Trump Media & Technology Group Corp.

Current report

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “TMTG,” “we,” “us,” “our,” and the “Company” are intended to refer to (i) following the Business Combination, the business and operations of Trump Media & Technology Group Corp. and its consolidated subsidiaries, and (ii) prior to the Business Combination, Private TMTG (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.

Current report

In this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, all dollars are presented in thousands.

Current report

TMTG ended 2024 with $776,783.4 of cash, cash equivalents, and short-term investments, as well as $9,616.7 of debt (excluding lease liabilities) arising from the WCT transaction.

Current report

Truth Social

Current report

TMTG aspires to build a media and technology powerhouse to rival the liberal media consortium and promote free expression. TMTG was founded to fight back against the Big Tech companies-Meta (Facebook, Instagram, and Threads), X (formerly Twitter), Netflix, Alphabet (Google), Amazon and others-that it believes have colluded to curtail debate in America and censor voices that contradict “woke” ideology. TMTG aims to safeguard public debate and open dialogue, and to provide a platform for all users to freely express themselves.

Current report

TMTG Sub Inc. (formerly known as Trump Media & Technology Group Corp.) (“Private TMTG”) was incorporated on February 8, 2021, and launched its first product, Truth Social, which is a social media platform aiming to end Big Tech’s assault on free speech by opening up the internet and giving the American people their voices back. It is a public, real-time platform where any user can create content, follow other users, and engage in an open and honest global conversation without fear of being censored or cancelled due to their political viewpoints. TMTG does not restrict whom a user can follow, which it believes will greatly enhance the breadth and depth of available content. Additionally, users can be followed by other users without requiring a reciprocal relationship, enhancing the ability of TMTG users to reach a broad audience.

Current report

Truth Social was generally made available in the first quarter of 2022. TMTG prides itself on operating its platform, to the best of its ability, without relying on Big Tech companies. Partnering with pro-free-speech alternative technology firms, Private TMTG fully launched Truth Social for iOS in April 2022. Private TMTG debuted the Truth Social web application in May 2022, and the Truth Social Android App became available in the Samsung Galaxy and Google Play stores in October 2022. Private TMTG introduced direct messaging to all versions of Truth Social in 2022, released a “Groups” feature for users in May 2023, and announced the general availability of Truth Social internationally in June 2023.

Current report

To foster a flourishing digital public forum, TMTG seeks to prevent illegal and other prohibited content from contaminating its platform. In accordance with Truth Social’s terms of service, illegal and prohibited content includes, but is not limited to a) sexual content or language; b) content that includes sexual activity, sexual intercourse or any type of sexual act; c) any content that portrays or suggest explicit sexual acts or sexually suggestive positions or poses; d) sexually suggestive (explicit or vague) statements, texts or phrases; or e) content in which sexual acts are requested or offered, including pornography, prostitution, sugar babies, sex trafficking or sexual fetishes. Using human moderators and an artificial intelligence vendor known as HIVE, Truth Social has developed what TMTG believes is a robust, fair, and viewpoint-neutral moderation system and that its moderation practices are consistent with, and indeed help facilitate, TMTG’s objective of maintaining “a public, real-time platform where any user can create content, follow other users, and engage in an open and honest global conversation without fear of being censored or cancelled due to their political viewpoints.”

Current report

During 2024, our capitalization was significantly enhanced through receipt of Business Combination proceeds and proceeds from the issuance of common stock described in detail in the section below titled, “Standby Equity Purchase Agreement.” As a result, we ended 2024 with $776,783.4 of cash, cash equivalents, and short-term investments and just $9,616.7 of debt (excluding lease liabilities).

Current report

Truth+

Current report

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”) branded as Truth+.

Current report

TMTG announced plans to roll out its streaming content in three phases:

Current report

Truth.Fi

Current report

On January 29, 2025, TMTG announced its financial technology strategy, which will include the launch of the financial services and FinTech brand Truth.Fi, including the investment of up to $250 million to be custodied by Charles Schwab. In addition to traditional investment vehicles, these funds may be allocated to customized separately managed accounts; customized exchange-traded funds; and Bitcoin and similar cryptocurrencies or crypto-related securities.

Current report

Company Growth Strategy

Current report

As TMTG seeks to create a fully integrated media and technology company, it is pursuing these growth strategies:

Current report

Grow Truth Social. TMTG believes that growth in Truth Social’s user base will drive more unique content, which in turn will drive the viral, organic promotion of content on Truth Social, thereby attracting more platform partners and advertisers. TMTG also plans to grow Truth Social through the addition and refinement of user-friendly features — including the integration of video — and continued global expansion. As Truth Social attracts more users, the value proposition for advertisers increases, thereby incentivizing advertisers to develop unique and compelling content for the platform.

