Trump Media & Technology Group Corp.

Previous wording

Prior to the Closing (as hereinafter defined), Private TMTG relied primarily on bridge financing, in the form of convertible promissory notes, to build the Truth Social platform. TMTG aims to use the funds available as a result of the Business Combination (as hereinafter defined) to catalyze growth, including through strategic investments in marketing, advertising sales, and the technology described below, while continuing to prioritize feature development and user experience. Private TMTG has historically incurred operating losses and negative cash flows from operating activities. For the reasons described below, TMTG expects to continue to incur operating losses and negative cash flows from operating activities for the foreseeable future, as it works to expand its user base, attracting more platform partners and advertisers. TMTG’s ability to become profitable and generate positive cash flow depends on TMTG’s success in growing its user base, platform partners, and advertisers. This growth is expected to come from the overall appeal of the Truth Social Platform.

Current wording

Prior to the Closing (as hereinafter defined), Private TMTG relied primarily on bridge financing, in the form of convertible promissory notes, to build the Truth Social platform. TMTG aims to use the proceeds from the Business Combination (as hereinafter defined) to catalyze growth, including through strategic investments in marketing, advertising sales, and the technology described below, while continuing to prioritize feature development and user experience. Private TMTG has historically incurred operating losses and negative cash flows from operating activities. For the reasons described below, TMTG expects to continue to incur operating losses and negative cash flows from operating activities for the foreseeable future, as it works to expand its user base, attracting more platform partners and advertisers. TMTG’s ability to become profitable and generate positive cash flow depends on TMTG’s success in growing its user base, platform partners, and advertisers. This growth is expected to come from the overall appeal of the Truth Social Platform.

Previous wording

TMTG may enhance this appeal through new initiatives or by acquiring new technologies. Private TMTG conducted extensive technological due diligence and testing regarding a particular, state-of-the-art technology that supports video streaming and provides a “home” for cancelled content creators, and which TMTG has worked to acquire and incorporate into its product offerings and/or services as soon as practicable. On April 16, 2024, TMTG announced that, after six months of testing on its Web and iOS platforms, the Company has finished the research and development phase of a new live TV streaming platform and expects to begin scaling up its own content delivery network (“CDN”).

Current wording

TMTG may enhance this appeal through new initiatives or by acquiring new technologies. Private TMTG conducted extensive technological due diligence and testing regarding a particular, state-of-the-art technology that supports video streaming and provides a “home” for cancelled content creators, and which TMTG has worked to acquire and incorporate into its product offerings and/or services as soon as practicable. On April 16, 2024, TMTG announced that, after nine months of testing on its Web and iOS platforms, the Company has finished the research and development phase of a new live TV streaming platform and expects to begin scaling up its own content delivery network (“CDN”).

Previous wording

As of the Closing, (i) President Donald J. Trump beneficially held approximately 57.6% of the outstanding shares of TMTG common stock and (ii) the public stockholders of TMTG held approximately 21.9% of the outstanding shares of TMTG common stock. As of the date of this Quarterly Report, President Donald J. Trump beneficially holds approximately 59.9% of the outstanding shares of TMTG common stock, including 36,000,000 Earnout Shares (as defined in the Merger Agreement). President Trump’s entitlement to the Earnout Shares was officially determined by TMTG on April 26, 2024 in accordance with the Merger Agreement, after which President Trump was issued the Earnout Shares.

Current wording

As of the Closing, (i) President Donald J. Trump beneficially held approximately 57.6% of the outstanding shares of TMTG common stock and (ii) the public stockholders of TMTG held approximately 21.9% of the outstanding shares of TMTG common stock. As of the date of this Quarterly Report, President Donald J. Trump beneficially holds approximately 52.9% of the outstanding shares of TMTG common stock, including 36,000,000 Earnout Shares (as defined in the Merger Agreement). President Trump’s entitlement to the Earnout Shares was officially determined by TMTG on April 26, 2024 in accordance with the Merger Agreement, after which President Trump was issued the Earnout Shares.

