Item 1. Financial Statements
Item 1.
Financial Statements
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets as of March 31, 2025 and December 31, 2024 and Statements of Operations, Stockholders’ Equity/(Deficit) and Cash Flows for the three months ending March 31, 2025 and March 31, 2024
1
Table of Contents
TRUMP MEDIA & TECHNOLOGY GROUP CORP.
TABLE OF CONTENTS
Page
Unaudited Condensed Consolidated Balance Sheets
3
Unaudited Condensed Consolidated Statements of Operations
4
Unaudited Condensed Consolidated Statements of Stockholders’ Equity/(Deficit)
5
Unaudited Condensed Consolidated Statements of Cash Flows
6
Notes to Unaudited Condensed Consolidated Financial Statements
7
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TRUMP MEDIA & TECHNOLOGY GROUP CORP.
Condensed Consolidated Balance Sheets
(in thousands except share and per share data)
March 31, 2025
(Unaudited)
December 31, 2024
(Audited)
Assets
Current Assets:
Cash and cash equivalents
$
146,127.4
$
170,236.1
Short-term investments
612,854.2
606,547.3
Prepaid expenses and other current assets
7,871.0
7,457.3
Accounts receivable, net
33.1
17.4
Total current assets
766,885.7
784,258.1
Property and equipment, net
3,954.4
4,366.0
Goodwill
120,884.2
120,884.2
Intangible assets, net
23,998.7
25,363.1
Right-of-use assets, net
3,194.1
3,416.1
Total assets
$
918,917.1
$
938,287.5
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses
$
13,681.0
$
10,167.5
Related party payables
262.0
262.0
Unearned revenue
246.7
1,010.7
Current portion of long-term debt
4,873.3
4,780.5
Current portion of operating lease liability
902.3
1,080.8
Total current liabilities
19,965.3
17,301.5
Long-term operating lease liability
2,335.1
2,559.7
Long-term debt - other
4,930.2
4,836.2
Total liabilities
27,230.6
24,697.4
Commitments and contingencies (Note 16)
Stockholders’ Equity:
Preferred Stock $ 0.0001 par value – 1,000,000 shares authorized, 0
shares issued and outstanding at March 31 , 2025 and December 31 , 2024
-
-
Common Stock $ 0.0001 par value – 999,000,000 shares authorized, 220,623,372
and 220,657,014 shares issued and outstanding at March 31 , 2025 and December 31 , 2024
22.1
22.1
Paid in capital
3,879,735.6
3,861,662.4
Treasury stock, at cost ( 424,483 and 128,138 shares)
( 11,158.9
)
( 2,908.7
)
Accumulated deficit
( 2,976,912.3
)
( 2,945,185.7
)
Total stockholders’ equity
891,686.5
913,590.1
Total liabilities and stockholders’ equity
$
918,917.1
$
938,287.5
The Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.
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TRUMP MEDIA & TECHNOLOGY GROUP CORP.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months
Ended
March 31,
March 31,
(in thousands except share and per share data)
2025
2024
Net sales
$
821.2
$
770.5
Operating costs and expenses (1)
Cost of revenue
336.7
93.4
Research and development
12,564.9
33,158.6
Sales and marketing
497.4
1,070.4
General and administration
25,178.0
64,795.1
Depreciation and amortization
1,779.2
5.6
Total operating costs and expenses
40,356.2
99,123.1
Loss from operations
( 39,535.0
)
( 98,352.6
)
Interest income
7,995.2
28.8
Interest expense
( 186.8
)
( 2,817.6
)
Change in fair value of derivative liabilities
-
( 225,916.0
)
Loss on the conversion of convertible debt
-
( 542.3
)
Loss from operations before income taxes
( 31,726.6
)
( 327,599.7
)
Income tax expense
-
-
Net loss
$
( 31,726.6
)
$
( 327,599.7
)
Loss per share attributable to common stockholders:
Basic
$
( 0.14
)
$
( 3.61
)
Diluted*
$
( 0.14
)
$
( 3.61
)
Weighted Average Shares used to compute net loss per share attributable to common stockholders:
Basic
220,576,705
90,743,994
Diluted
220,576,705
90,743,994
(1) Operating costs and expenses include stock-based compensation expense as follows:
Research and development
$
7,561.0
$
30,142.5
General and administration
10,290.7
54,445.5
Total stock based compensation expense
$
17,851.7
$
84,588.0
* Loss per share attributable to common stockholders for diluted calculation is based on the basic weighted shares as these are not dilutive. The basic and
diluted loss per share attributable to common stockholders are therefore the same.
The Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.
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TRUMP MEDIA & TECHNOLOGY GROUP CORP.
Condensed Consolidated Statements of Stockholders’ Equity /(Deficit)
(Unaudited)
(in thousands, except share data)
Common Stock
Number of Shares
Par Value
$0.0001
Treasury Stock
Number of Shares
Treasury Stock
Paid in Capital
Accumulated Deficit
Total
Stockholders’
Equity/(Deficit)
Balance as of December 31, 2023
87,500,000
$
8.8
-
$
-
$
-
$
( 66,770.7
)
$
( 66,761.9
)
Fair value of earnout shares
2,477,550.2
( 2,477,550.2
)
-
Conversion of convertible notes upon reverse capitalization
6,014,534
0.6
-
-
300,425.4
-
300,426.0
Stock based compensation
-
-
-
-
84,588.0
-
84,588.0
Issuance of common stock upon reverse capitalization
41,346,049
4.1
-
-
219,617.5
-
219,621.6
Conversion of executive and vendor notes to common stock
1,840,000
0.2
( 0.2
)
-
Net loss
-
-
-
-
( 327,599.7
)
( 327,599.7
)
Balance as of March 31, 2024
136,700,583
$
13.7
-
$
-
$
3,082,180.9
$
( 2,871,920.6
)
$
210,274.0
Balance as of December 31, 2024
220,785,152
$
22.1
( 128,138
)
$
( 2,908.7
)
$
3,861,662.4
$
( 2,945,185.7
)
$
913,590.1
Exercise of Warrants
19,292
-
-
-
221.5
-
221.5
Stock based compensation
-
-
-
-
17,851.7
-
17,851.7
Treasury stock
-
-
( 296,345
)
( 8,250.2
)
-
-
( 8,250.2
)
Vesting of restricted stock units
243,411
-
-
-
-
-
-
Net loss
-
-
-
-
( 31,726.6
)
( 31,726.6
)
Balance as of March 31, 2025
221,047,855
$
22.1
( 424,483
)
$
( 11,158.9
)
$
3,879,735.6
$
( 2,976,912.3
)
$
891,686.5
The Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.
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TRUMP MEDIA & TECHNOLOGY GROUP CORP.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
March 31,
(in thousands)
2025
2024
Cash flows from operating activities
Net loss
$
( 31,726.6
)
$
( 327,599.7
)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense on debt
186.8
2,817.6
Change in fair value of derivative liability
-
225,916.0
Depreciation and amortization
1,779.2
5.6
Loss on extinguishment of debt
-
542.3
Stock based compensation
17,851.7
84,588.0
Operating lease amortization
222.0
39.6
Change in operating assets and liabilities
Prepaid expenses and other current assets
( 381.6
)
2.8
Accounts receivable
( 15.7
)
33.8
Unearned revenue
( 764.0
)
( 695.9
)
Operating lease liabilities
( 216.2
)
( 39.2
)
Accounts payable and accrued expenses
3,326.6
5,073.1
Net cash used in operating activities
( 9,737.8
)
( 9,316.0
)
Cash flows used in investing activities
Purchases of property and equipment
( 3.2
)
-
Purchases of short-term investments
( 6,306.9
)
-
Net cash used in investing activities
( 6,310.1
)
-
Cash flows provided by financing activities
Proceeds of convertible promissory notes
-
47,455.0
Proceeds from merger
-
233,017.5
Repurchase of common stock
( 8,250.2
)
-
Proceeds from the exercise of warrants, net
189.4
-
Net cash (used in) provided by financing activities
( 8,060.8
)
280,472.5
Net change in cash and cash equivalents
( 24,108.7
)
271,156.5
Cash and cash equivalents, beginning of period
170,236.1
2,572.7
Cash and cash equivalents, end of period
$
146,127.4
$
273,729.2
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents
$
146,127.4
$
233,700.9
Restricted cash
-
40,028.3
Total cash and cash equivalents and restricted cash, end of period
$
146,127.4
$
273,729.2
Supplemental disclosure of cash flow information
Cash paid for interest
$
-
$
-
Cash paid for taxes
$
-
$
-
Noncash investing and financing activities
Shares issued for conversion of convertible notes
$
-
$
300,426.0
The Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in
thousands, except share and per share data)
NOTE 1 - DESCRIPTION OF BUSINESS
The accompanying unaudited condensed consolidated financial
statements include the historical accounts of TMTG Sub Inc. f/k/a Trump Media & Technology Group Corp. (“Private TMTG” or “Predecessor TMTG” or, prior to the closing on March 25, 2024, “TMTG”), which changed
its name from Trump Media Group Corp. in October 2021. The mission of TMTG is to end Big Tech’s assault on free speech by opening up the Internet and giving people their voices back. TMTG operates Truth Social, a social media
platform established as a safe harbor for free expression amid increasingly harsh censorship by Big Tech corporations, Truth+, a streaming platform focusing on news, Christian content, and family friendly programming, and Truth.Fi, a
financial services and FinTech brand incorporating America First investment vehicles.
