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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-04-01 · 732 added, 111 removed, 4 unchanged (100% of the section changed)

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

The following discussion and analysis of Digital World’s financial condition and results of operations should be read in conjunction with Digital World’s financial statements and

related notes that appear elsewhere in this Report.

In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, assumptions and other factors that could

cause actual results to differ materially from those made, projected or implied in the forward-looking statements.

Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and

elsewhere, particularly in the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of this Report.

Unless otherwise indicated or the context otherwise requires, references in this section to “we,” “our,” “us” and other

similar terms refer to Digital World before the Business Combination.

Digital World was formed as a blank check company under the laws of the State of Delaware on December 11, 2020 for the

purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar initial business combination with one or more businesses.

Digital World intended to effectuate its initial

business combination using cash from the proceeds of its initial public offering and the sale of the Placement Units, our capital stock, debt or a combination of cash, stock and debt.

Recent Development

In February 2024, Digital World issued Digital World Convertible Notes to certain accredited investors in the aggregate principal amount of up to $770,000.

The proceeds of the

promissory notes are expected to be used to pay costs and expenses in connection with completing the Business Combination.

Of such Digital World Convertible Notes (i) $620,000 have a conversion price of $10.00 per Working Capital Unit

and (ii) $150,000 have a conversion price of $8.00 per Working Capital Unit.

The issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

On February 7, 2024, Digital World entered into warrant subscription agreements with certain

institutional investors for the issuance of the Digital World Alternative Warrants in settlement of the terminated PIPE Investment.

Each such warrant entitles the holder thereof to purchase one share of Digital World Class A common

stock for $11.50 per share.

Digital World issued the Digital World Alternative Warrants concurrently with the closing of the Business Combination, and such warrants had substantially the same terms as the Public Warrants issued by

Digital World in connection with its IPO, except that such Digital World Alternative Warrants may only be transferred to the applicable holder’s.

On February 8, 2024, Digital World entered into a subscription agreement with certain institutional

investors for the issuance of the Digital World Alternative Financing Notes, issuing $10,000,000 in Digital World Alternative Financing Notes to such institutional investors.

Digital World issued the remaining up to $40,000,000 of

such Digital World Alternative Financing Notes concurrently with the Closing of the Business Combination on March 25, 2024.

The Digital World Alternative Financing Notes:

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 Digital World (the “Control Account”).

The proceeds from

such final drawdown deposited into the Control Account shall remain therein and may not be withdrawn by Digital World until such time as (i) Digital World exercises the Alternative Notes Redemption Right using the proceeds

in the Control Account, (ii) any portion of the applicable Digital World Alternative Financing 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 Digital World covering all common stock issued pursuant to the Digital World Alternative Financing Notes has been declared effective by the SEC;

are subject to specified events of default;

have registration rights pursuant to the registration rights agreement entered into by Digital World and the parties thereto as of September 2, 2021.

As of December 31, 2023, Digital World had approximately $395,011 in cash.

Digital World incurred significant costs in

the pursuit of the Business Combination.

On March 25, 2024 the Business Combination was consummated.

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with

our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, and for the year ended December 31, 2022, and other information included elsewhere in this Annual Report.

This discussion contains

forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from such forward-looking statements.

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 “Special Note Regarding Forward-Looking Statements” included elsewhere in this report.

Additionally, our historical results are not necessarily indicative

of the results that may be expected in any future period.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” to “TMTG,” “we,” “us,” “our,” and the “Company” are intended to refer to (i) following the Business Combination, the business and operations of Trump Media & Technology Group Corp.

and its consolidated subsidiaries, and (ii)

prior to the Business Combination, Private TMTG (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.

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

TMTG ended 2024 with $776,783.4 of cash, cash equivalents, and short-term investments, as well as

$9,616.7 of debt (excluding lease liabilities) arising from the WCT transaction.

TMTG aspires to build a media and technology powerhouse to rival the liberal media consortium and promote free expression.

founded to fight back against the Big Tech companies-Meta (Facebook, Instagram, and Threads), X (formerly Twitter), Netflix, Alphabet (Google), Amazon and others-that it believes have colluded to curtail debate in America and censor voices

that contradict “woke” ideology.

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

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.

is a public, real-time platform where any user can create content, follow other users, and engage in an open and honest global conversation without fear of being censored or cancelled due to their political viewpoints.

TMTG does not

restrict whom a user can follow, which it believes will greatly enhance the breadth and depth of available content.

Additionally, users can be followed by other users without requiring a reciprocal relationship, enhancing the ability of

TMTG users to reach a broad audience.

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.

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

In accordance with Truth Social’s terms of service, illegal and prohibited content includes, but is not limited to a) sexual content or language;

b) content that includes sexual activity, sexual intercourse or any type of sexual

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.”