Previous wording

On July 3, 2024, TMTG, WorldConnect Technologies, L.L.C. (“WCT”), WorldConnect IPTV Solutions, LLC (“Solutions”) and JedTec, L.L.C. (“JedTec”) entered into an asset acquisition agreement (the “Asset Acquisition Agreement”), pursuant to which TMTG agreed to acquire substantially all of the assets of WCT or its affiliate, which mainly included certain agreements, including an option agreement (the “Option Agreement”), dated February 5, 2024, by and between WCT, Perception Group, Inc., Perception TVCDN Ltd., and FORA, FOrum RAčunalništva, d.o.o., as amended (each of the parties thereto other than WCT, collectively, “Perception”), as well as ancillary agreements related to the source code purchase (the “Source Code Purchase Agreement”) and support and maintenance (the “Support and Maintenance Agreement”, together with the Source Code Purchase Agreement, the “CDN Agreements”). The transaction closed on August 9, 2024, the date which is business days after the Company implemented the Perception Software and Network (as defined below) with all back-end API services having become generally available on iOS, Google/Android, and web media services and with streaming enabled from at least one data-center (the “Closing Date”).

Current wording

On July 3, 2024, TMTG, WorldConnect Technologies, L.L.C. (“WCT”), WorldConnect IPTV Solutions, LLC (“Solutions”) and JedTec, L.L.C. (“JedTec”) entered into an asset acquisition agreement (the “Asset Acquisition Agreement”), pursuant to which TMTG agreed to acquire substantially all of the assets of WCT or its affiliate, which mainly included certain agreements, including an option agreement (the “Option Agreement”), dated February 5, 2024, by and between WCT, Perception Group, Inc., Perception TVCDN Ltd., and FORA, FOrum RAčunalništva, d.o.o., as amended (each of the parties thereto other than WCT, collectively, “Perception”), as well as ancillary agreements related to the source code purchase (the “Source Code Purchase Agreement”) and support and maintenance (the “Support and Maintenance Agreement”, together with the Source Code Purchase Agreement, the “CDN Agreements”). The transaction closed on August 9, 2024, the date which was two business days after the Company implemented the Perception Software and Network (as defined below) with all back-end API services having become generally available on iOS, Google/Android, and web media services and with streaming enabled from at least one data-center (the “Closing Date”).

Previous wording

Pursuant to the Asset Acquisition Agreement, on the Closing Date, the Company agreed to issue to Solutions and JedTec as consideration up to 5,100,000 shares (the “Shares”) of TMTG common stock, 2,600,000 shares of which were issued on the Closing Date and 2,500,000 shares of which will be issuable upon the satisfaction of certain Milestones (as defined in the Asset Acquisition Agreement). In addition, with respect to all of the Shares, for a period of 12 months after the Closing Date, neither JedTec, Solutions nor their respective affiliates will be permitted to collectively sell an amount of the Shares during any consecutive two trading week period (the “Two Week Sale Period”) exceeding the “Set Percentage.” For the purposes of this restriction, the “Set Percentage” means a percentage of the average daily trading volume of the common stock during the immediately preceding two consecutive trading weeks as reported on primary exchange on which the common stock is traded (i.e., currently the NASDAQ) (the “Prior Two Week ADTV”). Unsold amounts from a Two Week Sale Period do not carry over to a subsequent Two Week Sale Period. The “Set Percentage” is 3% for the first six months after the Closing Date and 5% from six to 12 months after the Closing Date. For example, if during the first six months after the Closing date, a Prior Two Week ADTV is 5,000,000 shares, restricted holders cannot sell more than 150,000 shares during the following Two Week Sale Period. Under the same fact pattern during six to 12 months after the Closing Date, restricted holders could not sell more than 250,000 shares during such Two Week Sale Period.

Current wording

Pursuant to the Asset Acquisition Agreement, on the Closing Date, the Company agreed to issue to Solutions and JedTec as consideration up to 5,100,000 shares (the “Shares”) of TMTG common stock, 2,600,000 shares of which were issued on the Closing Date and 2,500,000 shares of which will be issuable upon the satisfaction of certain Milestones (as defined in the Asset Acquisition Agreement). In addition, with respect to all of the Shares, for a period of 12 months after the Closing Date, neither JedTec, Solutions nor their respective affiliates will be permitted to collectively sell an amount of the Shares during any consecutive two trading week period (the “Two Week Sale Period”) exceeding the “Set Percentage.” For the purposes of this restriction, the “Set Percentage” means a percentage of the average daily trading volume of the common stock during the immediately preceding two consecutive trading weeks as reported on primary exchange on which the common stock is traded (i.e., currently the NASDAQ) (the “Prior Two Week ADTV”). Unsold amounts from a Two Week Sale Period do not carry over to a subsequent Two Week Sale Period. The “Set Percentage” is 3% for the first nine months after the Closing Date and 5% from six to 12 months after the Closing Date. For example, if during the first nine months after the Closing date, a Prior Two Week ADTV is 5,000,000 shares, restricted holders cannot sell more than 150,000 shares during the following Two Week Sale Period. Under the same fact pattern during six to 12 months after the Closing Date, restricted holders could not sell more than 250,000 shares during such Two Week Sale Period.