Merger
On March 25, 2024, TMTG consummated the transactions contemplated by the Agreement and Plan of Merger (collectively, the
“Business Combination”), dated October 20, 2021, between Digital World Acquisition Corp. (the “Company,” “Digital World” or “DWAC” or, following the closing on March 25, 2024, “TMTG” or “New Digital World”), DWAC Merger Sub, Private TMTG, ARC
Global Investments II (“ARC”), LLC and TMTG’s Chief Legal Officer, as amended on May 11, 2022, August 9, 2023 and September 29, 2023 (the “Merger Agreement”). Pursuant to the Merger Agreement, and subject to the terms and conditions set forth
therein, upon the closing of the Business Combination (the “Closing” and, the date of the Closing, the “Closing Date”), DWAC Merger Sub merged with and into TMTG, with TMTG surviving as a wholly owned subsidiary of Digital World (the
“Merger”). TMTG’s stockholders received 87,500,000 shares of Digital World Class A common stock (excluding 40,000,000 Earnout Shares (defined herein)), subject to certain adjustments and earnout provisions, in exchange for TMTG common stock. This was,
in substance, a continuation of the TMTG shareholders’ equity interests in the TMTG business, plus up to an additional 7,854,534
shares of New Digital World common stock to be issued upon conversion of outstanding TMTG Convertible Notes immediately prior to the Closing.
Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination was
accounted for as a reverse recapitalization in accordance with U.S. GAAP because TMTG was the operating company and was determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification
Topic 805, Business Combinations (“ASC 805”), while Digital World was a blank check company. The determination was primarily based on the evaluation of the following facts and circumstances:
•
The pre-combination equity holders of Private TMTG hold the majority of voting rights in TMTG;
•
The pre-combination equity holders of Private TMTG had 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; and
•
Operations of Private TMTG comprise the ongoing operations of TMTG.
Under the reverse
recapitalization model, the Business Combination was treated as TMTG issuing equity for the net assets of Digital World, with no goodwill or intangible assets recorded.
While Digital World was the legal acquirer in the Business Combination, because
Predecessor TMTG was deemed the accounting acquirer, the historical financial statements of Predecessor TMTG became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result,
the financial statements reflect (i) the historical operating results of Predecessor TMTG prior to the Business Combination; (ii) the combined results of Digital World and Predecessor TMTG following the closing of the Business Combination;
(iii) the assets and liabilities of Predecessor TMTG at their historical cost; and (iv) the Company’s equity structure for all periods presented. In connection with the consummation of the Business Combination, Digital World was renamed
“Trump Media & Technology Group Corp.” and TMTG was renamed “TMTG Sub Inc.”
In accordance with the applicable guidance, the equity structure was retroactively restated in
all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock issued to Predecessor TMTG common shareholders and Predecessor TMTG convertible noteholders in connection with the Business
Combination. As such, the shares and corresponding capital amounts and earnings (loss) per share related to Predecessor TMTG convertible notes and Predecessor TMTG common stock prior to the Business Combination were retroactively restated as
shares reflecting the exchange ratio established in the Business Combination.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature
necessary for the fair presentation of the periods presented. The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2025.
These unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited consolidated
financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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. Actual results could differ from those estimates. Material estimates and assumptions reflected in the unaudited condensed consolidated financial statements relate to and include, but are not limited to, fair value of
intangible assets acquired in business acquisitions, recoverability of goodwill and intangibles, fair value of short-term investments, useful lives of intangibles and depreciable assets, and stock-based compensation.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Principles of Consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries
and have been prepared in accordance with U.S. GAAP. All intercompany transactions have been eliminated.
Unearned revenue
Unearned revenue primarily consists of billings or payments received from customers in advance of revenue recognized for the services provided
to our customers or annual licenses and is recognized as services are performed or ratably over the life of the license. We generally invoice customers in advance or in milestone-based installments. Unearned revenue of $ 764.0 was recognized as revenue for the three months ended March 31, 2025, which was included in the unearned revenue balance as of December 31,
2024. As March 31, 2025, unearned revenue is expected to be recognized during the succeeding 12 -month period and is therefore
presented as a current liability on the consolidated balance sheets.
Concentrations of risks
Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and short-term
investments. Although we deposit cash and cash equivalents with multiple banks, these deposits may exceed the amount of insurance provided on such deposits. These deposits may generally be redeemed upon demand and bear minimal risk.
One customer accounted for 93.0 %
and 90.3 % of our total revenue for the three months ended March 31, 2025 and 2024, respectively.
In order to reduce the risk of downtime of the products we provide, we have established data centers in various geographic regions. We
have internal procedures to restore products in the event of a service disruption or disaster at any of our data center facilities. We serve our customers and users from data center facilities operated either by us or third parties. Even
with these procedures for disaster recovery in place, the availability of our products could be significantly interrupted during the implementation of restoration procedures.
Recently issued accounting standards
In December 2023, the FASB issued Accounting Standards Update, or ASU, 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures,” or ASU 2023-09. ASU 2023-09 requires additional disaggregated disclosures on an entity’s effective tax rate reconciliation and additional details on income taxes paid. ASU 2023-09 is effective on a prospective basis, with the
option for retrospective application, for annual periods beginning after December 15, 2024. The adoption of ASU 2023-09 did not have a material impact on our unaudited condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income
Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses ASU 2024-03 is effective prospectively to financial statements issued for reporting period after
the effective date or retrospectively to any or all prior periods presented in the financial statements, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is
permitted. Adoption of this guidance will result in additional disclosures, but we do not expect the adoption of ASU 2024-03 will impact our consolidated financial position, results of operations or cash flows.
In November 2024, the FASB issued ASU 2024-04, Debt (Subtopic
470-20): Debt with Conversion and Other Options. ASU 2024-04 clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features
as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have
adopted ASU 2020-06. We do not expect the adoption of ASU 2024-04 to have a material impact on our unaudited condensed consolidated financial statements.
NOTE 3 – RECAPITALIZATION
As discussed in Note 1, following the Closing of the Business Combination, TMTG was deemed the accounting acquirer and the transaction was accounted for as a
reverse recapitalization.
Transaction Proceeds
Upon the Closing, we received gross proceeds of $ 233,017.5 .
The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statements of changes
in stockholders’ equity/(deficit) for the year ended December 31, 2024:
Cash-trust and cash, net of redemptions
$
233,017.5
Add: other assets
-
Less: accrued expenses
( 3,292.9
)
Less: notes payable
( 10,103.0
)
Reverse recapitalization, net
$
219,621.6
In connection with the Business Combination, TMTG incurred $ 1,640.2 in one-time direct and incremental transaction costs, consisting of legal and other professional fees, recorded in general and administration expenses. TMTG also issued $ 6,130.0 of bonus payments to our employees and a director of Private TMTG that were triggered by the Business Combination. We recorded $ 5,530.0 and $ 600.0 in general and
administration expense and sales and marketing expense, respectively, for the year ended December 31, 2024. TMTG deems these to be non-recurring expenses that are not direct and incremental to the Business Combination.
