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Item 2. Management’s Discussion and Analysis

2024-05-20 compared with 2023-11-22 · 819 added, 103 removed, 8 unchanged (99% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below.

The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report.

References in this report (this “ Quarterly

Report ”) to “TMTG,” “we,” “us” or the “Company” refer to Trump Media & Technology Group Corp.

References to our “management” or our “management team” refer to our officers and directors.

The following discussion and analysis of the

Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.

All amounts are in thousands,

except per share data.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

References in this report (the “Quarterly Report”) to “we,” “us,” “Digital World” or the “Company” refer to Digital World Acquisition Corp.

References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to ARC Global Investments II LLC.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report.

Our actual results could differ materially from such forward-looking

Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”

included elsewhere in this report.

Cautionary Note Regarding Forward-Looking Statements

This Report (as defined below), including, without limitation, statements under “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act (as defined below) and Section 21E of the Exchange Act (as defined below).

These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.

There can be no assurance that actual results will not materially differ from expectations.

Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts.

These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:

our ability to complete the Business Combination or the PIPE;

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the Business Combination;

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Business Combination, as a result of which they would then receive expense reimbursements;

our potential ability to obtain additional financing to complete the Business Combination;

the competitive environment in which our successor will operate following the Business Combination;

our public securities’ potential liquidity and trading;

the lack of a liquid market for our securities;

the use of proceeds not held in the Trust Account or available to us from interest income on the Trust Account balance;

our financial performance.

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us.

Future developments affecting us may not be those that we have anticipated.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

TMTG Business Combination

On October 20, 2021, we entered into a Merger Agreement with Merger Sub, TMTG, our sponsor, in the capacity as our representative for certain stockholders, and TMTG’s Chief Legal Officer, in the capacity as the representative for stockholders of TMTG.

Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, (i) upon the Closing, Merger Sub will merge with and into TMTG, with TMTG continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of the Company.

In the Merger, (i) all shares of TMTG Common Stock issued and outstanding immediately prior to the Effective Time (other than those properly exercising any applicable dissenters rights under Delaware law) will be converted into the right to receive the Merger consideration;

(ii) each outstanding option to acquire shares of TMTG Common Stock (whether vested or unvested) will be assumed by the Company and automatically converted into an option to acquire shares of the Company’s common stock, with its price and number of shares equitably adjusted based on the conversion ratio of the shares of TMTG Common Stock into the Merger consideration and (iii) each outstanding restricted stock unit of TMTG shall be converted into a restricted stock unit relating to shares of the Company’s common stock.

At the Closing, the Company will change its name to “Trump Media & Technology Group Corp.”

Consummation of the TMTG Business Combination is subject to customary conditions of the respective parties, including regulatory approval and the approval of the Merger by our stockholders in accordance with our amended and restated certificate of incorporation and the completion of a redemption offer whereby we will be providing our public stockholders with the opportunity to redeem their shares of our Class A common stock for cash equal to their pro rata share of the aggregate amount on deposit in our Trust Account.

The Merger Agreement can be terminated, under certain customary and limited circumstances at any time prior to the Closing, including by

either party if any of the closing conditions have not been satisfied or waived by December 31, 2023 (the “Outside Date”).

On December 4, 2021, in support of the TMTG Business Combination, the Company entered into certain SPAs with the PIPE Investors, pursuant to which the PIPE Investors agreed to purchase up to an aggregate of 1,000,000 shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”) for a purchase price of $1,000 per share for an aggregate commitment of up to $1,000,000,000 in a PIPE to be consummated concurrently with the Closing.

The Preferred Stock have an initial conversion price per share of $33.60 and such number of shares of Preferred Stock were initially expected to be convertible into 29,761,905 shares of New Digital World Class A common stock, subject to upward adjustment.

Pursuant to the SPA, each of the PIPE Investors may terminate its respective SPA, among other things, if the closing of the PIPE had not occurred on or prior to September 20, 2022.

Furthermore, in connection with the Second Amendment to the Merger Agreement, at the request of TMTG, the Company agreed to use its reasonable best efforts to discuss with the PIPE Investors a reduction or termination of the SPAs and the PIPE.

As a result, as of November 20, 2023, the Company received termination notices from certain PIPE Investors, effectively cancelling approximately $474,500,000 of the PIPE.

The Company expects to continue to seek the termination of or significantly reduce such PIPE commitments.

As indicated in the accompanying financial statements, as of September 30, 2023, we had approximately $3.3 million in cash.

We have incurred and continue to incur significant costs in the pursuit of our initial business combination.

We cannot assure shareholders that our plans to complete our initial business combination will be successful.

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as

amended (the “ Securities Act ”) and Section 21E of the Exchange Act of 1934, as amended (the “ Exchange Act ”) that are not historical facts, and involve risks and

uncertainties that could cause actual results to differ materially from those expected and projected.

All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements under

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking

When used in this Quarterly Report, words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “aim,” “plan,” “may,” “will,” “continue,” “should,” “seek” and variations and similar words and expressions identify

forward-looking statements.

Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to management.

A number of factors could cause actual events, performance or

results to differ materially from the events, performance and results discussed in the forward-looking statements.

For information identifying important factors that could cause actual results to differ materially from those anticipated in the

forward-looking statements, please refer to the Risk Factors section of the Company’s Form 10-K filed with the U.S.

Securities and Exchange Commission (the “ SEC ”) on April 1, 2024, as amended by Amendment

Number 1 to Form 10-K filed with the SEC on April 3, 2024.

The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.

Except as expressly required by applicable securities law, the Company disclaims

any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

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 collude to curtail debate in America and censor voices that contradict their

“woke” ideology.

TMTG aims to safeguard public debate and open dialogue, and to provide a platform for all users to freely express themselves.

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.

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.

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.

Since its launch, Truth Social has experienced substantial growth, from zero to an aggregate of approximately 9.0 million signups for Truth Social via iOS, Android and the web

as of mid-February 2024.

However, investors should be aware that since its inception, TMTG has not relied on any specific key performance metric to make business or operating decisions.

Consequently, it has not been maintaining internal controls

and procedures for periodically collecting such information, if any.

While many mature industry peers may gather and analyze certain metrics, given the early development stage of the Truth Social platform, TMTG’s management team believes that

such metrics are not critical in the near future for the business and operation of the platform.

This stance is due to TMTG’s long-term commitment to implementing a robust business plan, which may involve introducing innovative features and

potentially incorporating new technologies, such as advanced video streaming services on its platform.

These initiatives may enhance the range of services and experiences TMTG can offer on its Truth Social platform.

At this juncture in its development, TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per

user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business.

TMTG believes that focusing

on these KPIs might not align with the best interests of TMTG or its stockholders, as it could lead to short-term decision-making at the expense of long-term innovation and value creation.

Therefore, TMTG believes that this strategic evaluation

is critical and aligns with its commitment to a robust business plan that includes introducing innovative features and new technologies.

To foster a flourishing digital public forum, TMTG seeks to prevent illegal and other prohibited content from contaminating its platform.

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.”

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.

TMTG may enhance this appeal through new

initiatives or by acquiring new technologies.

Private TMTG conducted extensive technological due diligence regarding, and has begun testing, a particular, state-of-the-art technology that supports video streaming and provides a “home” for

cancelled content creators, and which TMTG aims 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”).

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

Introduce Truth Social’s CDN for streaming live TV to the Truth Social app for Android, iOS, and Web.

Release stand-alone Truth Social over-the-top streaming apps for phones, tablets, and other devices.

Release Truth Social streaming apps for home TV.

Such initiatives and potential acquisitions are still preliminary and subject to material changes and risks, some of which are beyond TMTG’s

Given these uncertainties, TMTG believes it is premature for TMTG to predict when it will attain profitability and positive cash flows from its operations.

In order to fund its operations prior to Closing, Private TMTG issued approximately two dozen convertible promissory notes in the aggregate

principal amount of $48,155.0 (net of repayments) from May 2021 through March 2024.

All Private TMTG convertible promissory notes (the “ Private TMTG Convertible Notes ”), including the foregoing, converted

to shares of TMTG common stock immediately before the Closing of the Business Combination.

See the section titled “— Liquidity and Capital Resources ” below.

The mailing address of TMTG’s principal executive office is 401 N.

Cattlemen Rd., Suite 200, Sarasota, Florida 34232.

Recent Developments

Business Combination

On October 20, 2021, Digital World Acquisition Corp.

(now known as Trump Media & Technology Group Corp.) (prior to the Closing, “ Digital World ”), Merger Sub, Private TMTG, ARC Global Investments II, LLC (which was replaced and succeeded by RejuveTotal LLC, a New Mexico limited liability

company effective as of March 14, 2024), in the capacity as the representative of the stockholders of Digital World, and Private TMTG’s General Counsel in his capacity as the representative of the stockholders of Private TMTG, entered into an

Agreement and Plan of Merger (as amended, the “ Merger Agreement ”), pursuant to which, among other transactions, Merger Sub merged with and into Private TMTG,

with Private TMTG continuing as the surviving corporation and as a wholly owned subsidiary of TMTG (the “ Merger ” and, together with the other transactions

contemplated by the Merger Agreement, the “ Business Combination ”).

On March 25, 2024 (the “ Closing Date ”), the Business Combination was consummated (the “ Closing ”).

In connection with the Business Combination, all shares of Private TMTG common stock issued and outstanding immediately prior to the Effective

Time (other than those properly exercising any applicable dissenters rights under Delaware law) were exchanged for the Merger Consideration (as defined in the Merger Agreement) (or, as applicable, the separate and additional consideration

received by former holders of Private TMTG Convertible Notes issued by Private TMTG).

Each Private TMTG Convertible Note that was outstanding immediately prior

to the effective time of the Closing (the “ Effective Time ”) was automatically converted immediately prior to the Effective Time into a number of shares of

Private TMTG common stock, in accordance with each such Private TMTG Convertible Note as set forth therein.

At the Closing, Digital World Acquisition Corp.

changed its name to “Trump Media & Technology Group Corp.” and Private TMTG changed

its name to “TMTG Sub Inc.”

Notwithstanding the legal form of the Merger pursuant to the Merger Agreement, the Merger was accounted for as a reverse recapitalization in

accordance with U.S.

GAAP because Private TMTG was determined to be the accounting acquirer under ASC 805.

The determination was primarily based on the evaluation of the following facts and circumstances taking into consideration:

The pre-combination equity holders of Private TMTG hold the majority of voting rights in TMTG;

The pre-combination equity holders of Private TMTG have the right to appoint the majority of the directors on TMTG’s Board;

Private TMTG senior management (executives) are the senior management (executives) of TMTG;

Operations of Private TMTG comprise the ongoing operations of TMTG.

Under the reverse recapitalization model, the Merger is treated as Private TMTG issuing equity for the net assets of Digital World, with no

goodwill or intangible assets recorded.

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 64.9% 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.

Convertible Promissory Notes

Through March 31, 2024, Private TMTG issued Private TMTG Convertible Notes in the aggregate principal amount of $48,155.0 (net of repayments) that

accrued interest at a range between 5% and 10% per annum until converted.

See “Note 10 – Convertible Promissory Notes And Warrants,” in the accompanying financial statements for details.

Immediately prior to the Closing, all Private TMTG

Convertible Notes were converted into Private TMTG common stock.

Key Factors Affecting Results of Operations

Executive Promissory Notes

Private TMTG issued TMTG Executive Promissory Notes to certain executives prior to the Closing Date.

The principal amounts of such notes were as

$1,150,000 for Devin Nunes, our Chief Executive Officer, $4,900,000 for Phillip Juhan, our Chief Financial Officer, and $200,000 for Andrew Northwall, our Chief Operating Officer, and the aggregate amount of such notes for other

executives was $650,000.

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.

Inflation and the Global Supply Chain

Currently the U.S.

economy is experiencing a bout of increased inflation, resulting in rising prices.

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 periods ended March 31, 2024 and

2023, 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 Economic Conditions

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.

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.

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.

Private TMTG’s Former Chairman President Donald J.

TMTG’s success depends in part on the popularity of our brand and the reputation and popularity of President Donald J.

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.

extent users prefer a platform that is not associated with President Donald J.

Trump, TMTG’s ability to attract users may decrease.

Growth in User Base

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.

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.

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

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.

Prior to the Closing, Private TMTG relied primarily on bridge financing, in the form of convertible promissory notes, to build the Truth Social

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.

Attract, Retain and Motivate Talented Employees

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.

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

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.

Furthermore, although the risk is somewhat mitigated by the non-competition agreements signed by certain key employees in connection with the Closing of the

Business Combination, if we lose or terminate the services of one or more of our key employees or if one or more of our current or former executives or key employees joins a competitor or otherwise competes with us, it could impair our business

and our ability to successfully implement our business plan.

Additionally, if we are unable to hire qualified replacements for our executive and other key positions in a timely fashion, our ability to execute our business plan would be harmed.

Even if we can quickly hire qualified replacements, we could experience operational disruptions and inefficiencies during any such transition.

We believe that our future success will depend on our continued ability to attract and retain highly

skilled and qualified personnel.

In addition, many of our key technologies and systems will be custom-made for our business by our personnel.

The loss of key engineering, product development, marketing and sales personnel could disrupt our

operations and have an adverse effect on our business.

Expansion into New Geographic Markets

We plan to continue expanding our business operations by offering our products around the globe, and Truth Social is generally available

internationally.

As a result, we have entered new international markets where we have limited or no experience in marketing, selling, and deploying our products and may be subject to increased business and economic risks.

We may not be able to

monetize our products and services internationally as a result of competition, advertiser demand, differences in the digital advertising market and digital advertising conventions, as well as differences in the way that users in different

countries access or utilize our products and services.

Differences in the competitive landscape in international markets may impact our ability to monetize our products and services.

It is possible that governments of one or more countries may

seek to censor content available on Truth Social in their country or impose other restrictions that may affect the accessibility of Truth Social in their country for an extended period of time or indefinitely.

In addition, governments in other countries may seek to restrict access to Truth Social from their country entirely if they consider us to be in

violation of their laws.

In the event that access to Truth Social is restricted, in whole or in part, in one or more countries or our competitors are able to successfully penetrate geographic markets that we cannot access, our ability to retain

or increase our user base and user engagement may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.

We may be subject to greater risks than typical

social media platforms because of the focus of our offerings and the involvement of President Donald J.

If we fail to deploy or manage our operations in international markets successfully, our business may suffer.

Key Operating Metrics

From its inception through the Closing, Private TMTG focused on developing Truth Social by enhancing features and user interface rather than

relying on traditional performance metrics like average revenue per user, ad impressions and pricing, or active user accounts, including monthly and daily active users.

While many industry peers may gather and report on these or similar metrics,

given the early development stage of the Truth Social platform, TMTG’s management team has not relied on any particular key performance metric to make business or operating decisions.

TMTG believes that this evaluation is critical and in line

with its commitment to implement a robust business plan that may involve introducing innovative features and potentially incorporating new technologies.

At this juncture in its development, TMTG believes that adhering to traditional key

performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the

progress and growth of its business.

TMTG believes that focusing on these KPIs might not align with the best interests of TMTG or its stockholders, as it could lead to short-term decision-making at the expense of long-term innovation and value

Therefore, TMTG believes that this strategic evaluation is critical and aligns with its commitment to a robust business plan that includes introducing innovative features and new technologies.

In connection with such an evaluation, and consistent with SEC guidance, TMTG will consider the relevant key performance indicators for its

then-current business operations and determine whether it has effective controls and procedures in place to process information related to the disclosure of key performance indicators and metrics.

Should this be the case, TMTG may decide to

collect and report such metrics if they are deemed to significantly enhance investors’ understanding of TMTG’s financial condition, cash flows, and other aspects of its financial performance.

However, TMTG may find it challenging or

cost-prohibitive to implement such effective controls and procedures and may never collect, monitor, or report any or certain key operating metrics.

As the platform evolves and new technologies and features are added, TMTG’s management team

expects to reevaluate whether TMTG will gather and monitor one or more metrics and rely on such information in making management decisions.

If TMTG determines to do so, TMTG expects to present such material key operating metrics appropriately in

its periodic reports to enhance investors’ understanding of its financial condition, cash flows, and any other changes in financial condition and results of operations.

Components of Results of Operations

As of the period ended March 31, 2024, all revenue has been derived from the advertising of products and services on the Truth Social platform.

Advertising revenue is generated by displaying advertisements as posts (attributable to “ Truth Ads ”) in users’ Truth Social feeds.

On August 19, 2022, TMTG entered into an Advertising Publisher Agreement (“ Rumble Agreement ”) with Rumble

(“ Rumble ”), pursuant to which Rumble was engaged to sell advertising space for the placement of advertisements on Truth Social by making Truth Social Ad units (“ Ad

Unit ” or “ Ad Units ”) available for advertisers on an advertising manager service maintained by Rumble.

TMTG and Rumble executed a minimum guarantee advertising publisher agreement on October 30,

2023 (the “ Minimum Guarantee Rumble Agreement ”), which replaced the Rumble Agreement.

While TMTG determines the number of Ad Units available on our Truth Social platform, the prices for the Ad Units are set

by an auction operated and managed by Rumble.

Under the current agreement, 70% of the total aggregate gross revenues from the sale of Ad Units are allocated to TMTG, and the Ad Units will comprise at least 85% of the aggregate number of paid

advertisements directly into Truth Social feeds by TMTG each month.

We recognize advertising revenue during the period in which we satisfy our performance obligation by displaying advertisements in users’ Truth Social feeds.

We reimburse Rumble

for the direct out-of-pocket costs incurred by Rumble in the performance of the service covered by the Rumble Agreement, including processing fees and chargebacks/refunds paid to advertisers in relation to an Ad Unit.

On October 3, 2022, TMTG entered into a Publisher Agreement (the “ TAME Agreement ”) with The Affinity Media

Exchange, Inc.

(“ TAME ”), pursuant to which TMTG engaged TAME as its non-exclusive agent and representative for the sale of Digital Advertising Inventory on Truth Social.

“Digital Advertising Inventory”

means all advertising opportunities on the Truth Social platform which are inserted or added to the TMTG website, app, ad stacks, or video exchange players of Truth Social.

Within 25 days of the end of each calendar month, TAME is required to

provide TMTG with month end sales reporting by platform and to pay TMTG the net revenues actually paid to TAME by the advertisers, after deducting TAME’s commissions equal to 10% of the Digital Advertising Inventory revenue actually collected on

behalf of TMTG for Truth Social.

The Rumble Agreement grants to Rumble a worldwide, non-exclusive, royalty-free license to use any and all trademarks, service marks, trade names, symbols, logos and other branding identifiers of TMTG and Truth

Social solely for purposes of performing the services covered by the Rumble Agreement, provided, however, that such license does not include permission to alter, modify, edit, denigrate, or distort Donald J.

Trump’s name, photograph, likeness

(including caricature), voice, and biographical information, or any reproduction or simulation thereof.

The TAME Agreement does not contain a license to intellectual property.

Neither the Rumble Agreement nor the TAME Agreement provide for access to TMTG’s platform or services.

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 months ended March 31, 2024 and 2023, included in this Quarterly Report.

Cost of Revenue

Cost of revenue primarily encompasses expenses associated with generating advertising revenue.

These costs are determined by allocating staff

direct and indirect costs proportionately, based on the time spent managing the agency relationships with external vendors.

These costs are mainly in connection with activities related to coordinating with these third-party vendors as the

third-party vendors are responsible to control and facilitate the delivery of advertising services.

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 ”).

Infrastructure costs allocated may include data center costs related to TMTG’s co-located facilities, lease and hosting costs, related support and

maintenance costs and energy and bandwidth costs, public cloud hosting costs;

and personnel-related costs, including salaries, benefits and stock-based compensation, for our operations teams.

TAC costs may include costs TMTG incurs with third parties in connection with the sale to advertisers of its advertising products that it places on third-party

publishers’ websites and applications or other offerings collectively resulting from acquisitions.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for

TMTG’s executive, finance, legal, information technology, human resources and other administrative employees.

In addition, general and administrative expenses include fees and costs for professional services, including consulting, third-party

legal and accounting services and facilities costs and other supporting overhead costs that are not allocated to other departments.