Previous wording

TMTG entered into a registration rights agreement with Solutions and JedTec on the Closing Date, pursuant to which the TMTG will file a registration statement with the SEC to register for resale the Shares within 15 days following the Closing Date upon receiving a demand for registration from WCT. TMTG will use its reasonable best efforts to cause such registration statement to become effective and remain effective until all the Shares covered by such registration statement have been sold.

Current wording

TMTG entered into a registration rights agreement with Solutions and JedTec on the Closing Date, pursuant to which the TMTG will file a registration statement with the SEC to register for resale the Shares within 15 days following the Closing Date upon receiving a demand for registration from WCT. TMTG filed the registration statement on August 23, 2024, and it became effective on September 5, 2024. TMTG will use its reasonable best efforts to cause such registration statement to remain effective until all the Shares covered by such registration statement have been sold.

Previous wording

Private TMTG issued TMTG Executive Promissory Notes to certain executives prior to the Closing Date. The principal amounts of such notes were as follows: $1,150.0 for Devin Nunes, our Chief Executive Officer, $4,900.0 for Phillip Juhan, our Chief Financial Officer, and $200.0 for Andrew Northwall, our Chief Operating Officer, and the aggregate amount of such notes for other executives was $650.0. Private TMTG was not required to pay any interest pursuant to such notes. Upon the closing of the Merger, such notes automatically converted in whole, without any further action by the holders thereof, into 625,000 shares of TMTG common stock.

Current wording

Private TMTG issued TMTG Executive Promissory Notes to certain executives prior to the Closing Date. The principal amounts of such notes were as follows: $1,150.0 for Devin Nunes, our Chief Executive Officer, $4,900.0 for Phillip Juhan, our Chief Financial Officer, and $200.0 for Andrew Northwall, our Chief Operating Officer, and the aggregate amount of such notes for other executives was $650.0. Private TMTG was not required to pay any interest pursuant to such notes. Upon the closing of the Merger, such notes automatically converted in whole, without any further action by the holders thereof, into 690,000 shares of TMTG common stock.

Previous wording

For a description of TMTG’s revenue recognition policies, see Note 2, Significant Accounting Policies and Practices, in TMTG’s unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 and 2023, included in this Quarterly Report.

Current wording

For a description of TMTG’s revenue recognition policies, see Note 2, Significant Accounting Policies and Practices, in TMTG’s unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024 and 2023, included in this Quarterly Report.

Previous wording

TMTG expects cost of revenue to increase in absolute dollars in the future and as a percentage of revenue as it expands its Truth Social platform. Such increases will likely include investment in infrastructure costs, other direct costs, including revenue share expenses, allocated facility costs as well as traffic acquisition costs (“TAC”).

Current wording

TMTG expects cost of revenue to increase significantly in the foreseeable future as it expands its Truth Social and Truth+ platforms. Such increases will likely include investment in infrastructure and other direct costs such as revenue share expenses, allocated facility costs, and traffic acquisition costs (“TAC”).

Previous wording

Depreciation expense consists primarily of depreciation of furniture, fixtures, and equipment.

Current wording

Depreciation expense consists primarily of depreciation of computer software and computer equipment. Amortization expense consists of amortization of intangible assets.

Previous wording

Interest expense consists of accreted interest expense on Private TMTG’s outstanding convertible promissory note obligations, amortization of deferred financing costs, other related financing expenses and the post-merger interest expense related to DWAC’s Note Purchase Agreements. The convertible promissory notes (net of any related debt issuance costs) accreted interest using the respective effective interest rate method until the debt was extinguished.

Current wording

Interest expense consists of accreted interest expense on Private TMTG’s outstanding convertible promissory note obligations and assumed debt from the WCT acquisition, amortization of deferred financing costs, other related financing expenses and the post-merger interest expense related to DWAC’s Note Purchase Agreements. The convertible promissory notes (net of any related debt issuance costs) accreted interest using the respective effective interest rate method until the debt was extinguished.

Previous wording

Interest income consists of interest earned from banking institutions.

Current wording

Interest income consists of interest earned from banking institutions and through repurchase agreements.

Previous wording

Revenues decreased by approximately $355.2, or 30%, for the three months ended June 30, 2024 compared to revenue of approximately $1,192.1 for the three months ended June 30, 2023. A significant portion of the decrease was attributable to a change in the revenue share with one of our advertising partners, in connection with an agreement intended to improve the Company’s short-term, pre-Business Combination financial position. Additionally, revenue has varied as we selectively test a nascent advertising initiative on the Company’s Truth Social platform. This very early-stage initiative resulted in advertising revenues of $836.9 for the three months ended June 30, 2024.

Current wording

Revenues decreased approximately $60.4, or 6%, to approximately $1,010.9 for the three months ended September 30, 2024 compared to revenue of approximately $1,071.3 for the three months ended September 30, 2023. The decrease was attributable to a change in a revenue share agreement with one of our advertising partners, which was intended to improve the Company’s short-term, pre-Business Combination financial position. Additionally, revenue has varied as we selectively test a nascent advertising initiative on the Company’s Truth Social platform.

Previous wording

Sales and marketing expense increased by approximately $786.9, or 203%, to $1,175.3 for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily driven by an increase in marketing expense following access to additional capital.

Current wording

Sales and marketing expense increased approximately $1,855.8, or 556%, to $2,189.4 for the three months ended September 30, 2024 compared to approximately $333.6 for the three months ended September 30, 2023. The increase was driven almost entirely by an increase in marketing expense following access to additional capital.

Previous wording

General and administration expense increased by approximately $11,097.2 or 478%, for the three months ended June 30, 2024 compared to $2,321.4 for the three months ended June 30, 2023. The increase was primarily due to higher legal, license and registration, insurance, accounting, and finance fees during the second quarter of 2024.

Current wording

General and administration expense increased approximately $16,188.0 or 1,073%, to $17,697.0 for the three months ended September 30, 2024 compared to $1,509.0 for the three months ended September 30, 2023. The increase was primarily due to higher legal, software license, insurance, accounting, and finance fees during the third quarter of 2024.

Previous wording

The loss from the change in the fair value of the derivative liabilities of the Private TMTG Convertible Notes decreased 100% from $1,611.1 for the three months ended June 30, 2023. All Private TMTG Convertible Notes were automatically converted into shares of our common stock immediately prior to Closing of the Business Combination on March 25, 2024. The issuance of Private TMTG common stock upon conversion of the Private TMTG Convertible Notes extinguished the derivative liabilities immediately prior to the Closing. Therefore, there was no derivative liability as of June 30, 2024 and no adjustment to earnings pertaining to the Private TMTG Convertible Notes derivative liabilities during the second quarter of 2024.

Current wording

The loss from the change in the fair value of the derivative liabilities of the Private TMTG Convertible Notes decreased 100% from $7,931.2 for the three months ended September 30, 2023. All Private TMTG Convertible Notes were automatically converted into shares of our common stock immediately prior to Closing of the Business Combination on March 25, 2024. The issuance of Private TMTG common stock upon conversion of the Private TMTG Convertible Notes extinguished the derivative liabilities immediately prior to the Closing. Therefore, there was no derivative liability as of September 30, 2024 and no adjustment to earnings pertaining to the Private TMTG Convertible Notes derivative liabilities during the third quarter of 2024.

Previous wording

Interest expense decreased approximately $20,764.1, or 101%, for the three months ended June 30, 2024 compared to interest expense of $20,606.3 for the three months ended June 30, 2023. The decrease was due primarily to the conversion of Private TMTG convertible promissory notes to stockholders’ equity and not accruing accreted interest as compared for the three months ended June 30, 2023.

Current wording

Interest expense decreased approximately $14,825.2, or 98%, to approximately $246.7 for the three months ended September 30, 2024 compared to interest expense of approximately $15,071.9 for the three months ended September 30, 2023. The decrease was primarily due to the conversion of Private TMTG convertible promissory notes into common stock, thus no longer accruing accreted interest as compared to the three months ended September 30, 2023.

Previous wording

Interest income increased to approximately $2,132.7 for the three months ended June 30, 2024 compared to $0.0 for the three months ended June 30, 2023. The increase was due primarily to interest earned in the second quarter of 2024 on proceeds received from the Business Combination that closed March 25, 2024.

Current wording

Interest income increased to approximately $4,653.0 for the three months ended September 30, 2024 compared to $0.0 for the three months ended September 30, 2023. The increase was due primarily to interest earned in the third quarter of 2024 on cash holdings in a money market account and interest earned through a repurchase agreement.

Previous wording

TMTG did not record an income tax benefit for the three months ended June 30, 2024 and 2023 as no net credit was recognized due to the uncertainty of realizing future tax benefits emanating from the NOL carryforwards and other deferred tax assets. TMTG has established a full valuation allowance to offset its net deferred tax assets due to these uncertainties.