Current report

Increase Product Offerings and Services. Organically and/or in partnership with third parties, TMTG intends to continue developing additional cutting-edge products and/or services, including Truth+ and Truth.Fi, to complement the Truth Social platform and expand the Truth ecosystem.

Current report

Pursue Strategic Acquisitions and/or Partnerships. With cancel culture having swept through corporate America, businesses have faced increasing pressure to silence or disavow certain customers and/or have often taken controversial stands on political issues that alienated many consumers. Concurrently, an increasing number of entrepreneurs are catering to conservatives across various industries. TMTG will continue to explore opportunities to partner, merge with and/or acquire other participants in this growing America First Economy that would benefit from TMTG’s technology and branding—and that are able to function effectively if TMTG evolves into a holding company with numerous, largely autonomous subsidiaries in a variety of industries.

Current report

Such initiatives and acquisitions are subject to material changes and risks, some of which are beyond TMTG’s control. Given these uncertainties, TMTG believes it is premature for TMTG to predict when it will attain profitability and positive cash flows from its operations.

Current report

Key Factors Affecting Results of Operations

Current report

Executive & Consultant Promissory Notes

Current report

Private TMTG issued TMTG Executive & Consultant Promissory Notes to certain executives and consultants prior to the Closing Date. The principal amounts of the executive 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 former Chief Operating Officer, and the aggregate amount of such notes for other executives and one former director of Private TMTG was $4,650.0. 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 1,090,000 shares of TMTG common stock. In addition, the aggregate principal amount of other consultant notes totaled $7,500.0, which converted into 750,000 shares of TMTG common stock at Closing.

Current report

Restricted Stock Units and Shares for Services

Current report

TMTG granted 2,428,018 RSUs to executives of the Company for the year-ended December 31, 2024. The Company recognized $21,093.9 of compensation expense from the vesting of these RSUs based upon the fair value of the awards on their date of grant. As of December 31, 2024, unrecognized compensation expense related to non-vested equity grants was $61,313.1. In October 2024, we issued 57,230 shares of our common stock to WCT pursuant to achieving operational milestones related to the opening of our data centers that were compensatory in nature, due to project management services WCT provided related to opening our data centers outside the scope of our written agreement with them. Compensation expense totaling $1,659.8 was recorded based on the fair value of the common stock when the milestones were achieved.

Current report

Inflation and the Global Supply Chain

Current report

Currently the U.S. economy is experiencing a bout of increased inflation, resulting in rising prices. The U.S. Federal Reserve, as well as its counterparts in other countries, have engaged in a series of interest rate hikes in an effort to combat rising inflation. Although inflation did not have a significant impact on our results of operations for the years ended December 31, 2024, 2023, and 2022, we anticipate that inflation will have an impact on our business going forward, including through a material increase in our cost of revenue and operating expenses in the coming years, if not permanently. Continued or permanent rises in core costs could impact our growth negatively.

Current report

Current Economic Conditions

Current report

We are subject to risks and uncertainties caused by events with significant macroeconomic impacts, including, but not limited to, the COVID-19 pandemic, the Russian invasion of Ukraine, the Israel-Hamas war, and actions taken to counter inflation. Supply chain constraints, labor shortages, inflation, and rising interest rates and reduced consumer confidence have caused advertisers in a variety of industries to be cautious in their spending and to either pause or slow their campaigns.

Current report

In order to manage our cost structure in light of the current macroeconomic environment and pending TMTG’s access to additional capital via the Business Combination, we sought opportunities to reduce our expense growth. Following the elimination of several positions in March 2023, we paused hiring in the second quarter of 2023. We were subsequently more selective about the roles that we filled, resulting in some attrition. We also reduced non-labor spend in areas such as travel, rent, consulting fees, and professional services.

Current report

The extent of the ongoing impact of these macroeconomic events on our business and on global economic activity is uncertain and may continue to adversely affect our business, operations and financial results. Our past results may not be indicative of our future performance, and historical trends in revenue, income (loss) from operations, net income (loss), and net income (loss) per share may differ materially.

Current report

President Donald J. Trump

Current report

TMTG’s success depends in part on the popularity of our brand and the reputation and popularity of President Donald J. Trump. The value of TMTG’s brand may diminish if the popularity of President Donald J. Trump were to suffer. Adverse reactions to publicity relating to President Donald J. Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations and its ability to maintain or generate a consumer base. President Donald J. Trump is involved in numerous lawsuits and other matters that could damage his reputation. Additionally, TMTG’s business plan relies on President Donald J. Trump bringing his former social media followers to TMTG’s platform. In the event any of these, or other events, cause his followers to lose interest in his messages, the number of users of our platform could decline or not grow as we have assumed. To the extent users prefer a platform that is not associated with President Donald J. Trump, TMTG’s ability to attract users may decrease.