During 2024, our capitalization was significantly enhanced through receipt of Business Combination proceeds and proceeds from the

issuance of common stock described in detail in the section below titled, “ Standby Equity Purchase Agreement .” As a result, we ended 2024 with $776,783.4 of cash, cash equivalents, and short-term

investments and just $9,616.7 of debt (excluding lease liabilities).

Private TMTG conducted extensive technological due diligence and testing regarding a particular, state-of-the-art technology that

supports video streaming and provides a “home” for cancelled content creators, and which TMTG has worked to acquire and incorporate into its product offerings and/or services as soon as practicable.

On April 16, 2024, TMTG announced that,

after nine months of testing on its Web and iOS platforms, the Company has finished the research and development phase of a new live TV streaming platform and expects to begin scaling up its own content delivery network (“ CDN ”) branded as Truth+.

TMTG announced 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.

On August 7, 2024, TMTG announced that TV streaming

via Truth Social had become available via all three modalities.

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

As of October 21, 2024, TMTG had announced that Truth+

streaming had been released as a standalone product on Android, iOS, and Web.

Release Truth Social streaming apps for home TV.

As of October 23, 2024, TMTG had announced that Truth+ streaming had been released on

Apple TV, Android TV, and Amazon Fire TV.

On January 29, 2025, TMTG announced its financial technology strategy, which will include the launch of the financial services and FinTech brand

Truth.Fi, including the investment of up to $250 million to be custodied by Charles Schwab.

In addition to traditional investment vehicles, these funds may be allocated to customized separately managed accounts;

customized exchange-traded

and Bitcoin and similar cryptocurrencies or crypto-related securities.

Company Growth Strategy

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

Grow Truth Social.

TMTG believes that growth in

Truth Social’s user base will drive more unique content, which in turn will drive the viral, organic promotion of content on Truth Social, thereby attracting more platform partners and advertisers.

TMTG also plans to grow Truth Social

through the addition and refinement of user-friendly features — including the integration of video — and continued global expansion.

As Truth Social attracts more users, the value proposition for advertisers increases, thereby

incentivizing advertisers to develop unique and compelling content for the platform.

Increase Product Offerings and Services.

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

Pursue Strategic Acquisitions and/or Partnerships.

With cancel culture having swept through corporate America, businesses have faced increasing pressure to silence or disavow certain customers and/or have often taken controversial stands on political issues that alienated many consumers.

Concurrently, an increasing number of entrepreneurs are catering to conservatives across various industries.

TMTG will continue to explore opportunities to partner, merge with and/or acquire other participants in this growing America

First Economy that would benefit from TMTG’s technology and branding—and that are able to function effectively if TMTG evolves into a holding company with numerous, largely autonomous subsidiaries in a variety of industries.

Such initiatives and acquisitions are subject to material changes and risks, some of which are beyond TMTG’s control.

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

Key Factors Affecting Results of Operations

Executive & Consultant Promissory Notes

Private TMTG issued TMTG Executive & Consultant Promissory Notes to certain executives and consultants prior to the Closing Date.

The principal amounts of the executive notes were as follows:

$1,150.0 for Devin Nunes, our Chief Executive Officer, $4,900.0 for Phillip Juhan, our Chief Financial Officer, and $200.0 for Andrew Northwall, our former Chief Operating

Officer, and the aggregate amount of such notes for other executives and one former director of Private TMTG was $4,650.0.

Private TMTG was not required to pay any interest pursuant to such notes.

Upon the closing of the Merger, such notes

automatically converted in whole, without any further action by the holders thereof, into 1,090,000 shares of TMTG common stock.

In addition, the aggregate principal amount of other consultant notes totaled $7,500.0, which converted into

750,000 shares of TMTG common stock at Closing.

Restricted Stock Units and Shares for Services

TMTG granted 2,428,018 RSUs to executives of the Company for the year-ended December 31, 2024.

The Company recognized

$21,093.9 of compensation expense from the vesting of these RSUs based upon the fair value of the awards on their date of grant.

As of December 31, 2024,

unrecognized compensation expense related to non-vested equity grants was $61,313.1.

In October 2024, we issued 57,230 shares of our common stock to WCT pursuant

to achieving operational milestones related to the opening of our data centers that were compensatory in nature, due to project management services WCT provided related to opening our data centers outside the scope of our written

agreement with them.

Compensation expense totaling $1,659.8 was recorded based on the fair value of the common stock when the milestones were achieved.

Inflation and the Global Supply Chain

Currently the U.S.

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

Reserve, as well as its counterparts in other countries, have engaged in a series of interest rate hikes in an effort to combat rising inflation.

Although inflation did not have a significant impact on our results of operations for the

years ended December 31, 2024, 2023, and 2022, we anticipate that inflation will have an impact on our business going forward, including through a material increase in our cost of revenue and operating expenses in the coming years, if not

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.

President Donald J.

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

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

Trump bringing his former social media followers to TMTG’s platform.

In the event any of these, or other events, cause his followers to lose interest in his messages, the number of users of our platform could decline or not grow

as we have assumed.

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

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

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 competitors;

the safety and security of Truth Social;

and whether there is improper access to or disclosure of our users’ information, which could harm our reputation.

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

Social platform.

TMTG intends to use the funds available as a result of the Business Combination to catalyze growth, including through strategic investments in marketing, advertising sales, and new technologies as described above, while

continuing to prioritize feature development and user experience.

Private TMTG has historically incurred operating losses and negative cash flows from operating activities.

For the reasons described below, TMTG expects to continue to incur

operating losses and negative cash flows from operating activities for the foreseeable future, as it works to expand its user base, attracting more platform partners and advertisers.

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

Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on our business, financial

condition and results of operations.

The loss of the services of these key employees or our executive management members could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals

to replace such personnel on a timely basis or without incurring increased costs.

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

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 key performance indicators 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.

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 December 31, 2024, all revenue has been derived from the advertising of products and services on the Truth Social

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 USA, Inc.

(“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

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.

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.

For a description of TMTG’s revenue recognition policies, see Note 2, Significant Accounting Policies and Practices, in

TMTG’s consolidated financial statements as of and for the years ended December 31, 2024, 2023, and 2022 included in this Annual Report.

Cost of Revenue

Cost of revenue primarily encompasses expenses associated with generating advertising revenue, direct costs associated with the

acquisition and licensing of content, and streaming delivery costs of our CDN, excluding depreciation and amortization expense.

TMTG expects cost of revenue to increase significantly in the foreseeable future as it expands its Truth Social and Truth+ platforms.

Such increases will likely include investment in infrastructure and other direct costs such as revenue share expenses, allocated facility costs, and traffic acquisition costs (“TAC”).

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 Administration Expenses

General and administration 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 administration employees.

In addition, general and administration 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

Depreciation and Amortization Expense

Depreciation expense consists primarily of depreciation of computer software and computer equipment.

Amortization expense consists of

amortization of intangible assets.

Non-Operating Income and Other Items

Change in Fair Value of Derivative Liabilities

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 (Derivatives 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 converted.

Interest Expense

Interest expense consists of accreted interest expense on Private TMTG’s outstanding convertible promissory note obligations and assumed

debt from the WCT acquisition, amortization of deferred financing costs, other related financing expenses and the post-merger interest expense related to DWAC’s Note Purchase Agreements.

The convertible promissory notes (net of any related

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

Interest Income

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

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.

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 may be limited as per IRC Section 382.

Results of Operations

Digital World neither engaged in any operations nor generated any revenues through the Closing Date.

Its activities

from inception through December 31, 2023 were organizational activities and those necessary to prepare for Digital World’s IPO and the search for targets for the Business Combination, including the Merger with TMTG.

Digital World

did not expect to generate any operating revenues until after the completion of the Business Combination.

Digital World generated non-operating income in the form of interest income on marketable securities held.

Digital World

incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence in connection with its search for targets for its initial business

For the year ended December 31, 2023, Digital World had a net loss of $21,890,641, which consists primarily of

formation and operating expenses of $12,523,232, legal investigations expense of $19,671,581 and income taxes of $3,548,603, partially offset by income on the trust assets of $13,852,774.

The increase in legal investigations expense

is primarily due to the $18.0 million settlement with SEC.

The increase in income on the trust assets is due to the increase in interest rates.

For the year ended December 31, 2022, Digital World had a net loss of $15,642,548, which consists of formation and

operating expenses of $8,916,023, legal investigations expense of $10,004,519 and income taxes of 979,475, partially offset by income on the trust assets of $4,257,469.

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

the years ended December 31, 2024 and 2023, together with the related notes thereto, included elsewhere in this Annual Report.

This section includes a comparison of certain 2024 financial information to the same information for 2023, and a comparison of 2023 financial information to

the same information for 2022.

Comparison of the years ended December 31, 2024 and 2023.

The following table sets forth our consolidated statements of operations for the years ended December 31, 2024 and 2023, and the dollar and percentage change

between the two periods:

(in thousands)

For the year-ended

December 31, 2024

For the year-ended

December 31, 2023

Operating costs and expenses:

Cost of revenue

Research and development

Sales and marketing

General and administration

Depreciation and amortization

Total operating costs and expenses

(in thousands)

For the years-ended

December 31, 2024

For the years-ended

December 31, 2023

Loss from operations

Other income/(expense):

Interest income

Interest expense

Change in fair value of derivative liabilities

Loss on the conversion of convertible debt

Loss from operations before income taxes

Revenues decreased $512.3, or 12%, to $3,618.8 for the year ended December 31, 2024 compared to revenue of $4,131.1 for the year ended December 31, 2023.

significant portion of the decrease was attributable to a change in a revenue share agreement with one of our advertising partners, which was intended to improve our short-term, pre-Merger financial position.

Additionally, revenue has

varied as we selectively test a nascent advertising initiative on our Truth Social platform.

Cost of revenue

Cost of revenue increased $454.1, or 275%, to $619.0 for the year ended December 31, 2024 compared to $164.9 for the year ended December 31, 2023.

increase was primarily due to content license and data center lease costs that support our burgeoning Truth+ platform.

Research and development expense

Research and development expense increased $39,388.6 or 405%, to $49,104.3 for the year ended December 31, 2024 compared to $9,715.7 for the year ended

December 31, 2023.

The increase was primarily driven by $30,142.5 of non-cash stock-based compensation expense recorded in the first quarter of 2024 related to the issuance of convertible notes to certain vendors engaged in the

development of our live TV streaming platform, Truth+.

In addition, we experienced higher year-over-year consulting, salary, software, and server costs related to the implementation of Truth+.

Sales and marketing expense

Sales and marketing expense increased by $5,104.1, or 399%, to $6,383.7 for the year ended December 31, 2024 compared to $1,279.6 for the year ended December

The increase was primarily driven by a $4,064.6 increase in marketing expense following access to additional capital and a $600.0 bonus paid to an entity owned by a former director of and consultant to Private TMTG, as further

described herein.

General and administration expense

General and administration expense increased by $121,738.1, or 1,371%, to $130,616.8 for the year ended December 31, 2024

compared to $8,878.7 for the year ended December 31, 2023.

The increase was primarily due to merger related costs, including $80,661.9 of cash and non-cash stock-based awards to employees and vendors recorded throughout 2024 in connection

with mergers and acquisitions completed during the year.

Additionally, we experienced higher legal, insurance, software license, accounting, finance, and other merger-related costs.

Depreciation and amortization

Depreciation and amortization expense increased $2,874.3, or 4,823%, to $2,933.9 for the year ended December 31, 2024 compared to $59.6 for the year ended

December 31, 2023.

The increase in depreciation and amortization expense was due to the acquisition of software and hardware utilized to place our CDN into service as part of our launch of streaming video through Truth+.

Interest income

Interest income increased to $14,722.2 or 100%, for the year ended December 31, 2024 compared to $0.0 for the year ended December 31, 2023.

The increase was

due to interest earned in 2024 on cash holdings in a money market account and interest earned through repurchase agreements secured by U.S.

treasury securities.

Interest expense

Interest expense decreased by $36,339.3, or 92%, to $3,089.8 for the year ended December 31, 2024 compared to $39,429.1 for the year ended December 31, 2023.

The decrease was primarily due to the conversion of Private TMTG Convertible Notes to common stock, thus no longer accruing or accreting interest as compared for the year ended December 31, 2023.

Change in the fair value of derivative liabilities

The loss from the change in the fair value of the derivative liabilities of the Private TMTG Convertible Notes increased by $223,124.4, or 7,993%, to

$225,916.0 for the year ended December 31, 2024, compared to $2,791.6 for the year ended December 31, 2023.

All Private TMTG Convertible Notes were automatically converted into shares of our common stock immediately prior to 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.

there was no derivative liability recorded as of December 31, 2024, and there will no longer be future earnings adjustments pertaining to the Private TMTG Convertible Notes derivative liabilities.

Comparison of the years ended December 31, 2023 and 2022.

The following table sets forth TMTG’s consolidated statement of operations for the years ended December 31, 2023 and 2022, and the dollar and percentage

change between the two periods:

(in thousands)

For the year ended

Cost of revenue

Research and development

Sales and marketing

General and administration

Depreciation and amortization

Total operating costs and expenses

Loss from operations

Other income/(expense):

Interest expense

Change in fair value of derivative liabilities

Income/(loss) before income taxes

Revenues increased by $2,660.6, or 181%, to $4,131.1 for the year ended December 31, 2023 compared to revenue of $1,470.5 for the year ended December 31,

The increase was primarily the result of enhanced early-stage testing of a nascent advertising initiative on our Truth Social platform.

Cost of revenue

Cost of revenue increased by $110.4, or 203%, to $164.9 for the year ended December 31, 2023 compared to $54.5 for the year ended December 31, 2022.

increase was due to an increase in personnel-related expenses, which primarily reflects the allocation of a portion of salary expense for three of our employees who contributed to the early-stage testing of Truth Social’s nascent

advertising initiative.

Research and development expense

Research and development expense decreased by $3,917.4, or 29%, to $9,715.7 for the year ended December 31, 2023 compared to $13,633.1 for the year ended

December 31, 2022.

The decrease was due to significantly lower IT-related third-party consulting fees, server costs, and computer software costs.

Sales and marketing expense

Sales and marketing expense increased by $653.7, or 104%, to $1,279.6 for the year ended December 31, 2023 compared to $625.9 for the year ended December 31,

The increase was driven by a $859.8 increase in marketing expense, offset by a $206.2 decrease in marketing consultant costs.

General and administration expense

General and administrative expense decreased by $1,466.9, or 14%, to $8,878.7 for the year ended December 31, 2023 compared to $10,345.6 for the year ended

December 31, 2022, driven by a $1,358.4 aggregate decrease in rent, travel and entertainment expenses, staffing-related costs, and office supplies.

Depreciation and amortization

Depreciation and amortization expense was effectively unchanged at $59.6 for year ended December 31, 2023 compared to $58.7 for the year ended December 31,

Interest Expense

Interest expense increased by $37,390.4, or 1,834%, to $39,429.1 for year ended December 31, 2023 compared to $2,038.7 for the year ended December 31, 2022.

The increase was primarily due to the accreted interest (which adds to the balance) related to TMTG’s convertible promissory notes recorded as of December 31, 2023.

Change in the fair value of derivative liabilities

For the year ended December 31, 2023, the fair value of the derivative liability component of the TMTG Convertible Notes increased 23% to $18,402.9 from

$14,905.3 on December 31, 2022.

The higher value was primarily driven by a 17% increase in the underlying price of Digital World’s stock during the measurement period (from $15.00 at year-end 2022 to $17.50 at year-end 2023).

TMTG reported a related non-cash expense of $2,791.6 for the full year 2023.

For the year ended December 31, 2022, the fair value of the derivative liability component of the TMTG Convertible Notes decreased substantially.

value was primarily driven by a steep decline in the underlying price of Digital World’s stock during the measurement period.

The underlying stock price decreased 71% for the year ended December 31, 2022 (from $51.43 to $15.00).

result, TMTG reported related non-cash income of $75,809.9 for the full year 2022.

Liquidity and Capital Resources

Until Digital World’s IPO, Digital World’s only source of liquidity was an initial purchase of Class B common stock by

the Sponsor and loans from the Sponsor.

On September 8, 2021, Digital World consummated the IPO of 28,750,000 Units, at a price of $10.00 per Unit, generating

gross proceeds of $287,500,000.

Simultaneously with the closing of the IPO, Digital World consummated the sale of 1,133,484 Placement Units at a price of $10.00 per Placement Unit in a Private Placement to our Sponsor, generating

gross proceeds of $11,334,840.

Following the IPO and the sale of the Placement Units, a total of $293,250,000 was placed in the Trust

Digital World incurred $15,668,029 in transaction costs, including $3,593,750 of underwriting fees, $10,062,500 of deferred underwriting fees, fair value of representative shares of $1,437,500 and $574,279 of other offering

For the year ended December 31, 2023, cash used in operating activities was $5,135,588, which was primarily comprised of a net loss of $35,722,601 (excluding cash interest earned

on the Trust Account), partially offset by a net increase in operating liabilities of $30,587,013.

For the year ended December 31, 2022, cash used in operating activities was $1,455,883, which was primarily comprised of a net loss of $19,900,017 (excluding cash interest earned

on the Trust Account), partially offset by a net increase in operating liabilities of $18,444,134.

As of December 31, 2023, Digital World had cash of $310,623,083 held in the Trust Account.

Digital World

intended to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, to complete its initial business combination and to withdraw cash to pay taxes.

the extent that Digital World capital stock or debt was used, in whole or in part, as consideration to complete the Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance

TMTG's business, make other acquisitions and pursue our growth strategies.

On April 21, 2023, Digital World issued two promissory notes (one for $625,700 and the other for

$500,000) in the aggregate principal amount of $1,125,700 to the Sponsor to pay costs and expenses in connection with completing the Business Combination.

Each of the two notes bears no interest and is repayable in full upon the

earlier of (i) the date on which Digital World consummates its Business Combination and (ii) the date that the winding up of Digital World is effective.

At the election of the Sponsor and subject to certain conditions, all of the

unpaid principal amount of each of the two notes may be converted into Units of Digital World (the “Conversion Units”) immediately prior to the consummation of the Business Combination with the total Conversion Units so issued equal

(x) the portion of the principal amount of the respective note being converted divided by (y) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Units.