Current wording

TMTG did not record an income tax benefit for the three months ended September 30, 2024 and 2023, as no net credit was recognized due to the uncertainty of realizing future tax benefits from the NOL carryforwards and other deferred tax assets. TMTG has established a full valuation allowance to offset its net deferred tax assets due to these uncertainties.

Previous wording

The results of operations presented below should be reviewed in conjunction with TMTG’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2024 and 2023, together with the related notes thereto, included elsewhere in this Quarterly Report.

Current wording

The results of operations presented below should be reviewed in conjunction with TMTG’s unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2024 and 2023, together with the related notes thereto, included elsewhere in this Quarterly Report.

Previous wording

The following table sets forth TMTG’s unaudited statements of operations for the six months ended June 30, 2024 and 2023, and the dollar and percentage change between the two periods:

Current wording

The following table sets forth TMTG’s unaudited statements of operations for the nine months ended September 30, 2024 and 2023, and the dollar and percentage change between the two periods:

Previous wording

Revenues decreased by approximately $700.9, or 30%, for the six months ended June 30, 2024 compared to revenue of approximately $2,308.3 for the six months ended June 30, 2023. A significant portion of the decrease was attributable to a change in the revenue share with one of our advertising partners, in connection with an agreement intended to improve the Company’s short-term, pre-Business Combination financial position. Additionally, revenue has varied as we selectively test a nascent advertising initiative on the Company’s Truth Social platform. This very early-stage initiative resulted in advertising revenues of $1,607.4 for the six months ended June 30, 2024.

Current wording

Revenues decreased approximately $761.3, or 23%, to approximately $2,618.3 for the nine months ended September 30, 2024 compared to revenue of approximately $3,379.6 for the nine months ended September 30, 2023. A significant portion of the decrease was attributable to a change in a revenue share agreement with one of our advertising partners, which was intended to improve the Company’s short-term, pre-Business Combination financial position. Additionally, revenue has varied as we selectively test a nascent advertising initiative on the Company’s Truth Social platform.

Previous wording

Research and development expense increased by approximately $33,010.7, or 659%, for the six months ended June 30, 2024 compared to $5,009.5 for the six months ended June 30, 2023. The increase was primarily due to $30,142.5 of non-cash stock-based compensation expense recorded in the first quarter of 2024 related to the issuance of convertible notes to certain vendors engaged in the development of our planned live TV streaming platform.

Current wording

Research and development expense increased approximately $34,701.7 or 481%, to approximately $41,913.9 for the nine months ended September 30, 2024 compared to approximately $7,212.2 for the nine months ended September 30, 2023. The increase was primarily driven by $30,142.5 of non-cash stock-based compensation expense recorded in the first quarter of 2024 related to the issuance of convertible notes to certain vendors engaged in the development of our live TV streaming platform.

Previous wording

Sales and marketing expense increased by approximately $1,601.2, or 248%, to $2,245.7 for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily driven by a $600.0 bonus paid to an entity owned by a former director of and consultant to Private TMTG, as further described herein, and a $1,001.2 increase in marketing expense following access to additional capital.

Current wording

Sales and marketing expense increased by approximately $3,457.0, or 353%, to approximately $4,435.1 for the nine months ended September 30, 2024 compared to approximately $978.1 for the nine months ended September 30, 2023. The increase was primarily driven by a $2,511.3 increase in marketing expense following access to additional capital and a $600.0 bonus paid to an entity owned by a former director of and consultant to Private TMTG, as further described herein.

Previous wording

General and administration expense increased by approximately $74,056.0, or 1,781%, for the six months ended June 30, 2024 compared to $4,157.7 for the six months ended June 30, 2023. The increase was primarily due to merger related costs including $54,445.5 of non-cash stock-based compensation expense recorded in the first quarter of 2024 in connection with the issuance of Private TMTG Promissory Notes issued to Company executives (and one consultant) that converted into shares of our common stock upon execution of the Merger.

Current wording

General and administration expense increased by approximately $90,244.0, or 1,593%, to approximately $95,910.7 for the nine months ended September 30, 2024 compared to approximately $5,666.7 for the nine months ended September 30, 2023. The increase was primarily due to merger related costs including $54,445.5 of non-cash stock-based compensation expense recorded in the first quarter of 2024 in connection with the issuance of Private TMTG Promissory Notes issued to Company executives (and one consultant) that converted into shares of our common stock upon execution of the Merger. Additionally, the Company experienced higher legal, insurance, software license, accounting, finance, and other merger-related costs.