Current report

Growth in User Base

Current report

We currently rely on the sale of advertising services for all of our revenue. If we experience a decline in the number of users or a decline in user engagement, including as a result of the loss of high-profile individuals and entities who generate content on Truth Social, advertisers may not view Truth Social as attractive for their marketing expenditures, and may reduce their spending with us, which would harm our business and operating results.

Current report

Truth Social is being developed as a global platform for public self-expression and conversation in real time and our business depends on continued and unimpeded access to Truth Social on the internet by our users and advertisers. We face strong competition to attract and engage users, including other social media platforms that focus on the same audience that Truth Social focuses on, competitors that develop products, features, or services that are similar to ours or that achieve greater market acceptance, companies which have greater financial resources and substantially larger user bases, which offer a variety of internet and mobile device-based products, services and content.

Current report

The growth of our user base depends upon many factors both within and beyond our control, including the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors; the amount, quality and timeliness of content generated by our users; the frequency and relative prominence of the ads displayed by us or our competitors; the safety and security of Truth Social; and whether there is improper access to or disclosure of our users’ information, which could harm our reputation.

Current report

Prior to the Closing, Private TMTG relied primarily on bridge financing, in the form of convertible promissory notes, to build the Truth Social platform. TMTG intends to use the funds available as a result of the Business Combination to catalyze growth, including through strategic investments in marketing, advertising sales, and new technologies as described above, 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.

Current report

Attract, Retain and Motivate Talented Employees

Current report

Our results of operations rely on the leadership and experience of our relatively small number of key executive management personnel, and the loss of key personnel or the inability of replacements to quickly and successfully perform in their new roles could adversely affect our business. We have experienced management departures and may continue to experience management departures. Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on our business, financial condition and results of operations. The loss of the services of these key employees or our executive management members could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis or without incurring increased costs.

Previous report

Unless otherwise indicated or the context otherwise requires, references in this section to “we,” “our,” “us” and other similar terms refer to Digital World before the Business Combination.

Previous report

Overview

Previous report

Digital World was formed as a blank check company under the laws of the State of Delaware on December 11, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar initial business combination with one or more businesses. Digital World intended to effectuate its initial business combination using cash from the proceeds of its initial public offering and the sale of the Placement Units, our capital stock, debt or a combination of cash, stock and debt.

Previous report

Recent Development

Previous report

In February 2024, Digital World issued Digital World Convertible Notes to certain accredited investors in the aggregate principal amount of up to $770,000. The proceeds of the promissory notes are expected to be used to pay costs and expenses in connection with completing the Business Combination. Of such Digital World Convertible Notes (i) $620,000 have a conversion price of $10.00 per Working Capital Unit and (ii) $150,000 have a conversion price of $8.00 per Working Capital Unit. The issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

Previous report

On February 7, 2024, Digital World entered into warrant subscription agreements with certain institutional investors for the issuance of the Digital World Alternative Warrants in settlement of the terminated PIPE Investment. Each such warrant entitles the holder thereof to purchase one share of Digital World Class A common stock for $11.50 per share. Digital World issued the Digital World Alternative Warrants concurrently with the closing of the Business Combination, and such warrants had substantially the same terms as the Public Warrants issued by Digital World in connection with its IPO, except that such Digital World Alternative Warrants may only be transferred to the applicable holder’s.

Previous report

On February 8, 2024, Digital World entered into a subscription agreement with certain institutional investors for the issuance of the Digital World Alternative Financing Notes, issuing $10,000,000 in Digital World Alternative Financing Notes to such institutional investors. Digital World issued the remaining up to $40,000,000 of such Digital World Alternative Financing Notes concurrently with the Closing of the Business Combination on March 25, 2024. The Digital World Alternative Financing Notes:

Previous report

As of December 31, 2023, Digital World had approximately $395,011 in cash. Digital World incurred significant costs in the pursuit of the Business Combination. On March 25, 2024 the Business Combination was consummated.

Previous report

Digital World neither engaged in any operations nor generated any revenues through the Closing Date. Its activities from inception through December 31, 2023 were organizational activities and those necessary to prepare for Digital World’s IPO and the search for targets for the Business Combination, including the Merger with TMTG. Digital World did not expect to generate any operating revenues until after the completion of the Business Combination. Digital World generated non-operating income in the form of interest income on marketable securities held. Digital World incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence in connection with its search for targets for its initial business combination.