The issuances of the two notes were

made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

On June 2, 2023, Digital World issued two convertible notes to Renatus in the aggregate principal amounts of (a)

$2,000,000 and (b) $10,000,000.

The proceeds of the Notes were used to pay costs and expenses in connection with completing an initial business combination.

Swider, a current director of TMTG, is a founder and partner of

Historically, as a private company, we financed operations primarily through cash proceeds from the issuance of Private TMTG Convertible Notes.

our capitalization was significantly enhanced through receipt of Business Combination proceeds and proceeds from the issuance of common stock described in detail in the section below titled, “Standby Equity Purchase Agreement.” As a

result, we ended 2024 with $776,783.4 of cash, cash equivalents, and short-term investments and just $9,616.7 of debt (excluding lease liabilities).

Cash and cash equivalents consist of interest-bearing deposits held at financial

institutions.

Cash deposits are held at major financial institutions and are subject to credit risk to the extent those balances exceed applicable Federal Deposit Insurance Corporation (FDIC) limitations.

Short-term investments consist of a

repurchase agreement in which we loan our cash over 1 to 3 days to a seller in exchange for interest earned on debt securities collateralizing the loan.

The seller retains a beneficial interest in the securities serving as collateral.

Our primary short-term requirements for liquidity and capital are to fund general working capital and to invest in our strategic growth initiatives.

currently seek to (1) grow our initial product, Truth Social;

(2) increase its product offerings and services, including through further development of its streaming technology platform, Truth+;

and (3) pursue strategic acquisitions and/or

partnerships.

We intend to fund these activities through a combination of deploying cash on hand, generating advertising, subscription, and fee-based revenues, issuing equity, and/or selling stock pursuant to that certain Standby Equity

Purchase Agreement dated July 3, 2024.

Although we anticipate that the current cash on hand will be sufficient to fund our operations for the foreseeable future, we cannot guarantee that we will

not be required to obtain additional financing, or that additional financing, if needed, will be available on terms acceptable to us, or at all.

In addition, although there are no other present binding understandings, commitments, or

agreements with respect to any acquisition of other businesses, products, or technologies, we will, from time to time, evaluate acquisitions of other businesses, products, and technologies.

If we are unable to raise additional equity or

debt financing, as and when needed, we could be forced to forego such acquisitions or significantly curtail our operations.

The following table shows our cash flows for the stated periods:

(in thousands)

For the year ended

December 31, 2024

For year ended

December 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 year ended December 31, 2024 was $60,982.7 compared to $9,733.5 used in operating activities during the year

ended December 31, 2023.

The increase in cash used in operating activities was primarily driven by $52,717.5 of higher cash expenses (including higher general and administration, research and development, and marketing expenses).

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 was $618,581.1 compared to $2.2 used in investing activities during the year ended

December 31, 2023.

The substantial increase was due to the following:

$606,547.3 of cash outflows to short-term investments, a $7,000.0 cash payment related to the acquisition of WorldConnect Technologies, and $5,033.8 of cash disbursements

primarily related to placing our data centers into service.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 was $847,227.2 compared to $2,500.0 provided by financing activities for the

year ended December 31, 2023.

The increase was due to cash proceeds of $233,017.5 from the merger with DWAC, $47,455.0 from the issuance of convertible notes, $119,788.8 from the exercise of warrants, and $446,965.9 from the issuance of

common stock (net of repurchases of $2,908.7).

Cash Flows for the Years Ended December 31, 2023 and 2022

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

(in thousands)

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 year ended December 31, 2023, was $9,733.5 compared to $24,201.5 used in operating activities during the period

ended December 31, 2022.

The decrease in cash used in operating activities was driven by a $7,279.9 lower operating loss in 2023 compared to 2022.

The lower operating loss resulted from $2,660.6 of higher revenue and $4,729.7 of lower

operating expenses (driven primarily by lower IT-related third-party consulting fees, server costs, computer software costs, rent, travel and entertainment expenses, and staffing-related costs).

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2023 was $2.2, a decrease of $82.3 from cash used in investing activities of $84.5 for

the year ended December 31, 2022.

The decrease was primarily due to lower purchases of furniture, fixtures, and equipment in 2023 compared to 2022.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2023, was $2,500.0 compared to $15,360.0 provided by financing activities for the

year ended December 31, 2022.

The decrease was primarily due to a lower dollar amount of issuance of the TMTG Convertible Notes in 2023 compared to 2022.

Private TMTG Convertible Notes

Notes 1 to 7 were issued from May 2021 through October 2021 with a cumulative face value of $5,340.0 (including $240.0 of debt issuance costs), 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 to 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, 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 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 to 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 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 issued from January 2022 through March 2022.