Previous wording

The loss from the change in the fair value of the derivative liabilities of the Private TMTG Convertible Notes increased by approximately $233,187.0, or 3,207%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. All Private TMTG Convertible Notes were automatically converted into shares of our common stock immediately prior to Closing of the Business Combination, and pursuant to ASC 815, the derivative liabilities were revalued immediately prior to the conversion of the Private TMTG Convertible Notes on March 25, 2024, when our closing share price was $49.95 per share. The substantial increase in the value of our common stock when combined with the certainty of our execution of the Merger were primarily responsible for the increase in the change in fair value of the derivative liabilities. The increase in the fair value of the derivative liabilities is a non-cash expense and the issuance of Private TMTG common stock upon conversion of the Private TMTG Convertible Notes extinguished the derivative liabilities immediately prior to the Closing. Therefore, there were no derivative liability as of June 30, 2024 and there will no longer be future earnings adjustments pertaining to the Private TMTG Convertible Notes derivative liabilities.

Current wording

The loss from the change in the fair value of the derivative liabilities of the Private TMTG Convertible Notes increased by approximately $225,255.8, or 34,119%, to approximately $225,916.0 for the nine months ended September 30, 2024, compared to approximately $660.2 the nine months ended September 30, 2023. All Private TMTG Convertible Notes were automatically converted into shares of our common stock immediately prior to Closing of the Business Combination, and pursuant to ASC 815, the derivative liabilities were revalued immediately prior to the conversion of the Private TMTG Convertible Notes on March 25, 2024, when our closing share price was $49.95 per share. The substantial increase in the value of our common stock when combined with the certainty of our execution of the Merger were primarily responsible for the increase in the change in fair value of the derivative liabilities. The increase in the fair value of the derivative liabilities is a non-cash expense and the issuance of Private TMTG common stock upon conversion of the Private TMTG Convertible Notes extinguished the derivative liabilities immediately prior to the Closing. Therefore, there was no derivative liability as of September 30, 2024 and there will no longer be future earnings adjustments pertaining to the Private TMTG Convertible Notes derivative liabilities.

Previous wording

Interest expense decreased by approximately $19,970.8, or 88%, to $2,659.8 for the six months ended June 30, 2024 compared to $22,630.6 for the six months ended June 30, 2023. The decrease was due primarily to the conversion of Private TMTG convertible promissory notes to stockholders’ equity and not accruing accreted interest as compared for the six months ended June 30, 2023.

Current wording

Interest expense decreased by approximately $34,796.0, or 92%, to approximately $2,906.5 for the nine months ended September 30, 2024 compared to approximately $37,702.5 for the nine months ended September 30, 2023. The decrease was due primarily to the conversion of Private TMTG convertible promissory notes to common stock, thus no longer accruing accreted interest as compared for the nine months ended September 30, 2023.

Previous wording

Interest income increased to approximately $2,161.5 for the six months ended June 30, 2024 compared to $0.0 for the six months ended June 30, 2023. The increase was due to interest earned in the second quarter of 2024 on proceeds received from the Business Combination that closed March 25, 2024.

Current wording

Interest income increased to approximately $6,814.5 for the nine months ended September 30, 2024 compared to $0.0 for the nine months ended September 30, 2023. The increase was due to interest earned in the third quarter of 2024 on cash holdings in a money market account and interest earned through a repurchase agreement.

Previous wording

TMTG did not record an income tax benefit for the six months ended June 30, 2024 and 2023 as no net credit was recognized due to the uncertainty of realizing future tax benefits emanating from the NOL carryforwards and other deferred tax assets. TMTG has established a full valuation allowance to offset its net deferred tax assets due to these uncertainties.

Current wording

TMTG did not record an income tax benefit for the nine months ended September 30, 2024 and 2023, as no net credit was recognized due to the uncertainty of realizing future tax benefits from the NOL carryforwards and other deferred tax assets. TMTG has established a full valuation allowance to offset its net deferred tax assets due to these uncertainties.

Previous wording

TMTG is currently seeking to (1) grow its initial product, Truth Social; (2) increase its product offerings and services, including through the acquisition of streaming technology; and (3) pursue strategic acquisitions and/or partnership. TMTG intends to fund these activities through a combination of deploying cash on hand, generating advertising revenues, issuing equity (including up to 5,100,000 shares in connection with an asset acquisition agreement signed on July 3, 2024), and/or selling stock pursuant to that certain Standby Equity Purchase Agreement dated July 3, 2024.

