SPAC Merger Vote Delayed Amid Bank Capital Shortfall

Woofun AI reports that Digital Asset Acquisition Corp. has postponed the shareholder vote for its merger with Old Glory Holding Company, the parent of Old Glory Bank, from July 31 to 10 a.m. Eastern Time on Aug. 14. This delay stems from the bank’s failure to meet critical capital thresholds prior to the original voting window.

Structurally, the financial disclosures reveal significant compliance gaps. The final prospectus indicated that Old Glory Bank’s Tier 1 leverage ratio remained below the ordinary 4% adequately capitalized threshold as of June 29, placing it in technical noncompliance with a merger-agreement covenant, though the entity deemed this breach nonmaterial.

Furthermore, consolidated financial statements warn that capital is insufficient to cover operating losses and minimum regulatory needs over the next 12 months, raising substantial doubt about its ability to continue as a going concern. While management cites merger proceeds as a potential mitigation, the July 7 prospectus explicitly states that closing is not assured and depends on external market conditions.

Per Woofun AI, the transaction faces additional hurdles regarding financing and regulatory clearance. The July 7 prospectus confirmed that no PIPE or other transaction financing had been secured, and a June filing revealed that while DAAQ intended to negotiate non-redemption agreements, no executed investor commitments were identified. Regulatory approvals remain pending, including a Federal Reserve application and Nasdaq approval for the combined company’s initial listing, neither of which were announced in the July 31 filing. Consequently, DAAQ now has two additional weeks to secure votes while the deal’s cash picture remains opaque.

Investors now face a critical evaluation period before the new deadline. The transaction’s viability hinges on the redemption count and firm funding commitments to clear the $50 million closing test, alongside a fresh capital ratio to gauge Old Glory Bank’s shortfall. This marks a significant escalation in uncertainty for the digital asset banking sector.