The number of shares of common stock issued immediately following the consummation of the Business Combination were:
Digital World common stock, outstanding prior to the Business Combination
39,636,904
Shares issued to Digital World convertible noteholders, converted immediately prior to Business Combination
1,709,145
Predecessor TMTG Shares
87,500,000
Shares issued to former TMTG convertible noteholders
7,854,534
Common stock immediately after the Business Combination (1)
136,700,583
(1)
Excludes 1,024,517 additional shares issued to former Digital World Class B shareholders in connection with a court order in September 2024.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The number of Predecessor TMTG shares was determined as follows:
Predecessor TMTG
Shares
Shares issued to
shareholders of
Predecessor TMTG
Common stock
100,000,000
87,500,000
100,000,000
87,500,000
Public and private placement
warrants
In connection with Digital World’s initial public offering in 2021, 14,374,976 public warrants were issued (the “Public Warrants”) and 566,742
warrants were issued in a private placement (the “Private Placement Warrants”; and the Private Placement Warrants together with the Public Warrants, collectively the “Warrants”) all of which warrants remained outstanding and became warrants
for the Common Stock in the Company.
In March 2024, Digital World issued an aggregate of 3,424,510
warrants (“Convertible Note Post IPO Warrants and “Post-IPO Warrants”), each warrant entitling the holder thereof to purchase one
share of the Company’s Class A common stock for $ 11.50 per share, 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. The Convertible Note Post IPO Warrants and 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.
TMTG Earnout Shares
As noted in Note 1, in connection with the Merger, TMTG shareholders were entitled to up to 40,000,000 shares if certain post-merger per share market prices were achieved (the “Earnout Shares”).
We utilized a Monte Carlo simulation analysis to determine the fair value of the Earnout Shares at the date of the merger, which included
the following assumptions:
The Monte Carlo simulation conclusion for each tranche of the Earnout Shares was the result of the average of 1,000,000 trial outcomes. Within each trial of the simulation:
1.
The stock price was simulated for the defined term ( 1.5 years, 2 years, and 3 years)
after the Merger date.
2.
The vest date was determined as the date the stock price achieved the different stock price thresholds, which were $ 12.50 , $ 15.00 , and $ 17.50 .
3.
The payoff was calculated as the number of shares issued per tranche ( 15
million, 15 million, and 10
million) multiplied by the simulated stock price at the vest date, which varied with each simulation.
4.
The payoff was discounted to the present value using the interpolated risk-free rate ranging from 4.31 % to 4.70 %.
Volatility was calculated as the annualized standard deviation of daily returns from a set of Guideline Public Companies (GPC) over the
expected term for each tranche. The 75th percentile of GPC volatilities was selected given our early stage life cycle relative to the GPC set. The accounting for the Earnout Shares was first evaluated under ASC 718 to determine if the
arrangement represents a share-based payment arrangement. Because there were no service conditions nor any requirement of the participants to provide goods or services, we determined that the Earnout Shares were not within the scope of ASC
718.
Next, we determined that the Earnout Shares represent a freestanding equity-linked financial instrument to be evaluated under ASC 480 and
ASC 815-40. Based upon the analysis, we concluded that the Earnout Shares should not be classified as a liability under ASC 480.
We next considered the equity classification conditions in ASC 815-40-25 and concluded that all of the conditions were met. Therefore, the
Earnout Share arrangement was appropriately classified in equity.
As the Business Combination has been accounted for as a reverse recapitalization, the fair value of the Earnout Shares arrangement has been
accounted for as an equity transaction as of the Closing Date.
On April 26, 2024, the Earnout Shares had been earned and such shares were issued.
NOTE 4 – GOODWILL AND INTANGIBLE ASSETS
The following table summarizes changes in our
goodwill balance:
Balance at December 31, 2024
$
120,884.2
Goodwill related to acquisitions
-
Balance at March 31, 2025
$
120,884.2
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Finite-lived intangible assets, net are summarized as follows:
March 31, 2025
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Finite-lived intangible asset
Source code and technology
$
24,500.0
$
( 3,202.1
)
$
21,297.9
Exclusivity rights
3,100.0
( 399.2
)
2,700.8
Intangible assets, net
$
27,600.0
$
( 3,601.3
)
$
23,998.7
Amortization expense was $ 1,364.4 for the three months
ended March 31, 2025 and $ 0.0 for March 31, 2024 as the intangibles were acquired in August 2024. As of March 31, 2025, the
weighted-average remaining amortization period for amortizable intangible assets was 4.35 years.
Based on the balance of finite-lived intangible assets at March 31, 2025, expected future amortization expense is as follows:
Year Ending December 31:
2025
$
4,169.1
2026
5,529.9
2027
5,533.5
2028
5,548.7
2029
3,217.5
$
23,998.7
Finite-lived intangible assets, net are summarized as follows:
December 31, 2024
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Finite-lived intangible asset
Source code and technology
$
24,500.0
$
( 1,991.2
)
$
22,508.8
Exclusivity rights
3,100.0
( 245.7
)
2,854.3
Intangible assets, net
$
27,600.0
$
( 2,236.9
)
$
25,363.1
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
March 31, 2025
December 31, 2024
Property and equipment
Furniture and equipment
$
34.5
$
34.5
Computer equipment
5,157.8
5,154.6
Accumulated depreciation
( 1,237.9
)
( 823.1
)
Property and equipment, net
$
3,954.4
$
4,366.0
Total depreciation expense was $ 414.8
and $ 5.6 for the three months ended March 31, 2025 and 2024, respectively.
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
March 31, 2025
December 31, 2024
Accounts payable
$
1,935.2
$
1,483.3
Other accrued expenses
10,556.9
7,443.4
Income tax payable
880.7
732.6
Franchise tax payable
308.2
508.2
Accounts payable and accrued expenses
$
13,681.0
$
10,167.5
NOTE 8 – LONG-TERM DEBT
Our long-term debt consists of a term loan assumed from our business combination WorldConnect Technologies, LLC. As of March 31, 2025, and December
31, 2024, the term loan had a carrying amount of $ 9,803.5 and $ 9,616.7 , respectively, with $ 4,873.3 and $ 4,780.5 of the term loan due within 12 months of March 31, 2025 and December 31, 2024, respectively. For the three months ended March 31, 2025, we
accreted interest expense of $ 186.8 related to the term loan.
The term loan carries an effective interest rate of 7.72 %
and requires future payments of $ 5,000.0 in both August 2025 and August 2026, and $ 500.0 in August 2027.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 – LEASES
During the three months ended March 31, 2025, the Company entered no
additional leases with terms longer than 1 month. We elected not to recognize ROU assets and lease liabilities arising from short-term office leases with initial terms of twelve months or less (deemed immaterial) on the consolidated balance
sheets.
When measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using its estimated incremental borrowing
rate. The weighted average incremental borrowing rate applied was 7.86 %. As of March 31, 2025, our leases had a remaining weighted
average term of 3.40 years.
Operating leases are included in the consolidated balance sheets as follows:
Classification
March 31, 2025
December 31, 2024
Lease assets
Operating lease cost ROU assets, net
Assets
$
3,194.1
$
3,416.1
Total lease assets
$
3,194.1
$
3,416.1
Lease liabilities
Operating lease liabilities, current
Current liabilities
$
902.3
$
1,080.8
Operating lease liabilities, non-current
Liabilities
2,335.1
2,559.7
Total lease liabilities
$
3,237.4
$
3,640.5
The components of lease costs, which are included in loss from operations in our consolidated statements of operations were as follows:
Three months period ended
March 31, 2025
March 31, 2024
Lease costs
Operating lease costs
$
274.9
$
45.4
Variable lease costs
26.2
34.4
Short-term lease costs
8.5
3.6
Total lease costs
$
309.6
$
83.4
Future minimum payments under
non-cancellable leases for operating leases for the remaining terms of the leases following the year ended March 31, 2025, are as follows:
2025
$
852.5
2026
1,009.6
2027
1,005.2
2028
770.9
2029
87.9
Total future minimum lease payments
3,726.1
Amount representing interest
( 488.7
)
Present value of net future minimum lease payments
$
3,237.4
NOTE 10 - INCOME TAXES
The estimated annual effective tax rate applied to the three months ended March 31, 2025, is 0 % which differs from the US federal statutory rate of 21 %
principally due to the projection of U.S. net operating loss for the fiscal 2025 with full application of a valuation allowance. As of March 31, 2025, we had U.S. Federal and state net operating loss carryforwards (“NOLs”) with a tax benefit of
$ 31,456.6 from December 31, 2024. NOLs are available for use indefinitely.