Current wording

TMTG is currently seeking to (1) grow its initial product, Truth Social; (2) increase its product offerings and services, including through further development of its streaming technology platform, Truth+; and (3) pursue strategic acquisitions and/or partnerships. TMTG intends to fund these activities through a combination of deploying cash on hand, generating advertising revenues, issuing equity (including 5,100,000 shares in connection with an asset acquisition agreement signed on July 3, 2024), and/or selling stock pursuant to that certain Standby Equity Purchase Agreement dated July 3, 2024.

Previous wording

As of June 30, 2024 and December 31, 2023, the cash and cash equivalents balance was approximately $343,954.4 and $2,572.7, respectively. The $341,381.7 increase in the Company’s cash and cash equivalents in the first six months of 2024 is primarily due to cash proceeds of $233,017.5 from the Business Combination, $47,455.0 from the issuance of convertible notes, and $93,805.4 from the exercise of warrants. Cash and cash equivalents consist of interest-bearing deposits held at financial institutions. Cash deposits are held at major financial institutions and are subject to credit risk to the extent those balances exceed applicable Federal Deposit Insurance Corporation (FDIC) limitations.

Current wording

As of September 30, 2024 and December 31, 2023, the cash and cash equivalents and short-term investments balance totaled approximately $672,878.2 and $2,572.7, respectively. The $670,305.5 increase in the Company’s cash and cash equivalents and short-term investments in the first nine months of 2024 is primarily due to cash proceeds of $233,017.5 from the merger with DWAC, $47,455.0 from the issuance of convertible notes, $117,949.8 from the exercise of warrants (net of cash issuance costs), and $336,554.4 from the issuance of common stock (net of repurchases). Cash and cash equivalents consist of interest-bearing deposits held at financial institutions. Cash deposits are held at major financial institutions and are subject to credit risk to the extent those balances exceed applicable Federal Deposit Insurance Corporation (FDIC) limitations. Short-term investments consist of a repurchase agreement in which we loan our cash over 1 to 3 days to a seller in exchange for interest earned on debt securities collateralizing the loan. The seller retains a beneficial interest in the securities serving as collateral.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 was approximately $30,754.3 compared to $7,370.9 used in operating activities during the six months ended June 30, 2023. The increase in cash used in operating activities was primarily driven by $17,499.9 of higher operating expenses (i.e., higher legal, insurance, license and registration, accounting and finance, IT consulting, software, and server costs) and $6,580.0 of cash bonuses.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 was approximately $52,640.0 compared to $10,467.2 used in operating activities during the nine months ended September 30, 2023. The increase in cash used in operating activities was primarily driven by $37,189.0 of higher year-to-date expenses (including higher legal, insurance, marketing, software license, accounting, finance, and other merger-related costs) and $6,580.0 of merger-related cash bonuses paid in March and April of 2024.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024 was approximately $374,277.9 compared to $0.0 provided by financing activities for the six months ended June 30, 2023. The increase was due to due to cash proceeds of $233,017.5 from the Business Combination, $47,455.0 from the issuance of convertible notes, and $93,805.4 from the exercise of warrants.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024 was approximately $734,976.7 compared to $2,500.0 provided by financing activities for the nine months ended September 30, 2023. The increase was due to cash proceeds of $233,017.5 from the merger with DWAC, $47,455.0 from the issuance of convertible notes, $117,949.8 from the exercise of warrants, and $336,554.4 from the issuance of common stock (net of repurchases).

Previous wording

Notes 13 to 18 were Convertible Promissory Notes issued from January 2022 through March 2022. Note 19 was issued on August 23, 2023. Notes 13 to 19 were Convertible Promissory Notes issued with a cumulative face value of $17,360.0 (net of repayments), maturity of 18 months and interest will be accrued at a range between 5% and 10% based on the simple interest method (365 days year) for each note. Notes 13 to 19 were convertible simultaneously with the completion of a SPAC merger agreement or IPO. All outstanding principal of these Notes, together with all accrued but unpaid interest on such principal, would convert to equity. The number of shares of Company stock to be issued to the Lender upon conversion of the Notes would be the number of shares of the Company Stock (rounded to the nearest whole share) equal to the quotient of: (a) the principal plus accrued interest on the Notes then outstanding (b) divided by either US$25 or US$21 subject to the respective conditions of the individual.