We also expect to incur additional expenses as a result of operating as a public company, including expenses necessary to comply with rules and

regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC.

Sales and Marketing Expenses

Sales and marketing expenses consist of personnel-related costs, including salaries, commissions, benefits and stock-based compensation, for our

employees engaged in sales, sales support, business development and media, marketing, corporate communications and customer service functions.

In addition, marketing and sales-related expenses also include advertising costs, market research,

trade shows, branding, marketing, public relations costs, allocated facilities costs, and other supporting overhead costs.

Research and Development Expenses

Research and development expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for

TMTG’s engineers and other employees engaged in the research and development of its products and services.

In addition, research and development expenses include allocated facilities costs and other supporting overhead costs.

Depreciation Expense

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

Non-Operating Income and Other Items

Change in Fair Value of Derivative Liabilities

Private TMTG determined the automatic discounted share-settlement feature of its convertible promissory notes was an embedded derivative requiring

bifurcation accounting as (1) the feature was not clearly and closely related to the debt host and (2) the feature met the definition of a derivative under ASC 815 (Derivative and Hedging).

The bifurcated embedded features of the Private TMTG Convertible Notes were initially recorded on the balance sheet at their fair value on the

date of issuance.

After the initial recognition, the fair value of the embedded derivative feature changed over time due to changes in market conditions.

The change in fair market value has been included in the statement of operations through the

date the debt was derecognized.

Interest Expense

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.

Interest Income

Interest income consists of interest earned from banking institutions.

Income Tax Expense

TMTG is subject to income taxes in the United States.

The Company maintains a net operating loss (“ NOL ”) position but has not recognized a benefit in future years.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for

financial reporting purposes and the amounts used for income tax purposes.

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized.

TMTG has established a full valuation allowance to

offset its U.S.

net deferred tax assets due to the uncertainty of realizing future tax benefits from our NOL carryforwards and other deferred tax assets.

The utilization of the net operating losses prior to the merger will be limited as per IRC

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.

Our activities from inception through September 30, 2023 were organizational activities and those necessary to prepare for the initial public offering and the search for targets for our initial business combination, including the proposed Merger with TMTG.

We do not expect to generate any operating revenues until after the completion of our initial business combination.

We generate non-operating income in the form of interest income on marketable securities held.

We incur 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 our search for targets for our initial business combination.

For the three months ended September 30, 2023, we had a net loss of $12,192,367, which consists of general and administrative costs of $4,057,852, legal investigations expense of $11,639,030 and income tax expense of $899,687, partially offset by $3,599,760 of interest earned on cash held in Trust Account and insurance recoveries of $1,046,653.

Legal investigations expense includes $10 million related to the SEC settlement of $18 million.

For the three months ended September 30, 2022, we had a net loss of $3,818,711, which consists primarily of general and administrative costs of $2,165,260 and legal investigations expense of $2,656,763 partially offset by interest earned on the cash held in the Trust Account of $1,326,957.

For the nine months ended September 30, 2023, we had a net loss of $20,006,348, which consists of general and administrative costs of $8,131,700, legal investigations expenses of $20,639,030 and income tax expense of $2,687,493, partially offset by $10,405,222 of interest earned on cash held in Trust Account and insurance recoveries of $1,046,653.

Legal investigations expense includes $10 million related to the SEC settlement of $18 million.

For the nine months ended September 30, 2022, we had a net loss of $10,096,571, which consists primarily of general and administrative costs of $3,527,588 and legal investigations expenses of $7,964,208, partially offset by interest earned on the cash held in the Trust Account of $1,752,484.

Factors That May Adversely Affect Our Results of Operations

Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control.

Our business could be impacted by, among other things, the pending legal proceedings against us, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine.

We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.

The results of operations presented below should be reviewed in conjunction with TMTG’s unaudited condensed consolidated financial statements as

of and for the three months ended March 31, 2024 and 2023, together with the related notes thereto, included elsewhere in this Quarterly Report.

The following table sets forth TMTG’s unaudited statements of operations for the three months ended March 31, 2024 and 2023, and the dollar and

percentage change between the two periods:

(in thousands)

For the three months ended

March 31, 2024

For the three months ended

March 31, 2023

Cost of revenue

Costs and expenses:

General and administrative

Sales and marketing

Research and development

Total costs and expenses

(in thousands)

For the three months ended

March 31, 2024

For the three months ended

March 31, 2023

Operating income/(loss)

Other income:

Interest expense

Interest income

Loss on the extinguishment of debt

Change in fair value of derivative liabilities

Income/(loss) before income tax expense

Income tax expense

Net income/(loss)

Revenues decreased by approximately $345.7, or 31%, for the three months ended March 31, 2024 compared to revenue of approximately $1,116.2 for

the three months ended March 31, 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-merger 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 $770.5 for the

three months ended March 31, 2024.

Cost of Revenue

Cost of revenue increased by approximately $52.1 , or 126%, to $93.4 for the

three months ended March 31, 2024 compared to approximately $ 41.3 for the three months ended March 31, 2023.

The increase was mainly due to an increase in personnel-related

expenses of $52.1, which primarily reflects the allocation of a portion of salary and bonus expense for three TMTG employees who contributed to the early-stage testing of Truth Social’s nascent advertising initiative.

General and Administrative Expense

General and administrative expense increased by approximately $62,958.8 , or

3,429%, for the three months ended March 31, 2024 compared to $1,836.3 for the three months ended March 31, 2023.

The increase was primarily due to $ 54,445.5 of non-cash

stock-based compensation expense recorded 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.

Sales and Marketing Expense

Sales and marketing expense increased by approximately $814.3, or 318%, to $1,070.4 for the three months ended March 31, 2024 compared to the

three months ended March 31, 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 $200.0 increase in marketing expense.

Research and Development Expense

Research and development expense increased by approximately $30,346.5, or 1,079%, for the three months ended March 31, 2024 compared to $2,812.1

for the three months ended March 31, 2023.

The increase was primarily due to $30,142.5 of non-cash stock-based compensation expense related to the issuance in March 2024 of convertible notes to certain vendors engaged in the development of our

planned live TV streaming platform.

Depreciation expense decreased by $10.7, or 66%, to $5.6 for the three months ended March 31, 2024 compared to $16.3 for the three months ended

March 31, 2023.

Change in the Fair Value of Derivative Liabilities

Change in the fair value of the derivative liabilities of the Private TMTG Convertible Notes increased by approximately $231,575.9, or 4,092%, for

the three months ended March 31, 2024.

The Private TMTG Convertible Notes conversion features were accounted for as liability classified derivatives under ASC 815, which were subject to remeasurement to fair value at each balance sheet date.

Changes in the fair value of its derivative liabilities were recognized in the condensed consolidated statements of operations.

All Private TMTG Convertible Notes were automatically converted into shares of our common stock at closing of the Merger, 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 March 31,

2024 and there will no longer be future earnings adjustments pertaining to the Private TMTG Convertible Notes derivative liabilities.