NOTE 11 – RELATED PARTY TRANSACTIONS
Administrative Services Arrangement
An affiliate of the Digital World Sponsor ARC agreed, commencing from the date when Digital World’s Registration Statement was declared
effective through the earlier of Digital World’s consummation of a Business Combination and its liquidation, to make available to the Digital World certain general and administrative services, including office space, utilities and
administrative services, as Digital World required from time to time. Digital World agreed to pay the affiliate of the Sponsor $ 15.0
per month for these services. The agreement with the Sponsor was terminated on April 5, 2023, $ 221.0 was unpaid as of March 31, 2025.
Advances
During 2022, the Digital World sponsor, ARC (the “Sponsor”) paid, on behalf of Digital World, $ 470.8 to a vendor for costs incurred by Digital World and $ 41.0
directly to Digital World. As of March 31, 2025, our obligation to the Sponsor for such payments was outstanding in the amount of $ 41.0 .
NOTE 12 - FAIR VALUE MEASUREMENT
Fair value is defined as an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction
between market participants. We use a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.
Level 3. Significant unobservable inputs which are supported by little or no market activity.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of March 31, 2025
Quoted prices in
active markets
for identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Repurchase agreements
$
612,854.2
$
-
$
-
Total assets measured at fair value
$
612,854.2
$
-
$
-
As of December 31, 2024
Quoted prices in
active markets
for identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Repurchase agreements
$
606,547.3
$
-
$
-
Total assets measured at fair value
$
606,547.3
$
-
$
-
The
fair value of the repurchase agreement is classified within Level 1, because we use quoted market prices of the counter-party collateral to determine their fair value. Our repurchase agreement exposes us to credit risk and is
collateralized by U.S. Treasury Bills. We have not experienced any material losses related to these securities.
NOTE 13 – LOSS PER SHARE
Basic loss per share is calculated by dividing net loss by the weighted average number of shares of stock outstanding during the period. We
computed diluted earnings per share of common stock based on the weighted average number of shares of stock outstanding plus potentially dilutive shares of stock outstanding during the period. Potentially dilutive shares of stock from employee
incentive plans are determined by applying the treasury stock method to the assumed vesting of outstanding RSUs, convertible notes and warrants. There were no dilutive potential common stock for the periods ended March 31, 2025 and 2024 because we incurred a net loss and the potential dilutive shares are anti-dilutive.
Total common stock equivalents excluded from dilutive earnings/loss per share are as follows:
March 31, 2025
March 31, 2024
Convertible notes
-
6,250,000
Warrants
11,026,253
21,491,229
RSUs
2,862,874
-
Total common stock equivalents excluded from dilutive income/loss per share
13,889,127
27,741,229
NOTE 14 – STOCKHOLDERS’ EQUITY
The following table summarizes warrant activity:
Warrants
Weighted
Average
Exercise
Price
Weighted Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic
Value
Outstanding at January 1, 2025
11,045,545
$
11.50
4.31
-
Granted
-
-
-
-
Exercised
( 19,292
)
11.50
-
-
Expired or cancelled
-
-
-
-
Outstanding at March 31, 2025
11,026,253
$
11.50
4.07
$
88,651,074
Exercisable at March 31, 2025
11,026,253
$
11.50
4.07
$
88,651,074
NOTE 15 – STOCK BASED COMPENSATION
2024 Equity Incentive Plan
At
our Annual Meeting of Stockholders on April 30, 2025 (the Annual Meeting), our stockholders approved our amended and restated 2024 Equity Incentive Plan to automatically increase the then available share pool each January 1 commencing 2026
through 2034 by an amount equal to 5 % of the total number of shares of common stock outstanding as of the prior December 31,
each year. The name of the 2024 Plan has been updated to the Trump Media & Technology Group Corp. 2024 Equity Incentive Plan and the applicable governing law has been updated to the laws of the State of Florida.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes stock award activity:
Number of Shares of
Common Stock
Weighted Average
Grant-Date Fair
Value
Outstanding at January 1, 2025
1,821,015
$
33.94
Granted: RSUs
1,330,676
31.53
Vested
( 243,411
)
33.28
Forfeited
( 45,406
)
30.04
Outstanding at March 31, 2025
2,862,874
$
32.94
The aggregate fair value of awards that vested in the three months ended March 31, 2025 was $ 5,799.3 which represents the market value of our common stock on the date that the RSUs vested. The grant-date fair value of awards that vested in the three months ended March 31, 2025
was $ 8,101.2 . The number of RSUs vested includes shares of common stock that we withheld from employees to satisfy the minimum
statutory tax withholding requirements.
As of March 31, 2025, unrecognized compensation expense related to non-vested equity grants was $ 84,051.6 with an expected remaining weighted-average recognition period of approximately 2.01
years.
NOTE 16 - COMMITMENTS AND CONTINGENCIES
From time-to-time, we are a party to litigation and subject to claims, suits, regulatory and government investigations, other proceedings and consent decrees in
the ordinary course of business, and other unasserted claims. We investigate claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable. Based on current known
facts and circumstances, we currently believe that any liabilities ultimately resulting from ordinary course claims, and proceedings will not individually or in aggregate, have a material adverse effect on our financial position, results of
operations, or cash flows. However, the outcomes of claims legal proceedings or investigations are inherently unpredictable and subject to uncertainty, and may have an adverse effect on us because of defense costs, diversion of management
resources and other factors that are not known to us or cannot be quantified at this time. We may also receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes
will be obtained. The final outcome of any current or future claims or lawsuits could adversely affect our business, financial position, results of operations or cash flows. We periodically evaluate developments in our legal matters that
could affect the amount of liability that has previously been accrued or the reasonably possible losses that we have disclosed, and make adjustments as appropriate.
Consistent with
the practice of many companies, we have entered into, and continue to enter into indemnity agreements with our executive officers and certain members of our board of directors. These indemnity agreements broadly provide for us to advance
expenses (including attorneys’ fees) incurred in connection with any legal proceeding, as well as indemnification for any and all expenses, actually and reasonably incurred, in connection with the investigation, defense, settlement or appeal
of such a proceeding, in connection with matters related to their position. These indemnity agreements provide that the indemnitee shall repay all amounts so advanced if it shall ultimately be determined by final judicial decision from where
there is no further right of appeal that the indemnitee is not entitled to be indemnified.
Except as indicated below, to the knowledge of our Management Team, there is no litigation currently pending or contemplated against us, or
against any of our property.
Litigation with United Atlantic
Ventures (“UAV”) in Delaware
On July 30, 2021, an attorney for the Trump Organization, on behalf of
President Trump, declared void ab initio a services agreement that had granted Private TMTG, among other things, extensive intellectual property and digital media rights related to President Trump for purposes of commercializing the various
Private TMTG initiatives (the “Services Agreement” ). Neither Private TMTG nor Digital World was a party to such
agreement. On each of January 18, 2024 and February 9, 2024, Digital World received letters from counsel to UAV, a party to the Services Agreement. The letters contained certain assertions and enclosed a copy of the Services Agreement that had
been declared void two and a half years earlier. Specifically, counsel for UAV claims that the Services Agreement grants UAV rights to (1) appoint two directors to TMTG and its successors (i.e., TMTG after the Business Combination), (2) approve
or disapprove of the creation of additional TMTG shares or share classes and anti-dilution protection for future issuances, and (3) a $ 1.0
million expense reimbursement claim. In addition, UAV asserts that the Services Agreement is not void ab initio and claims that certain events following the July 30, 2021 notification support its assertion that such Services Agreement was not
void. On February 6, 2024, a representative of UAV sent a text message to a representative of a noteholder of TMTG suggesting that UAV might seek to enjoin the Business Combination. On February 9, 2024, Private TMTG received from counsel to UAV
a letter similar to those letters received by Digital World, which also threatened Private TMTG with legal action regarding UAV’s alleged rights in Private TMTG, including, if necessary, an action to enjoin consummation of the Business
Combination.
