8-K: Data443 Risk Mitigation Enters Compensation Agreement

Data443 Risk Mitigation, Inc. has entered into a Compensation Agreement with Guangzhou Xiaoyu DiDa Technology Co., Ltd, involving a $2 million promissory note.

Summary

• Data443 Risk Mitigation, Inc. (the Company) entered into a Compensation Agreement with Guangzhou Xiaoyu DiDa Technology Co., Ltd (XYDD) on July 16, 2026.
• This agreement is related to the termination of a prior business combination agreement between Four Leaf Acquisition Corporation (FORL) and XYDD.
• The Company will issue a $2,000,000 promissory note to XYDD as compensation for the termination.
• The note is payable in two installments: $1,000,000 within 90 days and $1,000,000 within 120 days after the Date of Deal Close.
• If payments are not made on time, the note accrues interest at 15% per annum.
• XYDD has the option to convert any outstanding amount into ordinary shares of the combined public company (PubCo) under specific conditions if not repaid within 12 months.
• The conversion price is set at 80% of the 20-trading-day VWAP preceding conversion, with a floor of 50% of the 20-day VWAP post-deal close, and a cap of 19.99% of PubCo shares.
• Additionally, 1,800,000 PubCo shares are allocated to S.SHUN Holdings Limited for prior finder services.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral filing, as it resolves a prior agreement termination with a defined financial obligation and potential equity dilution, without immediate positive or negative financial performance indicators.

Positives

• The company has resolved a prior business combination termination with a defined compensation structure.
• The promissory note provides a clear payment schedule for the $2 million compensation.
• Interest on the note is only applied if payments are delayed, incentivizing timely payment.
• The agreement includes provisions for potential share conversion, offering flexibility for both parties.

Negatives

• The company is obligated to issue a $2 million promissory note.
• A 15% per annum interest rate will be applied to the note if payments are not made on time.
• There is a risk of dilution if XYDD converts the outstanding note into PubCo shares.
• An additional 1,800,000 shares are allocated to a third party for finder services.

Risks

• Potential for dilution of existing shareholders if the promissory note is converted into PubCo shares.
• The risk of default on payment installments, leading to a 15% interest accrual.
• The conversion price mechanism could result in a significant number of shares being issued.
• The agreement is governed by Delaware law and disputes are resolved by arbitration under SIAC rules, which may have implications for legal recourse.

Future Outlook

The company has entered into a compensation agreement that includes a promissory note with specific payment terms and potential conversion into PubCo shares. The outcome depends on timely payments and potential conversion events.

Industry Context

StockSavvy.ai notes that this filing addresses a common scenario in SPAC (Special Purpose Acquisition Company) or business combination deal terminations, where compensation is provided to facilitate the dissolution of prior agreements to allow for new ones. The terms, including the promissory note and potential equity conversion, are typical mechanisms used to settle such obligations.

Related Party Transactions

• The Compensation Agreement with Guangzhou Xiaoyu DiDa Technology Co., Ltd (XYDD) is a material definitive agreement.
• 1,800,000 shares of PubCo are allocated to S.SHUN Holdings Limited in connection with prior finder services, which may be considered a related party transaction depending on the relationship.

Stakeholder Impact

• Shareholders may experience dilution if the promissory note is converted into PubCo shares.
• Creditors and suppliers will be impacted by the company's obligation to pay the $2 million promissory note.
• Management is responsible for ensuring timely payments to avoid interest accrual and potential conversion.

Next Steps

• Payment of the first $1,000,000 installment within 90 days of the Date of Deal Close.
• Payment of the second $1,000,000 installment within 120 days of the Date of Deal Close.
• Potential conversion of outstanding note balance into PubCo shares if not repaid within 12 months of the Date of Deal Close.

Key Dates

Recommendation

The filing details a material agreement to compensate a party for the termination of a prior business combination. While it resolves a potential issue, the $2 million obligation and potential share dilution are significant factors that warrant a 'hold' recommendation pending further clarity on the company's financial health and the terms of the new business combination.

Keywords

Data443 Risk Mitigation, Compensation Agreement, Promissory Note, Business Combination, Guangzhou Xiaoyu DiDa Technology, Four Leaf Acquisition Corporation, PubCo Shares, S.SHUN Holdings Limited