Interest Expense

Interest expense increased by approximately $793.3, or 39%, to $2,817.6 for the three months ended March 31, 2024 compared to $2,024.3 for the

three months ended March 31, 2023.

The increase was due primarily to accreted interest related to Private TMTG convertible promissory notes issued after March 31, 2023, with an aggregate principal amount of $10,955.0, and an increase in the

contractual interest rate on several Private TMTG convertible promissory notes from 5% to 10%.

Income Tax Expense

TMTG did not record an income tax benefit for the three months ended March 31, 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.

Liquidity and Capital Resources

Until the consummation of the initial public offering, our only source of liquidity was an initial purchase of Class B common stock by our sponsor and loans from our sponsor.

On September 8, 2021, we consummated the initial public offering 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 initial public offering, we 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.

Following the initial public offering and the sale of the placement units, a total of $293,250,000 was placed in a U.S.-based trust account, maintained by Continental, acting as trustee.

We 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.

For the nine months ended September 30, 2023, net increase in cash was $3,284,598 and was comprised of net cash used in operating activities of $1,702,985, net cash provided by investing activities and net cash provided by financing activities of $1,448,055.

Net cash used in operating activities of $1,702,985 consisted of a net loss of $20,006,348 and a change of accrued expense of $28,539,760, partially offset by interest earned on assets held in the Trust Account of $10,404,747.

Net cash provided by investing activities of $3,539,528 consisted of withdrawals to pay taxes and withdrawals for redemptions.

Net cash provided by financing activities of $1,448,055 consisted of proceeds from loans.

For the nine months ended September 30, 2022, net decrease in cash was $324,762 and was comprised of net cash used in operating activities of $897,582 and net cash provided by financing activities of $572,820.

Net cash used in operating activities of $897,582 consisted of a net loss of $6,277,860 partially offset by a change in accrued expenses of $5,586,968.

Net cash provided by financing activities of $572,820 consisted of proceeds from working capital loans and advances from related parties.

As of September 30, 2023, we had cash of $307,195,870 held in the Trust Account.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the trust account to complete our initial business combination.

We may withdraw cash to pay taxes.

To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As of September 30, 2023, we had cash of $3,285,587 outside of the Trust Account.

We intend to use the funds held outside the Trust Account primarily to complete the TMTG Business Combination, or if the TMTG Business Combination is not consummated, identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Account Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” as stated above, the Company has until September 8, 2024 to consummate a Business Combination.

It is uncertain that the Company will be able to consummate a Business Combination by this time.

If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company.

Additionally, the Company has incurred and expects to incur significant costs in pursuit of its acquisition plans.

The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements.

As a result, these factors raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Historically, Private TMTG financed operations primarily through cash proceeds from the Private TMTG Convertible Notes.

Our primary short-term

requirements for liquidity and capital are to fund general working capital.

TMTG’s principal long-term working capital uses include increasing its advertising and marketing exposure, expanding its internal marketing, engineering and product

teams, and developing and launching new products.

In connection with the development of TMTG’s first product, Truth Social, TMTG intends to continue funding initial app development requirements with cash on hand and

advertising revenues.

Longer term, TMTG’s expected liquidity and capital requirements will likely consist of business investments in strategic marketing initiatives as well as research and development needed to identify and launch additional

product opportunities.

TMTG expects to devote substantial resources to expand users for Truth Social and to maintain and enhance the systems necessary to support its growth.

Although TMTG anticipates that the net proceeds from the Business

Combination will be sufficient to fund its activities for the foreseeable future, TMTG cannot guarantee that it will not be required to obtain additional financing, or that additional financing, if needed, will be available on terms acceptable

to TMTG, or at all.

In addition, although there are no present binding understandings, commitments, or agreements with respect to any acquisition of other businesses, products, or technologies, TMTG will, from time to time, evaluate

acquisitions of other businesses, products, and technologies.

If TMTG is unable to raise additional equity or debt financing, as and when needed, it could be forced to forego such acquisitions or significantly curtail its operations.

As of March 31, 2024 and December 31, 2023, the cash and cash equivalents balance was approximately $273,729.2 and $2,572.7, respectively.

$271,156.5 increase in the Comapny’s cash and cash equivalents in the first quarter of 2024 is primarily due to $280,472.5 of aggregate cash proceeds from the Business Combination and the issuance of Private TMTG Convertible Notes.

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.

The following table shows our cash flows provided by (used in) operating activities, investing activities and financing activities for the stated

(in thousands)

For the three months ended

March 31, 2024

For the three months ended

March 31, 2023

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net Cash Used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2024 was approximately $9,316.0 compared to $3,774.5 used in operating

activities during the three months ended March 31, 2023.

The increase in cash used in operating activities was driven by $2,410.0 of cash bonuses and $3,419.3 of higher operating expenses related to the following expense categories:

insurance, accounting and finance, IT consulting costs, server costs, and marketing expenses.

Net Cash Used in Investing Activities

There were no cash flows from investing activities for the three months ended March 31, 2024 or 2023.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024 was approximately $280,472.5 compared to $0 provided by

financing activities for the three months ended March 31, 2023.

The increase was due to $7,455.0 of proceeds from the issuance of Private TMTG convertible notes and $273,017.5 of Merger proceeds.

Convertible Promissory Notes

Notes 1 to 7 were Convertible Promissory Notes issued from May 2021 through October 2021 with a cumulative face value of $5,340.0, maturity of 24

months from each respective issuance date and interest was accrued at 5% based on the simple interest method (365 days year) for each note.

Each of Notes 1-7 contemplated multiple plausible outcomes that include conversion upon a Qualified SPAC

Business Combination (“ SPAC ”) and at least one of the following conversion triggers:

Qualified Initial Public Offering (“ IPO ”), private equity transaction and/or change of control.

All outstanding principal of these Notes, together with all accrued but unpaid interest on such principal, will convert to

The number of shares of Company stock to be issued to the Lender upon conversion of the Notes in the event of a completed SPAC transaction 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, divided by $4.00.

In other, non-SPAC conversion scenarios, the number of shares of Company stock to be issued to the Lender upon conversion of the Notes was

variable based on the application of an automatic discounted share-settlement feature.

For Notes 1 and 2, the number of shares of Company stock to be issued to the Lender upon a non-SPAC conversion event would be the number of shares of 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 40% of the initial public offering price per share of a qualified initial public offering.

For Notes 3-7, the number of shares of Company stock to be issued to the Lender upon a non-SPAC conversion event would be the number of shares of 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 40% of (i) the initial public offering price per share of a qualified initial public offering, (ii) the price per share as determined by the valuation of the Company in connection

with a qualified private equity raise, or (iii) in the case of a change of control, the price per share determined in accordance with the Company’s then current fair value determined by an independent valuation firm.