On February 28, 2024, UAV filed a verified complaint against Private TMTG in the Court of Chancery seeking declaratory and injunctive relief relating to the authorization,
issuance, and ownership of stock in Private TMTG and filed a motion for expedited proceedings (C.A. No. 2024-0184-LWW). On March 4, 2024, UAV filed an amended complaint, converting their action from a direct action to a purported derivative
action, and adding members of the Private TMTG board as defendants. On March 9, 2024, the Court of Chancery held a hearing to decide UAV’s motion to expedite proceedings.
During the oral argument, Private TMTG agreed that any additional shares of Private TMTG issued prior to or upon the consummation of the Business Combination would be placed in escrow pending a resolution of the dispute between the parties.
The Court of Chancery entered an order consistent with the foregoing on March 15, 2024, and scheduled a status conference for April 1, 2024. On
April 2, 2024, UAV filed a motion for leave to file a second amended complaint together with a motion for preliminary injunction and a motion for contempt and anti-suit injunction related to Private TMTG’s filing of a separate litigation
against UAV and others in Florida state court. Private TMTG maintains that the contempt claims are meritless. On April 9, 2024, the Court of Chancery granted the motion for leave to file a second amended complaint and re-assigned the case
to a new judge. On April 11, 2024, UAV filed its second amended complaint, naming the prior Defendants together with five new defendants—TMTG and the current directors on the TMTG Board who were not on Private TMTG’s board of
directors. On April 22, 2024, all of the Defendants moved to vacate the Court of Chancery’s prior order expediting the matter. Additionally, all of the Defendants moved to dismiss the second amended complaint. Following briefing and oral
argument on the motion to vacate, on April 30, 2024, the Court of Chancery vacated the prior provisions of the March 15 order expediting the matter. On May 6, 2024, UAV filed its Renewed Motion for Contempt of the March 15, 2024 Order against
Private TMTG (“First Contempt Motion”) seeking, among other things, to enjoin Private TMTG and related parties from prosecuting certain claims in Florida state court. On May 8, 2024, the Court of
Chancery stayed discovery and granted a protective order with respect to all discovery served on Defendants and all other persons from whom discovery was being sought.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On June 5, 2024, UAV filed for leave to again amend its complaint. The Court of Chancery granted the motion for leave to amend on
July 8, 2024, and UAV filed its Third Amended Complaint on July 9, 2024. The Third Amended Complaint dismissed as defendants three current TMTG directors (W. Kyle Green, Linda McMahon, and Robert
Lighthizer) and added four former Digital World directors (Frank J. Andrews, Patrick F. Orlando, Edward J. Preble, and Jeffrey A. Smith). On July 17, 2024, UAV filed a second contempt motion against Private TMTG and TMTG (“ Second Contempt Motion ”) alleging additional violations of the March 15 Order. On
August 27, 2024, the Court of Chancery denied both the First Contempt Motion and the Second Contempt Motion. On July 23, 2024, all of the defendants with the exception of Patrick F. Orlando moved to dismiss the Third Amended Complaint. On September 17, 2024, Mr. Orlando moved to dismiss the Third
Amended Complaint. On October 8, 2024, UAV voluntarily dismissed Mr. Orlando with prejudice. The remaining defendants’ motions to dismiss are fully
briefed. The remaining defendants also filed a motion to dismiss or stay on the basis of temporary Presidential immunity, which has been fully briefed. The Court has scheduled a hearing to address both motions on May 15, 2025.
Lawsuit against ARC, Patrick Orlando, UAV, Andrew Litinsky,
and Wesley Moss in Florida
On February 26,
2024, representatives of ARC Global Investments II, LLC (“ARC”) claimed to Digital World that after a “more comprehensive” review, the conversion ratio for Digital World Class B common stock into
Digital World Class A common stock upon the completion of the Business Combination was approximately 1.8 :1. ARC’s new claim also
contradicted the previous assertion by Patrick Orlando, the managing member of ARC, that the conversion ratio was 1.68 :1. Digital
World’s board of directors viewed these claims as an attempt by Mr. Orlando to secure personal benefits, breaching his fiduciary duty to Digital World and its shareholders. Digital World and Private TMTG initiated a lawsuit against ARC in the
Civil Division for the Twelfth Judicial Circuit Court in Sarasota County, Florida, on February 27, 2024 (Docket No. 2024-CA-001061-NC). The complaint sought a declaratory judgment affirming the appropriate conversion ratio as 1.34 :1, as previously disclosed, damages for tortious interference with the contractual and business relationship between Private TMTG and Digital
World, and damages for conspiracy with unnamed co-conspirators to interfere with the same. The complaint also sought damages for Mr. Orlando’s breach of fiduciary duty, which exposed Digital World to regulatory liability and resulted in an $ 18 million penalty, and for his continuous obstruction of Digital World’s merger with Private TMTG to extort various concessions that benefited only
him and harmed Digital World and its shareholders. Furthermore, the complaint sought damages for the wrongful assertion of dominion over Digital World’s assets inconsistent with Digital World’s possessory rights over those assets. On March 8,
2024, Digital World voluntarily dismissed its declaratory judgment claim against ARC. On March 17, 2024, Digital World and Private TMTG filed an amended complaint, adding a claim for violation of Florida’s Deceptive and Unfair Trade Practices
Act. Digital World further alleged breach of fiduciary duty of loyalty, breach of fiduciary duty of care, and conversion claims against Mr. Orlando. With respect to ARC, Digital World alleged aiding and abetting a breach of fiduciary duty. On
April 3, 2024, Defendants ARC and Mr. Orlando filed a joint motion to dismiss the amended complaint or, in the alternative, to stay the proceeding pending the Delaware Action (C.A. No. 2024-0184-LWW). Defendants ARC and Mr. Orlando also filed
that same day a motion to stay discovery in the action.
On May 29, 2024, Digital
World moved to compel discovery from ARC and Mr. Orlando. On July 15, 2024, following a July 10 hearing, the
Court entered an order denying the motion to stay discovery and motion to compel. On July 29, 2024, the Court entered an order denying the motion to
dismiss or, in the alternative, to stay the proceeding for improper venue. Defendants ARC and Orlando appealed that order, which the Court dismissed on April 30, 2025. On August 2, 2024, Defendants ARC and Mr. Orlando filed a motion to stay pending appeal in the trial court. On July 31, 2024, Digital World and Private TMTG filed a motion for leave to file a second amended complaint, which proposed to add
allegations against ARC and Orlando related to pre-targeting and other misconduct as set forth in the SEC Complaint against Orlando, and naming UAV, Andrew Litinsky, and Wesley Moss as additional defendants. On August 15, 2024, Digital World and Private TMTG filed a motion for temporary injunction seeking to enjoin the threatened sale of Digital World stock by Defendant ARC and one of the new defendants proposed to be added through the motion for leave to file a second amended complaint. On August 28, 2024, Digital World and Private TMTG filed a renewed motion to compel, seeking prior productions to the SEC and DOJ and other documents from Defendants ARC and Mr. Orlando. On August 30, 2024, the trial court held a hearing to address several motions. During the hearing, the Court granted Digital World and Private TMTG’s motion for leave to amend and denied their
motion for temporary injunction. The trial court also denied the motion to stay pending appeal filed by Defendants ARC and Mr. Orlando. On September 3, 2024, Digital World and Private TMTG filed the Second Amended Complaint. On September 4, 2024, Digital World
and Private TMTG filed an expedited motion to compel, seeking production of ARC’s capitalization table, supporting documents, and an order requiring ARC to cooperate with Digital World and Private TMTG in advance of the expiration of the
lock-up restriction. On September 5, 2024, Defendants ARC and Mr. Orlando filed a motion to stay pending appeal in the Second District Court of Appeal, which the Second District denied on October 18, 2024 (C.A. No. 2 D 2024 - 1780) . On September 12, 2024, the
Court granted in part and denied in part the expedited motion to compel, ordering production of the capitalization table and supporting documents by September 13, 2024, at 12 p.m. On that same day, Defendants ARC and Mr. Orlando filed a notice of removal in the Middle District of Florida (C.A. No. 8 : 24 -cv- 02161) . On September 13, 2024, Digital World and Private TMTG filed an
emergency motion to remand to state court in the Middle District of Florida, which the Middle District granted on September 17, 2024. On September 18, 2024, Digital World and Private TMTG filed an emergency motion for temporary injunction and contempt against ARC and Mr. Orlando in the state court action. On that
same day, the Court held a hearing during which it granted Digital World and Private TMTG’s motion for contempt, imposed a coercive sanction against ARC and Mr. Orlando of $ 5,000 per day until they complied with the Court’s September 12 discovery order, and denied their motion
for temporary injunction. Defendants ARC and Orlando have filed an appeal of that order, which is scheduled for oral argument on June 4, 2025. (C.A. No.
2 D 2024 - 2364) .
On September 20, 2024, ARC filed its answer, defenses, and affirmative defenses to the Second Amended
Complaint. On September 26, 2024, Defendants ARC and Orlando filed a motion to compel. On October 1, 2024, Digital World and Private TMTG filed a motion for an order to show cause why ARC and Mr. Orlando should not be held in further contempt and subject to increased sanctions for their failure to comply with the
Court’s September 18 contempt order. On October 3, 2024, Mr. Orlando filed an amended motion to dismiss the Second Amended Complaint or, alternatively, to stay the action. On October 15, 2024, ARC filed an amended answer, defenses, and
affirmative defenses to the Second Amended Complaint, counterclaim, and third -party complaint, naming 9
additional defendants: Luis Orleans-Braganza, Lee Jacobson, Bruce J. Garelick, Justin Shaner, Eric Swider, Rodrigo Veloso, Ed Preble, Frank Andrews, and Jeffrey Smith. On October 21, 2024, UAV, Wesley Moss, and Andrew Litinsky jointly filed 3 motions: a motion to dismiss the Second Amended Complaint for
failure to state a cause of action, motion to stay pending resolution of the Delaware Action, and motion to dismiss for improper venue. On November 1, 2024, Digital World and Private TMTG filed a supplemental brief in support of the October motion for order to show cause and a fee petition to recover attorneys’ fees pursuant to the September 18
contempt order.
On November 18, 2024, the Court granted in part the October motion for order to show cause, ordering, inter alia , the appointment of a third -party vendor to re-collect all devices and files from ARC and Orlando and run search terms and a
sanction against ARC and Orlando of $ 5,000 per day from September 18 to November 8, 2024. Defendants ARC and Orlando have filed a motion for leave to amend their petition to appeal the
September 18 order to include an appeal of the November 18 order, which the Court denied on February 5, 2025 (C.A. No. 2 D 2024 - 2364) . On November 21, 2024, Third -Party Defendant Shaner filed a motion to dismiss ARC’s third -party complaint, which the Court denied on December 13, 2024. On December 6, 2024, the Court granted in part the September 26 motion to compel filed by Defendants ARC and Orlando. On December 16, 2024, Digital World and Private TMTG filed a fee
petition to recover attorneys’ fees pursuant to the November 18 contempt order. On December 27, 2024,
Defendants ARC and Orlando filed a motion for order to show cause for failure to comply with the December 6 order. On January 3, 2025, Digital World and Private TMTG and Third -Party Defendants Swider, Preble, Andrews, and Smith jointly filed a motion to dismiss ARC’s counterclaims and third -party complaint. On January 8, 2025, Third -Party Defendant Garelick filed a
motion to dismiss ARC’s counterclaims and third -party complaint. On January 10, 2025, Defendants ARC and
Orlando filed a motion to compel production of documents, which the Court denied for failure to confer on January 22, 2025. On January 10, 2025, Third -Party Defendant Veloso filed a motion to dismiss ARC’s counterclaims and third -party complaint. On January 17, 2025, Defendants ARC and Orlando filed a motion to strike, which the Court denied for failure to confer on
January 22, 2025.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On January 22, 2025, the Court held a hearing during which it heard the motion to stay pending resolution of the Delaware Action – taking the motion
under advisement and scheduled an omnibus hearing to hear outstanding motions on March 7, 2025. At the January 22, 2025 hearing, the Court entered a temporary administrative stay of discovery as to Defendants Litinsky, Moss, and UAV pending its resolution of their motion to stay. On January 23, 2025, Defendants ARC and Orlando filed a motion to compel production of documents and a motion to strike. On that same day, Third -Party Defendant Jacobson filed a motion to dismiss ARC’s counterclaims and third -party complaint. On February 10, 2025, Mr. Orlando and ARC filed an appeal of the Court’s November 18 order, which the Second District denied on April 24, 2025 (2 D 2025 - 0314) .
On February 19, 2025, the Court denied the October 3 motion to stay filed by Mr. Orlando and the October 21 motion to stay filed by UAV, Wesley Moss, and Andrew Litinsky, finding that this action and the Delaware Action (2024 - 0184 -LWW)
do not “involve substantially similar issues.” On February 21, 2025, Mr. Orlando and ARC filed a motion to compel, which the Court granted in part during
an April 28, 2025 hearing. On March 7, 2025, the Court held an
omnibus hearing to address outstanding motions.
Following the March 7 hearing, the Court entered several orders. It denied the motions to dismiss for improper venue filed by Mr.
Orlando on October 3 and UAV, Moss, and Litinsky on October 21. The Court also denied the motions to dismiss for failure to state a claim filed by Mr. Orlando on October 3 and UAV, Moss, and Litinsky on October 21. The Court granted the
motions to dismiss the third-party complaint filed on behalf of Lee Jacobson, Bruce J. Garelick, Eric Swider, Rodrigo Veloso, Ed Preble, Frank Andrews, and Jeffrey Smith but provided leave to amend. The Court granted in part the January
23 motion to compel filed by Mr. Orlando and ARC. The Court also granted in part the motion to dismiss ARC’s counterclaims, dismissing Count V of the counterclaims. On March 21, 2025, UAV, Wesley Moss, and Andrew Litinsky appealed Court’s February 19, 2025 order denying a stay. On April 2, 2025, Justin Shaner filed a motion for protective order against ARC’s first set of requests
for production.
On April
7, 2025, Mr. Orlando filed his Answer, Affirmative Defenses, and Additional Defenses and his Third -Party Complaint, naming Eric Swider, Justin Shaner, Rodrigo Veloso, Lee Jacobson, Bruce J. Garelick,
and Luis Orleans-Braganza. On that same day, UAV, Moss, and Litinsky filed their Answer and Affirmative Defenses, Counterclaims, and Third -Party Complaint, naming President Donald J. Trump, Donald
J. Trump Jr., Devin Nunes, Kashyap “Kash” Patel, and Daniel Scavino Jr. Also on April 7, 2025, ARC filed its Amended Answer, Defenses, and Affirmative
Defenses and its Amended Counterclaims and Amended Third -Party Complaint. The next day, ARC filed a motion seeking leave to file a Second Amended Answer,
Defenses, and Affirmative Defenses.
On April 11, 2025, Mr. Orlando and ARC filed a motion to determine confidentiality of court records. On April 17, 2025, ARC filed a motion to compel TMTG Sub Inc. and Trump Media & Technology Group Corp. to revise their responses to ARC’s first
set of interrogatories.
On April 21, 2025, Trump Media & Technology Group Corp.; TMTG Sub Inc.; and Third -Party Defendants
Eric Swider, Justin Shaner, Rodrigo Veloso, Bruce J. Garelick, and Lee Jacobson filed a motion to stay discovery and for protective order pertaining to ARC’s and Mr. Orlando’s Third -Party
Complaint pending resolution of their motions to dismiss ARC’s Third -Party Complaint.
