" Bullish investors may take (unwarranted) comfort in DWAC's most recently disclosed intentions regarding this long-awaited filing. We remain, however, highly skeptical. The same cheap promise was included in DWAC's 3Q 10-Q: For more information, \"please see the Form S-4 which the company intends to file after the filing of this Quarterly Report\").", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5a270e41-b62c-42cd-9ee2-bda082fe6c82", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.115, "w": 0.764, "x": 0.118, "y": 0.141 }, "kind": "paragraph", "text": "SPACs are permitted to submit one confidential S-4 during their first year of existence. Noting this, DWAC CEO Patrick Orlando had hinted at the possibility that DWAC has at least initiated the process, but his lack of transparency on the matter should have given investors pause. Though there is no obligation to disclose whether a filing has been made, it is common SPAC industry practice to voluntarily issue press releases to update shareholders and signal that the regulatory process is proceeding comfortably apace. After all this time, if an S-4 had been filed confidentially, why not assuage anxious investors that this important step has been taken?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "74d8fbef-e938-40b3-9a44-e60c453e2595", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.035, "w": 0.764, "x": 0.118, "y": 0.095 }, "kind": "paragraph", "text": "operations). Yet here we are, six months later and counting, without DWAC filing any S-4, an obvious sign of the seriousness of the SEC investigation.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "82be292b-ed3f-4722-969b-2f7ca7076c73", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.235, "w": 0.764, "x": 0.118, "y": 0.445 }, "kind": "paragraph", "text": "Contrary to DWAC's perpetually future intentions, we believe it has never had any reasonable hope of filing an S-4 that the SEC would allow to go effective. Unlike periodic reports – which as a rule need not include disclosures regarding SEC investigations – offering documents such as an S-4 and related proxy materials must include all information that might be material to a would-be investor's decision to participate in the offering – including fulsome information about any open SEC investigations. Given the facts as we know them, filing an S-4 that publicly discloses details of an investigation might expose DWAC's insiders, as well as certain highly prominent individuals, to meaningful legal risk. In addition, and quite aside from SEC concerns, we know (from the S-4 filed by an affiliate of DWAC's sister SPAC) that as of late August 2021, TMTG lacked audited financials and other key contracts. All of these items are necessary for an acceptable S-4. Given that in the past six months, DWAC hasn't made a single filing containing substantive information about TMTG, investors who think the necessary filing will miraculously soon appear and address all the substantial issues of securities law and disclosures in one fell swoop are delusional.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f3062564-d2fc-40aa-b4a8-24e4243b6810", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "TMTG 'intend to create a media and technology company rooted in social media...' — TMTG Investor Presentation", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f41-721f-9e56-43cd2dcb7eef", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.025, "w": 0.764, "x": 0.118, "y": 0.695 }, "kind": "title", "text": "TMTG Was a Bogus Media Company at Merger Announcement", "attrs": null, "subkind": "action-title", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0f9cd2b3-dd74-493d-b7e9-6edddf7ce224", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 9, "from": 7, "beatId": "a18ccd65-7f5a-4772-aee4-9483ab93ccc3", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Villain Critique", "beatSlug": null, "evidence": "The critique of TMTG's media business and technology team", "position": 1, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }