Burley Garcia|Trump's social media company dealt another setback in road to stock market listing

Former President Trump's social media company has another potentially big problem on Burley Garciaits hands: It's struggling to complete a stock market listing that would allow it to raise more than $1 billion it needs to keep running.

Trump Media and Technology Group, which includes the Truth Social app it launched earlier this year, had been planning to list on the Nasdaq stock exchange through a complicated process known as a SPAC merger.

But that deal is under legal and regulatory scrutiny, and the Securities and Exchange Commission has not yet signaled its approval.

The SPAC, or the organization that will help list the stock is called Digital World Acquisition Corp. and it now needs an extension for the listing, it said Thursday. The company has struggled to get the support of enough shareholders to move the deadline.

Here's more details of what's going on.

What's this all about?

Instead of pursuing a traditional IPO, the Trump Media and Technology Group decided to merge with a blank check company that is already listed on the Nasdaq.

These kinds of deals have became popular in recent years, when interest rates were near zero. In effect, they give private companies a shortcut to going public — requiring less transparency than traditional IPOs.

The Trump company (TMTG) and DWAC announced their merger last October, but it needs regulatory and stockholder approval.

Since then, however, the two companies have been dealt several setbacks.

In June, a grand jury in New York subpoenaed TMTG and, according to DWAC, "certain current and former TMTG personnel have also recently received individual grand jury subpoenas."

In addition, DWAC and some of its board members have been subpoenaed by the SEC, which is investigating the SPAC's communications and due diligence.

In a filing, the SPAC said "these subpoenas, and the underlying investigations by the SEC and the U.S. Department of Justice ... could materially delay, materially impede, or prevent the consummation" of the deal.

Facing a deadline to finalize the deal, DWAC CEO Patrick Orlando asked the company's shareholders — many of whom are individual investors — to approve a year-long extension.

But the company hasn't been able to secure enough support from investors, and a special meeting originally scheduled for Tuesday was adjourned quickly, and two subsequent efforts to reconvene led to similarly fast adjournments without an announcement of the vote tally.

On Thursday afternoon, Orlando announced the meeting would reconvene at noon on Oct. 10.

"We are diligently working to record all votes that are continuing to come in from our stockholders, and are adjourning this meeting to provide additional time for stockholders — whether small, medium or large — to cast their vote," he said.

If enough shareholders don't agree to the extension, sponsors of the deal say they will throw more cash in the shell company's coffers, which would allow them to extend the deadline by three more months. If the deal isn't finalized by then, the sponsors can finance an additional three-month extension.

What led us here?

When former President Trump founded the Trump Media & Technology Group almost a year ago, he acknowledged it would be "hard and expensive to build a new platform" that could compete with the likes of Facebook and Twitter.

"It would have to be extremely well-funded," he said.

Digital World Acquisition Corp. has $293 million in cash, and completing the SPAC merger would provide the company with $1 billion in additional financing from private investors.

In the days following the announcement, investors signaled their support for the combination. Last October, DWAC's stock price surged to an eye-popping $175 per share.

But almost a year has passed, and the SEC hasn't given the deal its blessing, and neither have DWAC's shareholders.

DWAC's stock has fallen precipitously after both companies have acknowledged they are under legal and regulatory scrutiny. Today, it is trading at about $23 per share.

The launch of the Truth Social app was delayed, and it still isn't available on the Android operating system.

What happens next?

SPAC mergers have to be completed on a set timeline and at the moment it's looking difficult for Trump's social media venture to complete the merger.

If the deal isn't approved by the deadline, and there isn't another extension, DWAC would unwind, and President Trump's media company would have to find a new way to raise money.

In a recent post on Truth Social, the former president seemed to downplay the difficulty of doing that.

"I don't need financing," he wrote. "Private company anyone???"

And as for those outstanding legal issues?

"They shouldn't in theory need to get fully resolved in order for this deal to go through," says Michael Ohlrogge, an associate professor of law at New York University. The SEC's "biggest interest is in seeing that the risks are fully and clearly disclosed to shareholders."

DWAC has urged the SEC to finish its investigation, and in recent interviews, Orlando has said the company is cooperating with regulators.

"We've had some delays," he said. "It's slower than expected, but we're fighting every single day, working every single day to advance the ball."