Previous report

For the year ended December 31, 2023, Digital World had a net loss of $21,890,641, which consists primarily of formation and operating expenses of $12,523,232, legal investigations expense of $19,671,581 and income taxes of $3,548,603, partially offset by income on the trust assets of $13,852,774. The increase in legal investigations expense is primarily due to the $18.0 million settlement with SEC. The increase in income on the trust assets is due to the increase in interest rates.

Previous report

For the year ended December 31, 2022, Digital World had a net loss of $15,642,548, which consists of formation and operating expenses of $8,916,023, legal investigations expense of $10,004,519 and income taxes of 979,475, partially offset by income on the trust assets of $4,257,469.

Previous report

Until Digital World’s IPO, Digital World’s only source of liquidity was an initial purchase of Class B common stock by the Sponsor and loans from the Sponsor.

Previous report

On September 8, 2021, Digital World consummated the IPO of 28,750,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $287,500,000. Simultaneously with the closing of the IPO, Digital World consummated the sale of 1,133,484 Placement Units at a price of $10.00 per Placement Unit in a Private Placement to our Sponsor, generating gross proceeds of $11,334,840.

Previous report

Following the IPO and the sale of the Placement Units, a total of $293,250,000 was placed in the Trust Account. Digital World incurred $15,668,029 in transaction costs, including $3,593,750 of underwriting fees, $10,062,500 of deferred underwriting fees, fair value of representative shares of $1,437,500 and $574,279 of other offering costs.

Previous report

For the year ended December 31, 2023, cash used in operating activities was $5,135,588, which was primarily comprised of a net loss of $35,722,601 (excluding cash interest earned on the Trust Account), partially offset by a net increase in operating liabilities of $30,587,013.

Previous report

For the year ended December 31, 2022, cash used in operating activities was $1,455,883, which was primarily comprised of a net loss of $19,900,017 (excluding cash interest earned on the Trust Account), partially offset by a net increase in operating liabilities of $18,444,134.

Previous report

As of December 31, 2023, Digital World had cash of $310,623,083 held in the Trust Account. Digital World intended to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, to complete its initial business combination and to withdraw cash to pay taxes. To the extent that Digital World capital stock or debt was used, in whole or in part, as consideration to complete the Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance TMTG's business, make other acquisitions and pursue our growth strategies.

Previous report

On April 21, 2023, Digital World issued two promissory notes (one for $625,700 and the other for $500,000) in the aggregate principal amount of $1,125,700 to the Sponsor to pay costs and expenses in connection with completing the Business Combination. Each of the two notes bears no interest and is repayable in full upon the earlier of (i) the date on which Digital World consummates its Business Combination and (ii) the date that the winding up of Digital World is effective. At the election of the Sponsor and subject to certain conditions, all of the unpaid principal amount of each of the two notes may be converted into Units of Digital World (the “Conversion Units”) immediately prior to the consummation of the Business Combination with the total Conversion Units so issued equal to: (x) the portion of the principal amount of the respective note being converted divided by (y) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Units. The issuances of the two notes were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

Previous report

On June 2, 2023, Digital World issued two convertible notes to Renatus in the aggregate principal amounts of (a) $2,000,000 and (b) $10,000,000. The proceeds of the Notes were used to pay costs and expenses in connection with completing an initial business combination. Mr. Swider, a current director of TMTG, is a founder and partner of Renatus.

Previous report

Digital World did not have any off-balance sheet arrangements as of December 31, 2023.

Previous report

Contractual Obligations

Previous report

Digital World did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of December 31, 2023.

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Critical Accounting Policies and Estimates

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Digital World Class A Common Stock Subject to Possible Redemption

Previous report

Digital World accounted for Digital World Class A common stock subject to possible Redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Digital World Class A common stock subject to mandatory Redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features Redemption Rights that is either within the control of the holder or subject to Redemption upon the occurrence of uncertain events not solely within Digital World's control) is classified as temporary equity. At all other times, shares of common stock are classified as stockholders’ equity. Shares of Digital World Class A common stock feature certain Redemption Rights that are considered to be outside of Digital World's control and subject to occurrence of uncertain future events. Accordingly, Digital World Class A common stock subject to possible Redemption is presented as temporary equity, outside of the stockholders’ equity section of Digital World's condensed interim balance sheets.

Previous report

Derivative Financial Instruments

Previous report

Digital World evaluated its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Digital World accounts for the Warrants in accordance with the guidance contained in ASC 815-40. Digital World has determined that the Warrants qualify for equity treatment in Digital World’s financial statements.