Notes 8 to 12 were Convertible Promissory Notes issued from November 2021 through December 2021 with a cumulative face value of $17,500.0,

maturity of between 18 months and 36 months and interest was accrued at a range between 5% and 10% based on the simple interest method (365 days year) for each note.

Notes 8 to 12 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, US$21 or US$20 subject to

the respective conditions of the individual Notes;

provided, however, in the event that the stock price quoted for the Company on NASDAQ or The New York Stock Exchange (as applicable) at the time of the closing of the Qualified SPAC Business

Combination (the “ TMTG Stock Price ”) is less than either $50 per share, $42 per share, $40 per share subject to the respective conditions of the individual

Notes, then the Conversion Price would be reset to 50% of the then current TMTG Stock Price subject to a floor of $10 per share.

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 $18,360.0, 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 Qualified SPAC Business Combination (“ SPAC ”) merger agreement or

Qualified Initial Public Offering (“ 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 20 to 23 were Convertible Promissory Notes issued from November 2023 through March 2024 with a cumulative face value of $7,955.0, maturity

of 18 months and interest will be accrued at 10% based on the simple interest method (365 days year) for each note.

Notes 20 to 23 were convertible with the completion of a Qualified SPAC Business Combination (“ SPAC ”) merger agreement or Qualified Initial Public Offering (“ IPO ”).

The outstanding principal

of the Notes, 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 in the event of a SPAC transaction 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 US$10.

The number of shares of Company stock to be issued to the Lender upon

conversion of the Notes in the event of an IPO 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

50% of the IPO price per share.

Several of the Private TMTG Convertible Notes were amended, extended, and/or restated after their initial issuance and prior to their conversion.

Each Private TMTG Convertible Note that was issued and outstanding immediately prior to the Closing automatically converted immediately prior to

the effective time of the Closing into a number of shares of Private TMTG common stock as such Private TMTG Convertible Note would automatically have been converted into upon the Closing, in accordance with the Merger Agreement.

Additionally, pursuant to a note purchase agreement entered into by and between Digital World and certain institutional investors on February 8,

2024 (the “ Note Purchase Agreement ”), Digital World agreed to issue up to $50,000.0 in convertible promissory notes (the “ DWAC Convertible Notes ”).

The DWAC Convertible Notes:

(a) accrue interest at an annual rate of 8.00% and are payable on the earlier of (i) the date that is 12 months after the date on

which the Digital World consummates the Business Combination, which interest is not payable to the extent the holder exercises the conversion right and (ii) the date that the winding up of Digital World is effective (such date, the “ Maturity Date ”);

(b) are convertible (i) at any time following the consummation of the Business Combination, but prior to the Maturity Date, redemption or

otherwise the repayment in full of the DWAC Convertible Notes, at each holder’s option, in whole or in part, and subject to the terms and conditions of the DWAC Convertible Notes, including any required shareholders’ approval upon the

consummation of the Business Combination and (ii) into that number of common stock of the Company and warrants included in the units, each unit consisting of one share of common stock of the Company and one-half of one warrant of the Company

(the “ Conversion Units ”), equivalent to (A) the portion of the principal amount of the applicable DWAC Convertible Note (excluding any accrued interest,

which shall not be payable with respect to the DWAC Convertible Note that was converted) being converted, divided by (B) $8.00 (the “Conversion Price”);

all common stock of the Company issuable to the holders has been registered with the SEC, by providing a 10-day notice of such redemption (the “ Redemption Right ”),

which Redemption Right is contingent upon the trading price of the common stock of the Company exceeding 130% of the applicable conversion price on at least 3 trading days, whether consecutive or not, within the 15 consecutive trading days

ending on the day immediately preceding the day on which a redemption notice is issued by the Company;

(d) are initially drawable for 20% of the applicable investor’s commitment amount and a final drawdown for the remaining 80% to occur upon

the closing of the Business Combination , with the proceeds of such final drawdown to be deposited into a control account as indicated by the Company (the “ Control

The proceeds from such final drawdown deposited into the Control Account will remain therein and may not be withdrawn by the Company until such time as (i) the Company exercises the Redemption Rights using the proceeds in

the Control Account, (ii) any portion of the applicable DWAC Convertible Note has been converted, at which time such portion shall be released from the Control Account or (iii) if prior to the conversion, a resale registration statement of the

Company covering all common stock issued pursuant to the DWAC Convertible Note has been declared effective by the SEC;

(e) are subject to specified events of default;

and (f) have registration rights pursuant to the registration rights

agreement entered into by the Company and the parties thereto as of September 2, 2021.

In addition, pursuant to warrant subscription agreements (each a “ Warrant Subscription Agreement ”) entered into by and between Digital World and certain institutional investors on February 7, 2024, Digital World agreed to issue an aggregate of 3,055,000 warrants (“ Post-IPO Warrants ”), each warrant entitling the holder thereof to purchase one share of common stock of the Company for $11.50 per share.

The Post-IPO Warrants were issued concurrently

with the closing of the Business Combination, and have substantially the same terms as the public warrants issued by Digital World in connection with its initial public offering, except that such Post-IPO Warrants may only be transferred to the

applicable holder’s affiliates.

Liquidity and Going Concern

Private TMTG commenced operations on February 8, 2021, and began the initial launch of its social media platform in the first quarter of 2022.

October of 2021, Private TMTG entered into a definitive merger agreement with Digital World.

The companies consummated the merger on March 25, 2024.

Company operations consumed $47,048.0 of cash from February 8, 2021 (inception) through March 31, 2024, primarily funded by $48,155.0 of proceeds

(net of repayments) from the issuance of the Private TMTG Convertible Notes.

The March 25, 2024 Closing triggered the automatic conversion of the Private TMTG Convertible Notes to Private TMTG common stock immediately prior to such closing, thus

eliminating the liability.

Concurrently, Private TMTG received $273,017.5 of net cash proceeds from the Business Combination, comprised of $233,017.5 of cash and $40,000.0

of restricted cash.

Prior to Closing, on February 8, 2024, Digital World agreed to issue up to $50,000.0 of DWAC Convertible Notes to certain institutional investors pursuant to the Note Purchase Agreements.

Principal plus accrued interest on

the DWAC Convertible Notes is due in March 2025, if the DWAC Convertible Notes have not been converted to common stock of the Company.

In accordance with the Note Purchase Agreement, Digital World received $10,000.0 of proceeds (from these notes)

prior to Closing, and the Company received the remaining $40,000.0 immediately after Closing.

The $40,000.0 of post-merger cash proceeds is held in a restricted account and will be released upon satisfaction of certain conditions, including the

registration of the underlying shares.

As a result, the Company had a total of $273,729.2 in cash (including restricted cash) and $50,157.8 of convertible promissory notes outstanding as of March 31, 2024.

Private TMTG has experienced operating losses in preceding years and in the first quarter of 2024.