Note 19 was issued on August 23, 2023.

Notes 13 to 19 were Convertible Promissory Notes

issued with a cumulative face value of $17,360.0 (net of repayments), maturity of 18 months and interest will be accrued at a range between 5% and 10% based on the simple interest method (365 days year) for each note.

Notes 13 to 19 were

convertible simultaneously with the completion of a SPAC merger agreement or IPO.

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

The number of shares of

Company stock to be issued to the Lender upon conversion of the Notes would be the number of shares of the Company Stock (rounded to the nearest whole share) equal to the quotient of:

(a) the principal plus accrued interest on the Notes

then outstanding (b) divided by either US$25 or US$21 subject to the respective conditions of the individual notes.

Notes 20 to 23 were 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 SPAC merger agreement 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

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 Agreements”), Digital World issued $50,000.0 in convertible promissory notes (the “DWAC Convertible Notes”).

The DWAC Convertible Notes:

(a) accrued 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 consummated 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 was effective (such date, the “Maturity Date”);

(b) were 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 shares 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”);

(c) could have been redeemed by the Company, in whole or in part, commencing on the date on which 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 was 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) were 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 deposited into a control account as indicated by the Company (the “Control

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

Control Account, (ii) any portion of the applicable DWAC Convertible Note was 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 Notes had been declared effective by the SEC.

The DWAC Convertible Notes were subject to specified events of default and had registration rights pursuant to the

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

Following the effectiveness on June 18, 2024, of a resale registration statement covering all common stock issued pursuant to the

DWAC Convertible Notes, all such notes were converted on or before June 20, 2024.

The proceeds of the final drawdown were released from the Control Account on July 1, 2024.

Standby Equity Purchase Agreement

On July 3, 2024, we entered into the Standby Equity Purchase Agreement (“SEPA”), pursuant to which we shall have the right, but not the obligation to sell up

to $2,500,000.0 of our common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA.

The per share subscription price is 97.25% of the Market Price during a one or three-day pricing period elected by us.

The “Market Price” is defined in the

SEPA as the lowest daily volume weighted average price (“VWAP”) during the one trading day, in the case of a one-day pricing period or of the three consecutive trading days, in the case of a three-day pricing period.

There is no upper

limit on the subscription price per share that could be paid for the shares.

During the year-ended December 31, 2024, we sold 20,330,365 shares of our common stock for prices between $14.31 and $36.98 per share, pursuant to the terms

Proceeds of these equity sales under the terms of the SEPA were $449,874.6 (net of $513.5 of deferred offering costs).

Off-Balance Sheet Arrangements

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

Contractual Obligations

Digital World did not have any long-term debt, capital lease obligations, operating lease obligations or long-term

liabilities as of December 31, 2023.

Critical Accounting Policies and Estimates

Digital World Class A Common Stock Subject to Possible Redemption

Digital World accounted for Digital World Class A

common stock subject to possible Redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Digital World Class A common stock subject to mandatory

Redemption is classified as a liability instrument and is measured at fair value.

Conditionally redeemable common stock (including common stock that features Redemption Rights that is either within the control of the holder or

subject to Redemption upon the occurrence of uncertain events not solely within Digital World's control) is classified as temporary equity.

At all other times, shares of common stock are classified

as stockholders’ equity.

Shares of Digital World Class A common stock feature certain Redemption Rights that are considered to be outside of Digital World's control and subject to occurrence of uncertain future events.

Accordingly, Digital World Class A common stock subject to possible Redemption is presented as temporary equity, outside of the stockholders’ equity

section of Digital World's condensed interim balance sheets.

Derivative Financial Instruments

Digital World evaluated its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC

Topic 815, “Derivatives and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Digital World accounts for the Warrants in accordance with the guidance contained in ASC 815-40.

Digital World has determined that the Warrants qualify for equity treatment in Digital World’s financial statements.

Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

As of December 31, 2024 and 2023, we had no off-balance sheet arrangements that had, or are reasonably likely to have, a current or future effect on our

financial statements.

Critical Accounting Policies and Significant Management Estimates

We prepare our financial statements in accordance with GAAP.

The preparation of financial statements also requires us to make estimates and assumptions that

affect the reported amounts of assets, liabilities, revenue, costs and expenses, as well as the related disclosure of contingent assets and liabilities.

We base our 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 our management team.

To the extent that there are differences between our estimates and actual results, its future

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

We believe 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 judgments and estimates.

Critical accounting policies and estimates are those that we consider 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.

Of our significant accounting policies, which are described in Note 2 to our financial statements, the following accounting policies and specific estimates

involve a greater degree of judgement and complexity.

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and operating results.

Revenue Recognition .

We record revenue in accordance with ASC 606.

enter 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 our Truth Social

We determine the number of Ad Units available on our Truth Social platform.