Current wording

Notes 13 to 18 were Convertible Promissory Notes issued from January 2022 through March 2022. Note 19 was issued on August 23, 2023. Notes 13 to 19 were Convertible Promissory Notes issued with a cumulative face value of $17,360.0 (net of repayments), maturity of 18 months and interest will be accrued at a range between 5% and 10% based on the simple interest method (365 days year) for each note. Notes 13 to 19 were convertible simultaneously with the completion of a SPAC merger agreement or IPO. All outstanding principal of these Notes, together with all accrued but unpaid interest on such principal, would convert to equity. The number of shares of Company stock to be issued to the Lender upon conversion of the Notes would be the number of shares of the Company Stock (rounded to the nearest whole share) equal to the quotient of: (a) the principal plus accrued interest on the Notes then outstanding (b) divided by either US$25 or US$21 subject to the respective conditions of the individual notes.

Previous wording

Private TMTG experienced operating losses in preceding years and through the first half of 2024. On average, Private TMTG operations consumed approximately $12,577.3 of cash per year from its inception (February 8, 2021) through year-end 2023. In addition, for the six months ended June 30, 2024, and 2023, the Company had negative operating cash flows of $30,754.3 (including transaction related cash disbursements) and $7,370.9, respectively. As of December 31, 2023, Private TMTG had a negative working capital position, primarily due to the short-term nature of the Private TMTG Convertible Notes, which converted to Private TMTG common stock immediately prior to the Closing. Based upon the receipt of cash proceeds related to the Business Combination, the resulting positive working capital position (i.e., $353,525.3 of current assets less $14,295.2 of current liabilities), and no debt on the balance sheet as of June 30, 2024, management believes there is not substantial doubt regarding the Company’s ability to continue as a going concern as of June 30, 2024, and the substantial doubt as of December 31, 2023, has been mitigated. The Company believes it has sufficient working capital to fund operations for at least the next twelve months from the date of issuance of the accompanying financial statements.

Current wording

As of September 30, 2024, TMTG held cash, cash equivalents, and short-term investments of approximately $672,878.2, a $670,305.5 increase from $2,572.7 at December 31, 2023. For the nine months ended September 30, 2024, the Company raised $734,976.7 of cash proceeds through financing activities including $233,017.5 from the merger with DWAC, $47,455.0 from the issuance of convertible notes, $117,949.8 from the exercise of warrants, and $336,554.4 from the issuance of common stock (net of repurchases). The cash flow from finance activities was partially offset by $52,640.0 of cash consumed by operations (including transaction related cash disbursements) and investments of $12,031.2 in acquisitions and capital equipment. The resulting positive working capital position (i.e., $682,126.5 of current assets less $14,363.0 of current liabilities) and no debt on the balance sheet support the Company’s view that there is not substantial doubt regarding the Company’s ability to continue as a going concern as of September 30, 2024, and the substantial doubt as of December 31, 2023, has been mitigated. In short, the Company believes it has sufficient working capital to fund operations for at least the next twelve months from the date of issuance of the accompanying financial statements.

Previous wording

Our cash and cash equivalents are comprised of demand deposits in bank accounts held at financial institutions. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Current wording

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Previous wording

As of June 30, 2024 and 2023, two advertising partners combined represented in excess of 98% of accounts receivable.

Current wording

As of September 30, 2024 and 2023, two advertising partners combined represented in excess of 90% of accounts receivable.

Previous wording

The preparation of TMTG’s financial statements in conformity with GAAP requires it to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although TMTG believes that the estimates it uses are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. TMTG’s significant accounting policies are described in Note 2 to TMTG’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2024 and 2023, included in this Quarterly Report. TMTG’s critical accounting policies are described below.

Current wording

The preparation of TMTG’s financial statements in conformity with GAAP requires it to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although TMTG believes that the estimates it uses are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. TMTG’s significant accounting policies are described in Note 2 to TMTG’s unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2024 and 2023, included in this Quarterly Report. TMTG’s critical accounting policies are described below.

Previous wording

Software Development Costs. We expense software development costs, including costs to develop software products or the software component products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility typically is reached shortly before the release of such products. As a result, development costs that meet the criteria for capitalization were not material for the six months ended June 30, 2024.

Current wording

Software Development Costs. We expense software development costs, including costs to develop software products or the software component products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility typically is reached shortly before the release of such products. As a result, development costs that meet the criteria for capitalization were not material for the nine months ended September 30, 2024.

Previous wording

Software development costs also include costs to develop software to be used solely to meet internal needs and cloud-based applications used to deliver our services. We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed, and the software will be used to perform the function intended. Costs capitalized for developing such software applications were not material for the six months ended June 30, 2024.

Current wording

Software development costs also include costs to develop software to be used solely to meet internal needs and cloud-based applications used to deliver our services. We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed, and the software will be used to perform the function intended. Costs capitalized for developing such software applications were not material for the nine months ended September 30, 2024.