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 three months ended March 31, 2024, and 2023, the Company had negative operating cash

flows of $9,316.0 and $3,774.5, 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 receipt of proceeds from the Business Combination detailed above, and the resulting positive working capital position (i.e., $274,101.1 of current assets less $60,284.8 of current liabilities,

including $ 50,157.8 of convertible notes as of March 31, 2024), management believes there is not substantial doubt regarding the Company’s ability to continue as a going concern as of March 31, 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

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2023.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Digital World Convertible Notes, and each of Renatus and an affiliate of our sponsor a monthly fee of $15,000 for office space, administrative and support services to us.

We will incur these fees monthly until the earlier of the completion of our initial business combination and our liquidation.

The underwriters are entitled to a deferred fee of $0.35 per unit, or $10,062,500 in the aggregate.

The deferred fee will become payable to the underwriters solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies and Estimates

Class A Common Stock Subject to Possible Redemption

We account for our Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” 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 our control) is classified as temporary equity.

At all other times, shares of common stock are classified as stockholders’ equity.

Our shares of Class A common stock feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events.

Accordingly, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our condensed interim balance sheets.

Derivative Financial Instruments

The Company evaluates 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.

The Company accounts for the warrants in accordance with the guidance contained in ASC 815-40.

The Company has determined that the warrants qualify for equity treatment in the Company’s financial statements.

As of March 31, 2024, TMTG did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect

on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

The term “off-balance sheet arrangement” generally means

any transaction, agreement or other contractual arrangement to which an entity unconsolidated with TMTG is a party, under which it has any obligation arising under a guaranteed contract, derivative instrument or variable interest or a retained or

contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business.

Market risk represents the risk of loss that may impact our financial

position due to adverse changes in financial market prices and rates.

Our market risk exposure is primarily interest rates, access to credit and funds to run day-to-day operations, and the result of fluctuations in foreign currency exchange rates

if we expand internationally.

Failure to mitigate these risks could have a negative impact on revenue growth, gross margin, and profitability.

Interest Rate Risk

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.

As of March 31, 2024 and 2023, effectively all of our cash and cash equivalents were maintained with a large financial institution.

reviewed the financial statements of our banking institution and believe it currently has sufficient assets and liquidity to conduct its operations in the ordinary course of business with little or no credit risk to us.

As of March 31, 2024 and 2023, two advertising partners each individually represented in excess of 5% of accounts receivable.

Emerging Growth Company Status

In April 2012, the JOBS Act was enacted.

Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended

transition period for complying with new or revised accounting standards.

Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

TMTG has elected

to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies.

As a result of the accounting standards

election, TMTG will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of our financials to those of other public

companies more difficult.

Critical Accounting Policies and Significant Management Estimates

TMTG prepares its financial statements in accordance with GAAP.

The preparation of financial statements also requires TMTG to make estimates and

assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.

TMTG bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under

the circumstances.

Actual results could differ significantly from the estimates made by TMTG’s management team.

To the extent that there are differences between TMTG’s estimates and actual results, its future financial statement presentation,

balance sheet, results of operations and cash flows will be affected.

TMTG believes that the accounting policies discussed below are critical to understanding its historical and future performance, as these policies relate to the more significant

areas involving our management team’s judgments and estimates.

Critical accounting policies and estimates are those that TMTG considers the most important to the portrayal of its balance sheet and results of operations because they require its

most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

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 three months ended March 31, 2024 and 2023, included in this Quarterly

TMTG’s critical accounting policies are described below.

Revenue Recognition.

TMTG records revenue in accordance with ASC 606.

TMTG determines the amount of

revenue to be recognized through application of the following steps – Identification of the contract, or contracts with a customer;

- Identification of the performance obligations in the contract;

- Determination of the transaction price;

Allocation of the transaction price to the performance obligations in the contract;

- Determining whether TMTG is the principal or the agent in arrangements where another party is involved in providing specified services to a customer;

Recognition of revenue when or as TMTG satisfies the performance obligations.

Private TMTG entered into advertising contractual arrangements with advertising manager service companies.

The advertising manager service

companies provide advertising services to customers that facilitate the placement of ads on the Truth Social platform.

TMTG determines the number of Ad Units available on its Truth Social platform.

The advertising manager service companies have

sole discretion over the terms of the auction and all payments and actions associated therewith.

Prices for the Ad Units are set by an auction operated and managed by these third-party companies.

TMTG has the right to block specific advertisers

at its sole reasonable discretion, consistent with applicable laws, rules, regulations, statutes, and ordinances.

TMTG is an agent in these arrangements, and recognizes revenue for its share in exchange for arranging for the specified advertising

to be provided by the advertising manager service companies.

The advertising revenues are recognized in the period when the advertising services are provided.

TMTG determined that the contractual arrangements with Rumble and TAME, respectively, are agency arrangements as determined by ASC 606-10-55.

Rumble is an advertising manager service involved in providing advertising services through its Ad Manager Service Platform on the Truth Social

website to customers.

Rumble will make Truth Social Ad Units available for purchase by advertisers on the Ad Manager Service.

TMTG determines the number of Ad Units available on its Truth Social website.

TMTG determined that the nature of its

promise is to arrange for advertising services to be provided by Rumble.

The distinct service is selling advertising space for the placement of advertisements (“Ads”) on Truth Social and not combined with any other service as contemplated in

paragraph ASC 606-10-55-36.

In evaluating the nature of its promise (as described in paragraph 606-10-55-36), TMTG determined that Rumble has sole discretion over the terms

of the auction and all payments and actions associated therewith.

Prices for the Ad Units will be set by an auction operated and managed by Rumble.

Rumble therefore controls (as described in paragraph ASC 606 -10-25-25) each specified Ad unit

used by the customer.

The services are not combined with any other services as contemplated in paragraph ASC 606-10-25-21(a).

ASC 606-10-55-38 is applicable as TMTG is an agent, its performance obligation is to arrange for the provision of advertising by Rumble.

not control the advertising provided by Rumble to satisfy the customer’s requirements.

TMTG therefore recognizes revenue in the amount of its share in exchange for arranging for the specified advertising to be provided by Rumble.

reduced by any costs incurred by Rumble.

The requirements of ASC 606-10-55-37 are not applicable as TMTG does not obtain control as outlined in this section.

Also refer to the analysis of control indicators in ASC 606-10-55-39.

ASC 606-10-55-39

(indicator of control before advertising is sold to customers) is not applicable due to:

Rumble and not TMTG is primarily responsible for fulfilling the promise to provide the specified advertising;

the Company has no inventory risk related to

advertising used by a customer or TMTG has no discretion in establishing the price for the specified advertising.

ASC 606-10-55-40 is not applicable as no principal obligations were transferred.

The TAME contractual arrangement is significantly smaller in financial scope than the Rumble arrangement;

however, the nature of the promise is

similar for both vendors.

TAME also has discretion over the terms of the auction and all payments and actions associated therewith.