On April 24, 2025, Mr. Orlando filed his Amended Answer, Affirmative Defenses, and Additional Defenses. On April 28, 2025, Trump Media & Technology Group Corp., TMTG Sub Inc., and Third -Party Defendant Eric Swider filed a motion to dismiss ARC’s Counterclaims and ARC’s and Orlando’s
Third -Party Complaint, and Third -Party Defendants Rodrigo Veloso and Bruce Garelick joined the motion. On that same day, Trump Media & Technology
Group Corp. and TMTG Sub Inc. filed their motion to dismiss UAV’s, Andrew Litinsky’s, and Wesley Moss’s Counterclaims. Also on April 28, 2025, Third -Party Defendant Lee Jacobson filed a motion to dismiss ARC’s and Orlando’s Amended Third -Party Complaints. The following day, Third -Party Defendant Justin Shaner filed a motion to dismiss ARC’s Amended Third -Party Complaint. A three-week jury trial has been scheduled to begin on March 23, 2026.
Litigation with ARC in Delaware
On February 29, 2024, ARC filed a lawsuit in the Court of Chancery of the State of Delaware (C.A. No. 2024-0186-LWW) against Digital World
and its directors, alleging an impending violation of the Digital World Charter. ARC alleged that Digital World failed to commit to issue conversion shares to ARC that ARC claims it is owed upon the consummation of the Business Combination
pursuant to the Charter. ARC claimed a conversion ratio of 1.81 :1 and sought specific performance and damages for the alleged
breach of the Charter, a declaratory judgment that the certain derivative securities of Digital World should be included in the calculation of the conversion ratio, a finding that the directors of Digital World breached their fiduciary
duties, and a preliminary injunction to enjoin the Business Combination until Digital World “corrected” the conversion ratio. TMTG defended Digital World’s calculation of the conversion ratio and related rights. In addition to its complaint,
ARC also filed a motion with the Court of Chancery requesting that the case schedule be expedited to enable the Court of Chancery to conduct an injunction hearing prior to the March 22, 2024, shareholder vote. On March 5, 2024, the Court of
Chancery denied ARC’s motion, stating that it would not conduct a merits or injunction hearing before March 22, 2024. Consequently, the Court of Chancery also denied ARC’s request to postpone the Business Combination vote until after a merits
hearing. The Court of Chancery ruled that Digital World’s proposal to deposit disputed shares into an escrow account at the close of the Business Combination was adequate to prevent potential irreparable harm related to ARC’s share
conversion. The Court of Chancery also found that Digital World’s public disclosures about ARC’s claims and possible conversion scenarios at the close of the Business Combination further mitigated the risk of irreparable harm due to
insufficient disclosure for the March 22, 2024, vote. As a result, on March
21, 2024, Digital World entered into two escrow agreements with Odyssey, as follows: (i) an escrow agreement for the benefit of
ARC (the “ARC Escrow Agreement”) , pursuant to which DWAC deposited into escrow 3,579,480
shares of TMTG shares of common stock (“Common Stock”), and (ii) an escrow agreement for the benefit of the Non-ARC Class B Shareholders (the “Non-ARC Class B Shareholders Escrow Agreement,” and
together with the ARC Escrow Agreement, the “Disputed Shares Escrow Agreements”) , pursuant to which TMTG deposited into escrow 1,087,553 shares of TMTG Common Stock, which amounts represent the difference between the actual conversion ratio, determined by Digital World’s board of directors upon closing of
the Business Combination (which was determined to be 1.348 :1), and a conversion ratio of 2.00 :1. On September 16, 2024, the Court of Chancery issued its order in this matter setting the conversion ratio at 1.4911 :1.
The Court of Chancery ruled against ARC on a substantial majority of its
claims, reducing ARC’s proposed calculation of the conversion ratio of 1.81 :1 by approximately 70 % and holding that the former board members of Digital World did not breach any fiduciary duties in setting the conversion ratio calculation
or in their public disclosures of the same. As a result of the Court of Chancery’s order, a portion of the disputed shares of Common Stock held in escrow were released to ARC. The release of Common Stock is subject to the terms and
conditions of the ARC Escrow Agreement with the Escrow Agent and TMTG. Accordingly, 785,825 shares of TMTG Common Stock, which
represents the Court’s calculation for the difference between a ratio of 1.348 :1 and 1.4911 :1, were released from escrow (the “Court Ratio”). Both parties still retain the option to file an appeal within 30 days after the Court of Chancery’s final order. In connection with the Court of Chancery’s final order, 238,692 Common Shares deposited in the Non-ARC Class B Shareholders Escrow Agreement, representing the Court Ratio, were released to the
applicable holders, subject to the terms and conditions of the Non-ARC Class B Shareholders Escrow Agreement and the Securities Act of 1933, as amended. On October 23, 2024, ARC filed a motion for a $ 1,000,000 fee award , which has since been fully briefed and will be decided by the Court without oral argument.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Lawsuit against UAV,
Litinsky, Moss, and Orlando in Florida
On March 24, 2024,
Private TMTG filed a lawsuit in the Circuit Court of the Twelfth Judicial Circuit for Sarasota County, Florida (Docket No. 2024-CA-001545-NC) against UAV, Andrew Litinsky, Wesley Moss, and Patrick Orlando. In view of UAV’s repeated
demands concerning its alleged stock ownership and director appointment rights, the complaint alleges claims for a declaratory judgment against UAV determining that the Services Agreement is unenforceable against Private TMTG. The
complaint also asserts a claim for unjust enrichment against UAV based on its failure to competently provide services to the company. Finally, the complaint asserts claims for damages for (a) breach of the fiduciary duty of loyalty
against Mr. Litinsky and Mr. Moss based on their dealings with Mr. Orlando, (b) aiding and abetting and conspiracy to breach fiduciary duty against Mr. Orlando based on the same events, and (c) breach of the fiduciary duty of care against
Mr. Litinsky and Mr. Moss for their gross negligence in managing the company. On April 25, 2024, Private TMTG filed a motion to consolidate this lawsuit with Docket No. 2024-CA-001061-NC (described above) for purposes of discovery and
pretrial proceedings, which was denied without prejudice on August 2, 2024. On June 27, 2024, the court granted Mr. Moss, Mr. Litinsky, and UAV’s motion to stay proceedings pending resolution of the Delaware Action involving UAV. The
court also denied Private TMTG’s motion for an anti-suit injunction. On July 3, 2024, Mr. Orlando filed a motion to dismiss. On July 17, 2024, Private TMTG sought review of the court’s order granting UAV’s motion to stay in Florida’s Second District Court of Appeal by filing a petition for a writ of certiorari with
that court (Case No. 2D2024-1642). The court subsequently denied UAV’s motion to enforce the stay and Private TMTG’s motion to stay the stay pending certiorari review on September 2, 2024, and September 23, 2024, respectively . On December 11, 2024, the Second
District Court of Appeal heard argument on Private TMTG’s appeal of the trial court’s order granting UAV’s motion to stay, which the Second District denied on February 14, 2025.
Litigation with Orlando in Delaware
On March 15, 2024,
Plaintiff Patrick Orlando brought a lawsuit against Digital World in the Court of Chancery seeking advancement of legal fees associated with Mr. Orlando’s involvement in civil litigation against Digital World in Florida and certain other
matters (the “Advancement Lawsuit”) (C.A. No. 2024-0264-CDW). Mr. Orlando’s allegations relate to certain provisions in the Digital World Charter, Digital World’s bylaws, and an indemnity agreement
allegedly entered into between Mr. Orlando and Digital World. Mr. Orlando alleges that those certain provisions require Digital World to pay the legal fees Mr. Orlando incurred and will incur in connection with legal proceedings in which he is
involved by reason of the fact that he is or was a director or officer of Digital World. Mr. Orlando seeks a court order that (i) declares that he is entitled to legal fees for certain proceedings described in the complaint, (ii) requires
Digital World to pay for legal fees incurred and future legal fees to be incurred for those proceedings, (iii) requires Digital World to pay the fees incurred to bring the Advancement Lawsuit, and (iv) requires Digital World to pay pre- and
post-judgment interest on the amounts owed to Mr. Orlando. On April 3, 2024, the Court of Chancery entered a Stipulation and Advancement Order (“Stipulation”) stating that Mr. Orlando is entitled to
advancement of attorneys’ fees and costs incurred with legal proceedings described in the Stipulation, subject to Digital World’s right to challenge the reasonableness of those attorneys’ fees and costs. The Stipulation further states that Mr.
Orlando is entitled to fees incurred in connection with enforcement of advancement rights and sets forth procedures that will govern future requests for advancement of attorneys’ fees and costs. As of May 5, 2025, TMTG had paid or agreed to
pay approximately $ 6.0 million to Mr. Orlando’s attorneys pursuant to such Stipulation and TMTG’s other advancement obligations to
Mr. Orlando. On April 23, 2024, Mr. Orlando filed a motion for leave to supplement the Advancement Lawsuit to add a claim for advancement of legal fees and expenses Mr. Orlando had incurred and would incur in connection with his defense of an
action for declaratory judgment brought by members of ARC regarding Mr. Orlando’s removal as the managing member of ARC ( the “ARC Removal Action”). Mr. Orlando also sought reimbursement for the legal
fees and expenses incurred in connection with his supplement to the Advancement Lawsuit, and he sought pre-judgment and post-judgment interest on the amounts he claimed were owed to him. On August 1, 2024, plaintiffs in the ARC Removal Action
dismissed their complaint without prejudice. On August 8, 2024, Mr. Orlando dismissed his supplemental claims in the Advancement Lawsuit without prejudice.
On February 10, 2025, Mr. Orlando filed a motion to modify the advancement order, seeking to modify the advancement order to allow him to not submit invoices for experts. On March 12, 2025, the Court denied the motion in part, stating that “TMTG is entitled to have some concrete information allowing it to assess whether Orlando’s expenses are reasonable and related to DWAC/TMTG before making a
payment” and ordering Mr. Orlando to “provide TMTG with invoices with sufficient unredacted information that allows it to make that assessment.”
On March 31, 2025, Mr. Orlando filed a motion seeking advancement of certain disputed fees, which has been fully briefed. On April 8, 2025, Mr. Orlando filed a motion for sanctions, which he subsequently withdrew. This matter remains open on the Court’s docket.
Litigation with Orlando and Benessere in Miami, Florida
On April 2, 2024, Patrick Orlando and Benessere Investment Group, LLC (“Benessere”) filed suit against TMTG in the Circuit Court of the
Eleventh Judicial District in Miami-Dade County Florida (Docket No. 2024-005894-CA-01). Orlando and Benessere seek a declaratory judgment that TMTG is restricted from disclosing material exchanged with Orlando and Benessere pursuant to a
joint defense agreement previously entered into by the Parties in addition to a request for damages for any breach of the joint defense agreement. Also on April 3, 2024, Orlando and Benessere filed a motion for preliminary injunction for
enforcement of the joint defense agreement. As of May 5, 2025, the motion for preliminary injunction had not been set for hearing . On Februrary 3, 2025, Orlando and Benessere filed an Amended Complaint.
This matter has
been scheduled a three-day trial beginning September 3, 2025.
Litigation with
Odyssey Transfer & Trust Company in Delaware
On
June 20, 2024, TMTG’s transfer agent, Odyssey filed an interpleader action in the U.S. District Court of the District of Delaware (C.A. No. 24-CV-00729). The complaint pertains to the ongoing dispute regarding share ownership between
Michael Melkersen and ARC and includes TMTG as a nominal defendant. Odyssey is seeking an order from the Court discharging Odyssey of further liability and requiring ARC and TMTG to resolve their competing claims as to 716,140 Class A shares of TMTG and 25,000
TMTG warrants. On July 17, 2024, Odyssey filed a motion to dismiss for discharge and dismissal. On July 18, 2024, ARC filed a motion to dismiss for improper venue. On July 22, 2024, TMTG filed a motion for discharge and dismissal. On August
13, 2024, TMTG filed its answer and crossclaims against Mr. Melkersen and ARC. On August 21, 2024, ARC filed a motion to dismiss for l ack of subject matter jurisdiction. On September 3, 2024, ARC filed a motion to dismiss TMTG’s crossclaims on the grounds of forum non conveniens. On October 14, 2024, Mr.
Melkersen filed his answer to the complaint for interpleader. This matter remains pending.
Litigation with
RejuveTotal in New York
On
October 21, 2024, RejuveTotal LLC (“Rejuve”) filed suit against TMTG and its Chief Financial Officer in the Supreme Court of the State of New York, New York County (Index No. 655551/2024). The
complaint alleged breach of contract, and sought equitable relief as well as indemnification and reimbursement of costs and expenses, in connection with Rejuve’s role as Purchaser Representative under the Merger Agreement. On February
18, 2025, Rejuve discontinued this action without prejudice.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On December 23, 2024, TMTG filed suit against Rejuve in the Supreme Court of the State of New York, New York County (Index No. 659834 / 2024) . In the complaint, TMTG seeks declaratory and injunctive relief against Rejuve arising out of Rejuve’s alleged conduct as Purchaser Representative under an Agreement and
Plan of Merger dated as of October 20, 2021. On January 13, 2025,
TMTG filed an application, by way of a proposed order to show cause, for a preliminary injunction prohibiting Rejuve from taking any further action in its alleged capacity as Purchaser Representative under the Merger Agreement. On
January 23, 2025, the Court approved a stipulation to stay the action pending resolution of the arbitration before the American Arbitration Association
seeking to recover its fees and expenses from TMTG that Rejuve allegedly incurred as Purchaser Representative, and to enjoin Rejuve from acting as Purchaser Representative except with respect to its participation in the arbitration.
The arbitration occurred on April 29, 2025 .
NOTE 17 – SEGMENT INFORMATION
We report our operating results through one
reportable segment: social media and streaming.
Our Chief Operating Decision Maker (CODM), as of March 31, 2025, was our Chief Executive Officer. Our CODM evaluates the performance of and
allocates resources to our segment based on our consolidated net loss and earnings before interest, taxes, depreciation and amortization (Segment EBITDA). Segment EBITDA is defined as segment revenue less operating costs and expenses, excluding
depreciation and amortization, interest income or expense (net), provision or benefit for income taxes, change in fair value of derivative liabilities, loss on extinguishment of debt and stock-based compensation expense. We believe Segment EBITDA
serves as a measure that assists our CODM and our investors in comparing our segment performance on a consistent basis.
To date, we have generated limited advertising revenue through Truth Social and no advertising revenue through our newly launched streaming
operations, Truth+. We expect to incur significant expenses and operating losses for the foreseeable future as we build and grow our streaming and infrastructure operations. As of March 31, 2025, we have not yet allocated resources, incurred
expenses or generated revenue from Truth.Fi. Our CODM does not use assets by segment to evaluate performance or allocate resources; therefore, we do not provide disclosure of assets by segment.
Review of cash forecast models is used to assess the entity-wide result and performance, and inform investment decisions by our CODM. Net loss
and Segment EBITDA are used to monitor budgeted versus actual results. Additionally, review of budgeted versus actual results is used in assessing performance of the segment.
The following table presents our segment information for the periods indicated and, because we currently only have one segment, net loss is identical to the information presented in the “Consolidated Statement of Operations” above:
(in thousands)
Three months ended March 31,
2025
2024
Net loss
$
( 31,726.6
)
$
( 327,599.7
)
Interest (income)/expense, net
( 7,808.4
)
2,788.8
Depreciation and amortization
1,779.2
5.6
Stock-based compensation
17,851.7
84,588.0
Change in fair value of derivative liabilities
-
225,916.0
Loss on extinguishment of debt
-
542.3
Segment EBITDA
$
( 19,904.1
)
$
( 13,759.0
)
NOTE 18 - SUBSEQUENT EVENTS
On April 15, 2025, the Company announced the launch of Separately Managed Accounts in
partnership with Yorkville America Equities and Index Technologies Group.
On April 22, 2025, the Company announced an agreement to partner with Crypto.com and Yorkville America Digital to launch a series of
exchange-traded funds and exchange-traded products.
On April 30, 2025, the Company reincorporated from Delaware to Florida after receiving shareholder approval to do so .
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.