The advertising manager service companies have sole discretion over the terms of the auction and all payments and actions associated therewith.

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

We have the right to block specific advertisers at its sole reasonable discretion, consistent with applicable laws, rules, regulations, statutes,

and ordinances.

We are an agent in these arrangements, and recognize revenue for our 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 on a net basis.

See Note 2 to our consolidated financial statements for additional information regarding revenue recognition and unearned revenue.

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 periods present.

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

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

Costs capitalized for developing such software applications were not material for the periods presented.

Stock Based Compensation .

We measure 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.

Acquisitions.

We determine whether substantially all of the fair value

of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.

If this threshold is met, the single asset or group of assets, as applicable, is accounted for as an asset acquisition.

threshold is not met, further assessment is undertaken to ascertain whether the acquisition meets the definition of a business.

We include the results of operations of acquired businesses in our financial statements as of the respective dates of acquisition.

Accounting for business

acquisitions requires us to make significant estimates and assumptions, especially at the acquisition date, with respect to tangible and intangible assets acquired, liabilities assumed and pre-acquisition contingencies.

The purchase price,

including estimates of the fair value of contingent consideration when applicable, is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the respective acquisition

dates, with the excess recorded as goodwill.

Critical estimates used in valuing certain acquired intangible assets include, but are not limited to, future expected cash flows and discount rates.

Equity classified contingent consideration, which relate to future earn-out payments associated with our acquisitions, are generally valued their fair value

on the acquisition date.

We use our best estimates and assumptions to determine acquisition-date fair values.

These estimates are inherently uncertain and subject to refinement.

continue to collect information and reevaluate our preliminary estimates and assumptions and record any qualifying measurement period adjustments to goodwill.

See Notes 2 and 4 to our financial statements for additional information regarding business acquisitions.

Goodwill and Indefinite-Lived Intangible Assets .

indefinite-lived intangible assets are assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value.

We perform our annual

impairment review of goodwill at the reporting unit level.

If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying value as a result of an annual or interim

test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred.

We perform our impairment assessment based on a quantitative analysis performed for

our reporting unit.

We review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying amount of such

assets may not be fully recoverable.

Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition.

Should an asset not be recoverable, an impairment loss

is measured by comparing the fair value of the asset to its carrying value.

If we determine the fair value of an asset is less than the carrying value, an impairment loss is recognized in operating income or loss in the consolidated

statements of operations during the period incurred.

We performed our annual impairment assessment for 2024, and concluded that no impairment of goodwill was indicated.

As of December 31, 2024, we believe such

assets are recoverable, however, there can be no assurance these assets will not be impaired in future periods.

Any future impairment charges could adversely impact our results of operations.

See Notes 2 and 5 to our financial statements for additional information regarding goodwill and indefinite-lived intangible assets.

Convertible Promissory Notes .

We 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

The Private TMTG Convertible Notes represented a financial instrument other than an outstanding share that embodies a conditional obligation that we 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 .

We use 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 fair value hierarch requires an entity to maximize the use of observable inputs and minimize the use of unobservable input when measuring fair value.

The determination of fair value involves the use of appropriate valuation methods and relevant inputs into valuation models.

Our financial assets and liabilities that are measured at fair value on a recurring basis include investments and derivative financial instruments.

We measure certain other instruments, including stock-based compensation awards settled in stock, and certain assets acquired in a business combination, also

at fair value on a non-recurring basis.

Change in fair value of derivative

The automatic discounted share-settlement feature of the Private TMTG Convertible 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 (Derivatives 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 converted.

Interest expense.

expense consists of accreted interest expense on Private TMTG’s outstanding convertible promissory note obligations and assumed debt from the WCT acquisition, amortization of deferred financing costs, other related financing expenses

and the post-merger interest expense related to DWAC’s Note Purchase Agreements.

The convertible promissory notes (net of any related debt issuance costs) accreted interest using the respective effective interest rate method until the

debt was extinguished.

Income tax expense.

are 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.

We have 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 Section 382.

Use of Estimates .

The preparation of financial statements in

accordance with U.S.

GAAP requires us 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, the fair

value of assets acquired and liabilities assumed in business acquisitions, the assessment of recoverability of our goodwill and long-lived assets, and the reported amounts of revenues and expenses during the reporting period.

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, the estimates of fair value of derivative liabilities,

recoverability of goodwill and intangibles, fair value of short-term investments, useful lives of property and equipment, earn-out shares, and stock-based compensation.

Recent Accounting Pronouncements

See Note 2 to TMTG’s consolidated financial statements for the years ended December 31, 2024, 2023, and 2022.

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-K

Item 7. Management’s Discussion and Analysis