Business Context and Reporting Period
This Form 8-K, dated February 21, 2021, reports that Trident Acquisitions Corp. ("TDAC") entered into a definitive Business Combination Agreement with AutoLotto, Inc. ("Lottery.com"). Upon closing, TDAC will merge with Lottery.com, change its name to "LOTTERY.COM," and continue as a publicly traded entity on the NASDAQ Capital Market. The filing serves as a current report of this material definitive agreement and includes forward-looking statements regarding the proposed merger.
Key Financial Metrics and Transaction Terms
The filing details the structure of the acquisition consideration rather than historical financial performance metrics for the target or the SPAC.
- Base Consideration: Approximately $444 million in value, calculated as 40,000,000 shares of TDAC Common Stock issued to Lottery.com shareholders at a reference price of $11.00 per share.
- Debt Adjustment: The share count is subject to reduction if Lottery.com's Net Indebtedness exceeds $10,000,000. For every dollar of Net Indebtedness over this threshold, the share count is reduced by 1/11th of a share.
- Earnout Provisions: Up to 6,000,000 additional shares ("Seller Earnout Shares") may be issued based on stock price performance:
- 3,000,000 shares if the VWAP exceeds $13.00 for 20 of 30 consecutive trading days by December 31, 2021.
- 3,000,000 shares if the VWAP exceeds $16.00 for 20 of 30 consecutive trading days by December 31, 2022.
- Termination Fee: Up to $500,000 payable by either party under specific termination circumstances.
- Liquidity Requirement: TDAC must maintain at least $5,000,001 in net tangible assets immediately after closing.
Material Changes and Governance
The primary material change is the entry into the Merger Agreement, which alters the corporate structure and future operations of TDAC.
- Board Composition: Post-closing, the board will consist of five directors: four designated by Lottery.com and one independent director designated by TDAC.
- Sponsor Forfeiture: Founder Holders will forfeit all 1,150,000 TDAC Warrants and a minimum of 561,932 shares of TDAC Common Stock. Additional shares (up to 3,090,625) may be forfeited if redemptions reduce the Trust Account below 70% of its initial value.
- Stockholder Approval: The transaction is contingent upon approval by a majority of TDAC stockholders at a special meeting.
Outlook, Risks, and Contingencies
Management commentary is limited to the terms of the agreement and standard forward-looking disclaimers. The filing highlights significant risks and contingencies that could prevent the transaction from closing.
- Conditions to Closing: Includes stockholder approval, effectiveness of the Form S-4 Registration Statement, Nasdaq listing approval, expiration of HSR Act waiting periods, and the absence of laws or orders preventing the merger.
- Termination Rights: Either party may terminate if the deal is not closed by the "Outside Date" of October 31, 2021, or if stockholder approval is not obtained.
- Forward-Looking Risks: Risks include the inability to complete the merger, disruption of Lottery.com's operations, failure to achieve anticipated synergies, changes in regulatory laws, and the possibility that actual results differ materially from projections.
Investor Verification Checklist
- Verify the final Net Indebtedness of Lottery.com to determine the exact number of shares to be issued (adjustment for debt over $10M).
- Monitor the upcoming Form S-4 Registration Statement and Proxy Statement for detailed financial data on Lottery.com and the final terms of the merger.
- Assess the redemption rate of TDAC stockholders, as high redemptions could trigger additional sponsor share forfeitures and impact the post-merger capitalization.
- Confirm the outcome of the TDAC stockholder special meeting required to approve the transaction.
- Review the "Risk Factors" section in the forthcoming Registration Statement for specific details on Lottery.com's business model and regulatory environment.