Data443 Takes On $2M Termination Fee Note with Conversion Feature Tied to SPAC Deal Close

summarizeSummary

Data443 Risk Mitigation entered into a Compensation Agreement with XYDD, issuing a $2 million promissory note to facilitate its SPAC merger. The note carries a conversion feature that could lead to significant dilution if not repaid within 12 months, and 1.8 million shares are allocated to a finder.

check_boxKey Events · Financing and Capital Events · ATDS

• $2M Termination Fee Note Issued

  To clear the way for its own merger with Four Leaf Acquisition Corp., Data443 agreed to pay XYDD $2 million via a promissory note, effectively terminating XYDD's prior SPAC deal.

• Conversion Feature Adds Dilution Risk

  Should the note remain unpaid 12 months after the deal closes, XYDD can convert the outstanding amount into PubCo shares at 80% of the 20-day VWAP, subject to a floor of 50% of the post-close VWAP and a cap of 19.99% of PubCo shares outstanding.

• 1.8M Finder Shares Allocated

  The agreement allocates 1,800,000 shares of the post-merger company to S.SHUN Holdings Limited for prior finder services, adding to the post-transaction share count.

• Financial Strain Context

  This obligation arrives as Data443's latest 10-Q showed an 80% increase in shares outstanding due to debt conversions and warrant exercises, signaling ongoing financial distress.

auto_awesomeAnalysis · ATDS · Technology

To clear the path for its SPAC merger with Four Leaf Acquisition Corp., Data443 has assumed a $2 million obligation. The note becomes payable after the deal closes, but if it remains outstanding beyond 12 months, XYDD can convert the debt into shares of the combined company at a discount—a move that would dilute existing holders. The agreement also allocates 1.8 million shares to a finder, further swelling the post-merger share count. This adds financial risk and potential dilution to a company already under severe strain, as underscored by its recent 10-Q, which revealed an 80% increase in shares outstanding.