ASC 606-10-55-38 is therefore applicable, and the Company recognizes revenue in the amount of its share in

exchange for arranging for the specified advertising to be provided by TAME.

ASC 606-10-55-39 is not applicable for similar reasons as outlined in the preceding paragraph.

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 three months ended March 31, 2024.

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 three months ended March 31, 2024.

Stock Based Compensation .

TMTG measures the cost of services received

in exchange for an award of equity instruments based on the fair value of the award.

The fair value of the award is measured on the grant date for equity classified instruments, and liability classified awards are subject to remeasurement in

accordance with ASC 718.

Awards granted to directors are treated on the same basis as awards granted to employees.

Income Taxes .

TMTG is subject to income taxes in the United States.

Significant judgment is required in

determining its provision (benefit) for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

Income taxes are accounted for under the asset and

liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases

and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

TMTG recognizes the effect of income tax positions only if those positions are more likely

than not of being sustained.

Income tax amounts are therefore recognized for all situations where the likelihood of realization is greater than 50%.

Changes in recognition or measurement are reflected in income tax expense in the period in which

the change in judgment occurs.

Accrued interest expense and penalties related to uncertain tax positions are recorded in income tax expense.

Convertible Promissory Notes .

Private TMTG issued the Private TMTG Convertible Notes, which contained a

range of fixed rate conversion features, whereby the outstanding principal and accrued interest would be converted into common shares at a fixed discount to the market price of the Common Stock at the time of conversion.

The Private TMTG

Convertible Notes represented a financial instrument other than an outstanding share that embodies a conditional obligation that Private TMTG must or may have settled by issuing a variable number of its equity shares.

The bifurcated embedded

features of the convertible promissory notes were initially recorded on the balance sheet at their fair value on the date of issuance.

After the initial recognition, the fair value of the convertible promissory notes (derivative feature

component) may have changed over time due to changes in market conditions.

The change in fair market value was included in the statement of operations.

The liability component of the bifurcated convertible promissory notes (net of any related

debt issuance costs) accreted interest using the respective effective interest rate method until maturity.

Fair Value of Financial Instruments .

TMTG uses a three-tier fair value hierarchy, which prioritizes the

inputs used in the valuation methodologies in measuring fair value:

Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Significant other inputs that are directly or indirectly observable in the marketplace.

Significant unobservable inputs which are supported by little or no market activity.

The derivative liability component of Private TMTG Convertible Notes were classified as Level 3 due to significant unobservable inputs.

Historically, the estimated fair value of the conversion feature of the derivative liability has been based on traditional valuation methods including Black-Scholes option pricing models and Monte Carlo simulations.

Use of Estimates.

The preparation of financial statements in accordance with U.S.

GAAP requires TMTG to

make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the

reporting period.

Actual results could differ from those estimates.

Material estimates include assumptions used in the fair value of equity instruments, the valuation allowance against deferred tax assets, and the estimates of fair value of

derivative liabilities.

Recent Accounting Pronouncements

See Note 2 to TMTG’s unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Internal Control over Financial Reporting

The TMTG management team is responsible for establishing and maintaining adequate internal controls over financial reporting, as defined in Rule

13a-15(f) under the Securities Exchange Act of 1934, as amended.

These controls are designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles as applicable in the United States.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that accurately and fairly

reflect TMTG’s transactions, provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles, and that expenditures are

made only in accordance with authorizations of our management team as determined by our chart of authority.

TMTG fosters a strong control environment by the management team’s tone at the top, clearly defined organizational structure, robust communication

channels, and assignment of authority and responsibilities.

TMTG has also implemented specific procedures and policies which include both preventive (e.g., approvals and authorizations) and detective (e.g., reconciliations and reviews) control

TMTG performs monitoring activities which involve ongoing reviews and evaluations to ensure that controls are working as intended.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect

all errors or acts of fraud.

We regularly review our system of internal control over financial reporting to ensure compliance and to address any deficiencies or weaknesses that may arise.

Private TMTG’s management identified a material weakness in its internal control over financial reporting in Private TMTG’s financial statements

for the years ended December 31, 2021 and 2022.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of an

entity’s financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified by Private TMTG management related to material errors over its financial reporting, which required the restatement of its

financial statements for the years ended December 31, 2021 and 2022.

Specifically, Private TMTG’s management determined the material weaknesses related to a material error in classifying income from a licensing arrangement in 2021 as net sales

from related parties rather than the proper classification as other income from related parties.

Private TMTG’s management determined that the restatement matters primarily related to its failure to design and maintain formal accounting policies,

processes, and controls to analyze, account for and properly disclose income recordation as well as a need for additional accounting personnel who have the requisite experience in SEC reporting regulation.

TMTG is committed to remediating the material weaknesses described above and continuing remediation efforts during 2024.

TMTG intends to initiate

and implement several remediation measures including, but not limited to hiring additional accounting staff with the requisite background and knowledge, engaging third parties to assist in complying with the accounting and financial reporting

requirements related to significant and complex transactions as well as adding personnel to assist TMTG with formalizing its business processes, accounting policies and internal control documentation, strengthening supervisory reviews by our

management team, and evaluating the effectiveness of its internal controls in accordance with the framework established by Internal Control - Integrated Framework

(2013) published by the Committee of Sponsoring Organizations of the Treadway Commission.

Although TMTG intends to pursue the remediation efforts mentioned above, all identified material weaknesses continue to exist as of the date of

this Quarterly Report.

Interest Rate Fluctuation Risk

TMTG’s investment portfolio may consist of short-term and long-term interest-bearing obligations, including government and investment-grade debt

securities and money market funds.

These securities may be classified as available-for-sale and, consequently, would be recorded on the unaudited condensed consolidated balance sheets at fair value with unrealized gains or losses reported as a

separate component of accumulated other comprehensive income (loss), net of tax.

TMTG’s investment policy and strategy will be focused on the preservation of capital and supporting its liquidity requirements.

TMTG does not intend to enter into

investments for trading or speculative purposes.

Foreign Currency Exchange Risk

Transaction Exposure

TMTG may transact business in various foreign currencies and have international revenue, as well as costs denominated in foreign currencies.

may expose us to the risk of fluctuations in foreign currency exchange rates.

Accordingly, changes in exchange rates, and in particular a strengthening of the U.S.

dollar, could negatively affect our revenue and other operating results as

expressed in U.S.

Financial Market Risk

The primary objective of any investment activities is to preserve principal, while at the same time maximizing income we receive from investments

without significantly increased risk.

Some of the securities TMTG may invest in may be subject to market risk.

This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate.

For example, if

TMTG holds a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the value of its investment will decline.

To minimize this risk in the future, TMTG may maintain its

portfolio of cash equivalents and investments in a variety of securities, including (but not limited to):

commercial paper, money market funds, government and non-government debt securities and certificates of deposit.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis