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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q(Mark One)XQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30,2024TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1

2、934For the transition period from to Commission File No.001-40779Trump Media&Technology Group Corp.(Exact name of registrant as specified in its charter)Delaware 85-4293042(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)401 N.Cattlemen Rd.,Ste.200Sara

3、sota,Florida 34232(Address of Principal Executive Offices,including zip code)(941)735-7346(Registrants telephone number,including area code)N/A(Former name,former address and former fiscal year,if changed since last report)Securities registered pursuant to Section 12(b)of the Act:Title of each class

4、 TradingSymbol(s)Name of each exchangeon which registered Common Stock,par value$0.0001 per share DJT The Nasdaq Stock Market LLCWarrants,each exercisable for one share of Common Stock for$11.50 per share DJTW The Nasdaq Stock Market LLCIndicate by check mark whether the registrant(1)has filed all r

5、eports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes X No Indicate by check

6、mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes X No Indic

7、ate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growthcompany.See the definitions of large accelerated filer,”accelerated filer,”smaller reporting company,”and emerging growth company”in Rul

8、e 12b-2 of the Exchange Act.Large accelerated filerAccelerated filer Non-accelerated filerXSmaller reporting companyX Emerging growth companyXIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or rev

9、ised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act):Yes No XAs of August 7,2024,there were 194,715,772 shares of common stock,par value$0.0001 per share

10、,of the registrant issued and outstanding.TRUMP MEDIA&TECHNOLOGY GROUP CORP.FORM 10-Q FOR THE QUARTER ENDED JUNE 30,2024 TABLE OF CONTENTS PagePART I-FINANCIAL INFORMATION1 Item 1.Financial Statements(unaudited)1 Unaudited Condensed Consolidated Balance Sheets3 Unaudited Condensed Consolidated State

11、ments of Operations4 Unaudited Condensed Consolidated Statements of Changes in Stockholders Equity/(Deficit)5 Unaudited Condensed Consolidated Statements of Cash Flows6 Notes to Unaudited Condensed Consolidated Financial Statements7 Item 2.Managements Discussion and Analysis of Financial Condition a

12、nd Results of Operations20 Item 3.Quantitative and Qualitative Disclosures about Market Risk41 Item 4.Control and Procedures41 PART II-OTHER INFORMATION43 Item 1.Legal Proceedings43 Item 1A.Risk Factors48 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds52 Item 3.Defaults Upon Senio

13、r Securities52 Item 4.Mine Safety Disclosures52 Item 5.Other Information52 Item 6.Exhibits52 SIGNATURES54Table of ContentsPART I-FINANCIAL INFORMATIONItem 1.Financial StatementsCONDENSED CONSOLIDATED FINANCIAL STATEMENTSBalance Sheets as of June 30,2024 and December 31,2023 and Statements of Operati

14、ons,Stockholders(Deficit)/Equity and Cash Flows for the three and six months endingJune 30th,2024 and June 30th,20231Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.TABLE OF CONTENTSPage Unaudited Condensed Consolidated Balance Sheets3Unaudited Condensed Consolidated Statements of Operations4Unau

15、dited Condensed Consolidated Statements of Stockholders Equity/(Deficit)5Unaudited Condensed Consolidated Statements of Cash Flows6Notes to Unaudited Condensed Consolidated Financial Statements72Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolidated Balance Sheets(in thousands exc

16、ept share data)June 30,2024(Unaudited)December 31,2023(Audited)Assets Current Assets:Cash and cash equivalents$343,954.4$2,572.7 Prepaid expenses and other current assets 9,553.4 327.5 Accounts receivable,net 17.5 81.0 Total current assets 353,525.3 2,981.2 Property and equipment,net 2,161.9 29.2 Ri

17、ght-of-Use Assets,net 806.6 353.2 Total Assets 356,493.8 3,363.6 Liabilities and Stockholders Equity/(Deficit)Current Liabilities:Accounts payable and accrued expenses 10,831.7 1,600.7 Convertible promissory notes -41,818.8 Related party payables 262.0 -Derivative liability -17,282.5 Unearned revenu

18、e 2,924.6 4,413.1 Current portion of operating lease liability 276.9 160.3 Total Current Liabilities 14,295.2 65,275.4 Long-term operating lease liability 530.3 201.6 Convertible promissory notes -3,528.2 Derivative liability -1,120.3 Total liabilities 14,825.5 70,125.5 Commitments and contingencies

19、(Note 14)Stockholders Equity/(Deficit):Preferred Stock$0.0001 par value 1,000,000 shares authorized,0 shares issued and outstanding at June 30,2024 and December 31,2023 -Common Stock$0.0001 par value 999,000,000 shares authorized,191,477,375 and 87,500,000 shares issued and outstanding at June 30,20

20、24 and December 31,2023 19.2 8.8 Paid in Capital 3,229,937.7 -Accumulated Deficit (2,888,288.6)(66,770.7)Total stockholders equity/(deficit)341,668.3 (66,761.9)Total liabilities and stockholders equity/(deficit)$356,493.8$3,363.6 The Notes to the Unaudited Condensed Consolidated Financial Statements

21、 are an integral part of these statements.3Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolidated Statements of Operations(Unaudited)Three Month Six Month Period Ended Period Ended (in thousands except share and per share data)June 30,2024 June 30,2023 June 30,2024 June 30,2023 Ne

22、t sales$836.9$1,192.1$1,607.4$2,308.3 Cost of revenue 36.2 41.2 129.6 82.5 Gross profit 800.7 1,150.9 1,477.8 2,225.8 Operating costs and expenses(1)Research and development 4,861.6 2,197.4 38,020.2 5,009.5 Sales and marketing 1,175.3 388.4 2,245.7 644.5 General and administration 13,418.6 2,321.4 7

23、8,213.7 4,157.7 Depreciation 3.7 16.6 9.3 32.9 Total costs and operating expenses 19,459.2 4,923.8 118,488.9 9,844.6 Loss from operations (18,658.5)(3,772.9)(117,011.1)(7,618.8)Interest income 2,132.7 -2,161.5 -Interest expense 157.8 (20,606.3)(2,659.8)(22,630.6)Change in fair value of derivative li

24、abilities -1,611.1 (225,916.0)7,271.0 Loss on the convertion of convertible debt -(542.3)-Loss from operations before income taxes (16,368.0)(22,768.1)(343,967.7)(22,978.4)Income tax expense -Net loss$(16,368.0)$(22,768.1)$(343,967.7)$(22,978.4)Loss per Share attributable to common stockholders:Basi

25、c(0.10)(0.26)(2.67)(0.26)Diluted*(0.10)(0.26)(2.67)(0.26)Weighted Average Shares used to compute net loss per share attributable to commonstockholders:Basic 166,726,512 87,500,000 128,735,253 87,500,000 Diluted 166,726,512 87,500,000 128,735,253 87,500,000 (1)Costs of operating expenses include stoc

26、k based compensation expense as follows:Research and development$-$-$30,142.5$-General and administration -54,445.5 -Total stock based compensation expense$-$-$84,588.0$-*Loss per share attributable to common stockholders for diluted calculation is based on the Basic weighted shares as these are not

27、 dilutive.The Basic and diluted loss per shareattributable to common stockholders are therefore the same.The Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.4Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolidated Statements o

28、f Stockholders(Deficit)/Equity(Unaudited)(in thousands,except sharedata)Common StockNumber of Shares Par Value$0.0001 Preferred StockNumber of Shares Par Value$0.0001 Paid in Capital AccumulatedDeficit TotalStockholders(Deficit)/Equity Retroactive application ofrecapitalization to January1,2023 87,5

29、00,000$8.8 -$-$-$(8,581.3)$(8,572.5)Net Profit/(Loss)-(210.3)(210.3)Balance at March 31,2023 87,500,000 8.8 -(8,791.6)(8,782.8)Net Profit/(Loss)-(22,768.1)(22,768.1)Balance at June 30,2023 87,500,000$8.8 -$-$-$(31,559.7)$(31,550.9)Balance as December 31,2023 87,500,000$8.8 -$-$-$(66,770.7)$(66,761.9

30、)Net Loss -(327,599.7)(327,599.7)Fair value of TMTG earnoutshares 2,477,550.2 (2,477,550.2)-Conversion of convertiblenotes into common stockupon BusinessCombination 6,014,534 0.6 -300,425.4 -300,426.0 Stock Based Compensation 1,840,000 0.2 -84,587.8 84,588.0 Issuance of common stockupon BusinessComb

31、ination 41,346,049 4.1 -219,617.5 219,621.6 Balance as of March 31,2024 136,700,583 13.7 -3,082,180.9 (2,871,920.6)210,274.0 Exercise of Warrants 8,526,792 0.9 97,761.4 97,762.3 Issuance of Earnout Shares 40,000,000 4.0 (4.0)-Conversion of convertiblenotes in common stock 6,250,000 0.6 49,999.4 50,0

32、00.0 Net loss (16,368.0)(16,368.0)Balance as of June 30,2024 191,477,375$19.2 -$-$3,229,937.7$(2,888,288.6)$341,668.3 The Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.5Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolid

33、ated Statements of Cash Flows(Unaudited)Six Month Periods Ended (in thousands)June 30,2024 June 30,2023 Cash flows from operating activities Net loss$(343,967.7)$(22,978.4)Adjustments to reconcile net loss to net cash used in operating activities:Non-cash interest expense on debt 2,659.8 22,630.6 Ch

34、ange in fair value of derivative liability 225,916.0 (7,271.1)Depreciation 9.3 33.3 Loss on extinguishment of debt 542.3 -Stock based compensation 84,588.0 -Non-cash charge for operating lease (7.9)3.2 Prepaid expenses and other current assets (5,269.1)6.0 Accounts receivable 63.4 94.5 Unearned reve

35、nue (1,488.5)-Accounts payable 6,200.1 111.0 Net cash used in operating activities(30,754.3)(7,370.9)Cash flows used in investing activities Purchases of property and equipment (2,141.9)(2.2)Net cash used in investing activities(2,141.9)(2.2)Cash flows provided by financing activities Proceeds from

36、convertible promissory notes 47,455.0 -Proceeds from merger 233,017.5 -Proceeds from warrant conversion 93,805.4 -Net cash provided by financing activities 374,277.9 -Net change in cash and cash equivalents 341,381.7 (7,373.1)Cash and cash equivalents,beginning of period 2,572.7 9,808.4 Cash and cas

37、h equivalents,end of period$343,954.4$2,435.3 Supplemental disclosure of cash flow information Cash paid for interest$-$-Cash paid for taxes$1,897.7$-Non cash investing and financing activities Shares issued for conversion of convertible notes$350,426.0$-Operating lease assets obtained in exchange f

38、or operating lease obligations$542.3$-The Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.6Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands,except share and per sha

39、re data)(Unaudited)NOTE 1-DESCRIPTION OF BUSINESS The accompanying unaudited condensed consolidated financial statements include the historical accounts of Trump Media&Technology Group Corp.(TMTG”),which changedits name from Trump Media Group Corp.in October 2021.The mission of TMTG is to end Big Te

40、chs assault on free speech by opening up the Internet and giving people theirvoices 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.MergerOn March 25,2024,TMTG consummated the Merger

41、Agreement dated October 20,2021,between Digital World Acquisition Corp.(Digital World”or DWAC”),DWAC MergerSub,TMTG,ARC Global Investments II(ARC”),LLC and TMTGs General Counsel,as amended on May 11,2022,August 9,2023 and September 29,2023.Pursuant to theMerger Agreement,and subject to the terms and

42、 conditions set forth therein,upon the Closing,Merger Sub merged with and into TMTG,with TMTG surviving as a whollyowned subsidiary of Digital World,and with TMTGs stockholders receiving 87,500,000 shares of Digital World Class A common stock(excluding 40,000,000 Earnout Shares),subject to certain a

43、djustments and earnout provisions,in exchange for TMTG common stock,which is in substance,a continuation of the TMTG shareholders equity interests inthe 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 Converti

44、ble Notesimmediately prior to the Closing.Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement,the Business Combination has been accounted for as a reverse recapitalizationin accordance with U.S.GAAP because TMTG is the operating company and has been determined

45、 to be the accounting acquirer under Financial Accounting Standards BoardsAccounting Standards Codification Topic 805,Business Combinations(ASC 805”),while Digital World is a blank check company.The determination is primarily based on theevaluation of the following facts and circumstances:The pre-co

46、mbination equity holders of TMTG hold the majority of voting rights in Digital World after giving effect to the Business Combination(the CombinedEntity”,also referred to herein as New Digital World”or the Company”);The pre-combination equity holders of TMTG have the right to appoint the majority of

47、the directors on the Combined Entity Board;TMTG senior management(executives)are the senior management(executives)of the Combined Entity;and Operations of TMTG will comprise the ongoing operations of Combined Entity.Under the reverse recapitalization model,the Business Combination was treated as TMT

48、G issuing equity for the net assets of Digital World,with no goodwill or intangible assetsrecorded.While Digital World was the legal acquirer in the Business Combination,because Predecessor TMTG was deemed the accounting acquirer,the historical financial statements ofPredecessor TMTG became the hist

49、orical financial statements of the combined company upon the consummation of the Business Combination.As a result,the financialstatements reflect(i)the historical operating results of Predecessor TMTG prior to the Business Combination;(ii)the combined results of Digital World and Predecessor TMTGfol

50、lowing the closing of the Business Combination;(iii)the assets and liabilities of Predecessor TMTG at their historical cost;and(iv)the Companys equity structure for allperiods presented.In connection with the consummation of the Business Combination,Digital World was renamed Trump Media&Technology G

51、roup Corp.”and TMTG wasrenamed TMTG Sub Inc.”In accordance with the applicable guidance,the equity structure has been retroactively restated in all comparative periods up to the Closing Date,to reflect the number of shares ofthe Companys common stock issued to Predecessor TMTG common shareholders an

52、d Predecessor TMTG convertible noteholders in connection with the Business Combination.As such,the shares and corresponding capital amounts and earnings per share related to Predecessor TMTG convertible notes and Predecessor TMTG common stock prior to theBusiness Combination have been retroactively

53、restated as shares reflecting the exchange ratio established in the Business Combination.NOTE 2-SIGNIFICANT ACCOUNTING POLICIES AND PRACTICESBasis of Presentation The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally a

54、ccepted in the United States ofAmerica(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

55、 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 31,2024.These unauditedcondensed consolidated financial statements and related notes should be read in conjunction with our au

56、dited financial statements for the year ended December 31,2023.Reclassifications Reclassifications of certain prior period amounts have been made to conform to the current period presentation.Use of EstimatesThe preparation of financial statements in conformity with U.S.GAAP requires management to m

57、ake estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those est

58、imates.Material estimates and assumptions reflected in the unaudited condensed consolidated financial statements relate to and include,but are not limited to,the valuation of convertible promissory notes,derivative liabilities,earn-out shares and stock-based compensation.7Table of ContentsNOTES TO C

59、ONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Principles of ConsolidationThe unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries and have been prepared inaccordance with U.S.GAAP.All intercompany transactions

60、have been eliminated.In October 2021,the Company acquired 100%of the ownership in T Media Tech LLC for anominal value.The results of T Media Tech LLC since October 13,2021 are included in the Companys Condensed Consolidated Statements of Operations.Cash and cash equivalentsCash and cash equivalents

61、represents bank accounts and demand deposits held at financial institutions.Cash and cash equivalents are held at major financial institutions with anoriginal maturity of 90 days or less and are subject to credit risk to the extent those balances exceed applicable Federal Deposit Insurance Corporati

62、on(FDIC)limitations.No losseswere incurred for those balances exceeding the limitations.Prepaid expenses and other current assetsOther current assets consist of receivables for proceeds from warrant exercises,prepaid rent,insurance and prepaid data costs.Included in the prepaid expenses and other cu

63、rrentassets are receivables related to warrant conversion of$3,956.9 as of June 30,2024 and$0.0 as of June 30,2023.This balance reflects proceeds from warrant exercises in transitfrom the transfer agent.Property and EquipmentProperty and equipment are recorded at cost less accumulated depreciation.D

64、epreciation is calculated on the straight-line basis over the estimated useful lives of the assets.Useful lives for property and equipment are as follows:Asset TypeRangeFurniture and equipment2-5 yearsComputer equipment3 yearsExpenditures which substantially increase value or extend useful lives are

65、 capitalized.Expenditures for maintenance and repairs are charged to operations as incurred.Gains andlosses are recorded on the disposition or retirement of property and equipment based on the net book value and any proceeds received.Long-lived fixed assets held and used are reviewed for impairment

66、when events or changes in business circumstances indicate that the carrying amount of the assets may not befully recoverable.Circumstances such as the discontinuation of a line of service,a sudden or consistent decline in the sales forecast for a product,changes in technology or in theway an asset i

67、s being used,a history of operating or cash flow losses or an adverse change in legal factors or in TMTG climate,among others,may trigger an impairment review.Ifsuch indicators are present,TMTG performs undiscounted cash flow analyses to determine if impairment exists.The asset value would be deemed

68、 impaired if the undiscountedcash flows generated did not exceed the carrying value of the asset.If impairment is determined to exist,any related impairment loss is calculated based on fair value.There were notriggering events identified that necessitated an impairment test over property and equipme

69、nt.Assets to be disposed of are reported at the lower of the carrying amount or fairvalue less costs to sell.See Note 4-Property and equipment for further detail.Software Development CostWe expense software development costs,including costs to develop software products or the software component prod

70、ucts 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 thecriteria for capitalization were not material for the periods present

71、ed.Software development cost also includes costs to develop software to be used solely to meet internal needs and cloud-based applications used to deliver our services.Wecapitalize development costs related to these software applications once the preliminary project stage is complete and it is proba

72、ble that the project will be completed and thesoftware will be used to perform the function intended.Costs capitalized for developing such software applications were not material for the periods presented.Revenue recognition The Company records revenue in accordance with ASC 606.The Company determin

73、es the amount of revenue to be recognized through application of the following steps-Identification of the contract,or contracts with a customer;-Identification of the performance obligations in the contract;-Determination of the transaction price;-Allocation ofthe transaction price to the performan

74、ce obligations in the contract;and-Recognition of revenue when or as the Company satisfies the performance obligations.The Company entered into advertising contractual arrangements with advertising manager service companies.The advertising manager service companies provide advertisingservices throug

75、h their Ad Manager Service Platform on the Truth Social website to customers.The Company determines the number of Ad Units available on its Truth Socialwebsite.The advertising manager service companies have sole discretion over the terms of the auction and all payments and actions associated therewi

76、th.Prices for the Ad Unitsare set by an auction operated and managed by these companies.The Company has the right to block specific advertisers at its sole reasonable discretion,consistent withapplicable laws,rules,regulations,statutes,and ordinances.The Company is an agent in these arrangements,and

77、 recognizes revenue for its share in exchange for arranging forthe specified advertising to be provided by the advertising manager service companies.The advertising revenues are recognized in the period when the advertising services areprovided.Unearned revenueUnearned revenue primarily consists of

78、billings or payments received from customers in advance of revenue recognized for the services provided to our customers or annuallicenses 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.

79、Unearnedrevenue of$1,488.5 was recognized as revenue for the six months ended June 30,2024,which was included in the deferred revenue balance as of December 31,2023.As June 30,2024,deferred revenue is expected to be recognized during the succeeding 12-month period and is therefore presented as curre

80、nt liability on the unaudited condensed balancesheet.Cost of revenueCost of revenue primarily encompasses expenses associated with generating advertising revenue.These costs are determined by allocating staff direct and indirect costsproportionately,including depreciation,based on the time spent man

81、aging the agency relationships with external vendors.These costs are confined to activities related tocoordinating with these third-party vendors as the third-party vendors are responsible to control and facilitate the delivery of advertising services.8Table of ContentsNOTES TO CONDENSED CONSOLIDATE

82、D FINANCIAL STATEMENTS(Continued)Research and developmentResearch and development expenses consist primarily of personnel-related costs,including salaries,benefits and stock-based compensation,for our engineers and otheremployees engaged in the research and development of our products and services.I

83、n addition,research and development expenses include allocated facilities costs,and othersupporting overhead costs.Marketing and salesSales and marketing expenses consist primarily of personnel-related costs,including salaries,commissions,benefits and stock-based compensation for our employees engag

84、ed insales,sales support,business development and media,marketing,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 overh

85、ead costs.We expense marketing and sales cost inthe period in which they are incurred.Selling,general and administration expensesGeneral and administration expenses consist primarily of personnel-related costs,including salaries,benefits,and stock-based compensation for our executive,finance,legal,i

86、nformation technology,corporate communications,human resources,and other administration employees.In addition,general and administration expenses include fees and costsfor professional services(including third-party consulting,legal,and accounting services),facilities costs,and other supporting over

87、head costs that are not allocated to otherdepartments.Income taxesIncome taxes are accounted for under the asset and liability method.Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differencesbetween the unaudited condensed consolidated financial s

88、tatements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and taxcredit carryforwards.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differencesar

89、e expected to be recovered or settled.The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactmentdate.The Company recognizes the effect of income tax positions only if those positions are more likely than not of being s

90、ustained.Income tax amounts are therefore recognized for allsituations where the likelihood of realization is greater than 50%.Changes in recognition or measurement are reflected in income tax expense in the period in which the change injudgment occurs.Accrued interest expense and penalties related

91、to uncertain tax positions are recorded in Income Tax Expense/(Benefit).See Note 7-Income Taxes.Derivatives The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASCTopic 815,Deriva

92、tives 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 fairvalue reported in the statements of operations.Derivative assets and liabilities are classified in the balance sheets as current or non-curren

93、t based on whether or not net-cashsettlement or conversion of the instrument could be required within 12 months of the balance sheet date.The Company accounts for the warrants and earnout in accordance withthe guidance contained in ASC 815-40.The Company has determined that the warrants qualify for

94、equity treatment in the Companys unaudited condensed consolidated financialstatements.Commitments and contingenciesLiabilities for loss contingencies arising from claims,assessments,litigation,fines,and penalties and other sources are recorded when it is probable that a liability has beenincurred an

95、d the amount can be reasonably estimated.The Company has no liabilities for loss contingencies.Recently issued accounting standardsIn 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.ASU2023-09 req

96、uires additional disaggregated disclosures on an entitys effective tax rate reconciliation and additional details on income taxes paid.ASU 2023-09 is effective on aprospective basis,with the option for retrospective application,for annual periods beginning after December 15,2024 and early adoption i

97、s permitted.We do not expect theadoption of ASU 2023-09 to have a material impact on our unaudited condensed consolidated financial statements.In November 2023,the FASB issued ASU 2023-07 Segment Reporting(Topic 280):Improvements to Reportable Segment Disclosures,”or ASU 2023-07.ASU 2023-07 enhances

98、the disclosures required for reportable segments on an annual and interim basis.ASU 2023-07 is effective on a retrospective basis for annual periods beginning after December 15,2023,for interim periods within fiscal years beginning after December 15,2024,and early adoption is permitted.We do not exp

99、ect the adoption of ASU 2023-07 to have a materialimpact on our unaudited condensed consolidated financial statements.In August 2020,the FASB issued ASU 2020-06,DebtDebt with Conversion and Other Options(Subtopic 470-20)and Derivatives and HedgingContracts in Entitys OwnEquity(Subtopic 815-40)Accoun

100、ting for Convertible Instruments and Contracts in an Entitys Own Equity”.ASU 2020-06 reduces the number of accounting models forconvertible debt instruments and convertible preferred stock.For convertible instruments with conversion features that are not required to be accounted for as derivatives u

101、nderTopic 815,Derivatives and Hedging,or that do not result in substantial premiums accounted for as paid-in capital,the embedded conversion features no longer are separated fromthe host contract.ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception

102、 evaluation under Subtopic 815-40,Derivatives andHedgingContracts in Entitys Own Equity,and clarify the scope and certain requirements under Subtopic 815-40.In addition,ASU 2020-06 improves the guidance related to thedisclosures and earnings-per-share(EPS)for convertible instruments and contracts in

103、 an entitys own equity.ASU 2020-06 is effective for public smaller reporting companies forfiscal years beginning after December 15,2023,including interim periods within those fiscal years.The Board specified that an entity should adopt the guidance as of thebeginning of its annual fiscal year.The Co

104、mpany has adopted ASU 2020-06 effective as of January 1,2024.The adoption of ASU 2020-06 did not have a material effect on theCompanys unaudited condensed consolidated financial statements.9Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)NOTE 3-RECAPITALIZATION As dis

105、cussed in Note 1,following the Closing of the Business Combination,TMTG was deemed the accounting acquirer and the transaction was accounted for as a reverserecapitalization.Transaction Proceeds Upon the Closing,the Company received gross proceeds of$233,017.5.The following table reconciles the elem

106、ents of the Business Combination to the condensedconsolidated statements of cash flows and the condensed consolidated statements of changes in stockholders equity(deficit)for the period ended June 30,2024:Cash-trust and cash,net of redemptions 233,017.5 Add:other assets -Less:accrued expenses (3,292

107、.9)Less:notes payable (10,103.0)Reverse recapitalization,net 219,621.6 In connection with the Merger,TMTG incurred$1,640.2 in one-time direct and incremental transaction costs,consisting of legal and other professional fees,recorded in generaland administration expenses.TMTG also issued$6,130.0 of b

108、onus payments to employees of the Company and a director of Private TMTG that were triggered by the Merger.TheCompany recorded$5,530.0 and$600.0 in general and administration expense and sales and marketing expense,respectively,for the three and six months ended June 30,2024.TMTG deems these to be n

109、on-recurring expenses that are not direct and incremental to the Merger.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 Wor

110、ld convertible noteholders,converted immediately prior to Business Combination 1,709,145 Predecessor TMTG Shares(1)87,500,000 Shares issued to former TMTG convertible noteholders 7,854,534 Common stock immediately after the Business Combination(2)136,700,583 (1)Includes 614,640 shares outstanding an

111、d held in escrow.(2)Excludes 4,667,033 shares not outstanding and held in escrow.The number of Predecessor TMTG shares was determined as follows:Predecessor TMTGShares Shares issued toshareholders ofPredecessor TMTG Common stock 100,000,000 87,500,000 100,000,000$87,500,000 Public and private placem

112、ent warrantsIn connection with Digital Worlds initial public offering in 2021,14,374,976 public warrants were issued(the Public Warrants”)and 566,742 warrants were issued in a privateplacement(the Private Placement Warrants”;and the Private Placement Warrants together with the Public Warrants,collec

113、tively the Warrants”)all of which warrants remainedoutstanding and became warrants for the Common Stock in the Company.Additionally,pursuant to warrant subscription agreements(each a Warrant Subscription Agreement”)entered into by and between Digital World and certain institutionalinvestors on Febru

114、ary 7,2024,Digital World has agreed to issue an aggregate of 3,424,510 warrants(Convertible Note Post IPO Warrants and Post-IPO Warrants”),each warrantentitling the holder thereof to purchase one share of the Companys Class A common stock for$11.50 per share.The Convertible Note Post IPO Warrants an

115、d Post-IPO Warrantswere 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 withits initial public offering,except that such Post-IPO Warrants may only be transferred to the applicable hol

116、ders 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 Company utilized a Monte Carlo simulation analysis to determine the fair value of the Earno

117、ut 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

118、(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)

119、multiplied by the simulated stock price at the vest date,whichvaried 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%.10Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Volatility was

120、 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 75thpercentile of GPC volatilities was selected given the Companys early stage life cycle relative to the GPC set.The accounting for the Earnout

121、Shares was first evaluated under ASC718 to determine if the arrangement represents a share-based payment arrangement.Because there were no service conditions nor any requirement of the participants to providegoods or services,the Company determined that the Earnout Shares were not within the scope o

122、f ASC 718.Next,the Company determined that the Earnout Shares represent a freestanding equity-linked financial instrument to be evaluated under ASC 480 and ASC 815-40.Based upon theanalysis,the Company concluded that the Earnout Shares should not be classified as a liability under ASC 480.The Compan

123、y next considered the equity classification conditions in ASC 815-40-25 and concluded that all of the conditions were met.Therefore,the Earnout Share arrangementwere appropriately classified in equity.As the merger has been accounted for as a reverse recapitalization,the fair value of the Earnout Sh

124、ares arrangement has been accounted for as an equity transaction as of theclosing date of the merger.On April 26,2024,the Earnout Shares had been earned and such shares were issued.NOTE 4-PROPERTY AND EQUIPMENTProperty and equipment consist of the following:(in thousands)June 30,2024 December 31,202

125、3 Property and equipment Furniture and equipment$34.5$34.5 Computer equipment 123.6 120.8 Computer equipment-work in progress 2,139.2 -Accumulated depreciation (135.4)(126.1)Property and equipment,net$2,161.9$29.2 Total depreciation expense was$3.7 and$16.8 for the three months ended June 30,2024 an

126、d 2023,respectively.Total depreciation expense was$9.3 and$33.3 for the six monthsended June 30,2024 and 2023,respectivelyNOTE 5-ACCOUNTS PAYABLE AND ACCRUED EXPENSESAccounts payable and accrued expenses consisted of the following:(in thousands)June 30,2024 December 31,2023 Accounts payable$1,948.0$

127、1,600.7 Other accrued expenses 7,642.9 -Income tax payable 732.6 -Franchise tax payable 508.2 -Accounts payable and accrued expenses$10,831.7$1,600.7 NOTE 6-LEASES Operating leases are included in the unaudited condensed consolidated Balance Sheets as follows:(in thousands)Classification June 30,202

128、4 December 31,2023 Lease assets Operating lease cost ROU assets,net Assets$806.6$353.2 Total lease assets$806.6$353.2 Lease liabilities Operating lease liabilities,current Current liabilities$276.9$160.3 Operating lease liabilities,non-current Liabilities 530.3 201.6 Total lease liabilities$807.2$36

129、1.9 The components of lease costs,which are included in loss from operations in our unaudited condensed consolidated Statements of Operations we as follows:Three Month Period Ended (in thousands)June 30,2024 June 30,2023 Lease costs Operating lease costs$66.7$44.9 Short-term lease costs 43.2 38.7 To

130、tal lease costs$109.9$83.6 11Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Six Month Period Ended (in thousands)June 30,2024 June 30,2023Lease costs Operating lease costs$111.6$89.7Short-term lease costs 81.8 75.7Total lease costs$193.4$165.4Future minimum payments

131、under non-cancelable leases for operating leases for the remaining terms of the leases following June 30,2024 were as follows:(in thousands)2024(remainder of)$159.3 2025 338.7 2026 189.2 2027 159.3 2028 66.3 Total future minimum lease payments 912.8 Amount representing interest 105.6 Present value o

132、f net future minimum lease payments$807.2 NOTE 7-INCOME TAXESThe estimated annual effective tax rate applied to the six month period ended June 30,2024 is 0%,which differs from the US federal statutory rate of 21%principally due to theprojection of U.S.net operating loss for fiscal 2024 with full ap

133、plication of a valuation allowance.As of June 30,2024,TMTG had US Federal net operating loss carryforwards(NOLs”)with a tax benefit of approximately$9,400.0 from December 31,2023.NOTE 8-OTHER INCOME-RELATED PARTY,RELATED PARTY RECEIVABLE AND PAYABLEAdministrative Services ArrangementAn affiliate of

134、the Digital World sponsor ARC agreed,commencing from the date when Digital Worlds Registration Statement was declared effective through the earlier of DigitalWorlds consummation of a Business Combination and its liquidation,to make available to the Digital World certain general and administrative se

135、rvices,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.Theagreement with the Sponsor was terminated on April 5,2023,$221.0 was unpaid as of June 30,2024

136、.Advances related partyDuring 2022 and the year ended December 31,2023,the Digital World Sponsor paid,on behalf of Digital World,$470.8 to a vendor for costs incurred by Digital World and$41.0directly to Digital World.As of June 30,2024,the Companys obligation to the Sponsor for such payments was ou

137、tstanding in the amount of$41.0.Effective June 13,2022,Private TMTG entered into a Consulting Services Agreement with Trishul,LLC(Trishul”).Pursuant to such agreement and subsequent performance bythe parties thereto,Trishul provided consulting services to Private TMTG until the consulting relationsh

138、ip was terminated by Private TMTG effective March 25,2024,upon theClosing of the Business Combination.During the three months ended June 30,2024 and 2023,TMTG paid$8.3 and$30.5,respectively,and during the six months ended June 30,2024 and 2023 paid$38.3 and$70.5,respectively,to Trishul.As of June 30

139、,2024 and December 31,2023,TMTG had an outstanding payable balance of zero to Trishul.Trishul isowned by Kashyap Kash”Patel,a director of TMTG since March 25,2024,and previously a director of Private TMTG from March 11,2022,until March 26,2024.In August 2021,Private TMTG entered into a Consulting Se

140、rvices Agreement with Hudson Digital,LLC(Hudson Digital”).Pursuant to the agreement,which as amended expiresDecember 31,2024,Hudson Digital provides consulting services to TMTG.Hudson Digital also received a TMTG Executive Promissory Note in the principal amount of$4,000.0,which converted into commo

141、n shares immediately before the Closing(along with all other Private TMTG Convertible Notes),and a$600.0 retention bonus following the Closing.During the three months ended June 30,2024 and 2023,we paid$60.0 and$60.0,respectively,and for the six months ended June 30,2024,we paid$120.0 and$120.0,resp

142、ectively,toHudson Digital.As of June 30,2024 and December 31,2023,TMTG had an outstanding payable balances of zero to Hudson Digital.Hudson Digital is owned by Daniel Scavino,who served as a director of Private TMTG from February 16,2023,until March 25,2024.Mr.Scavino has not served as an officer or

143、 director of TMTG.In June 2024,in connection with a company event,TMTG paid$78.2 to Mar-a-Lago Club LLC,which is owned by the Donald J.Trump Revocable Trust,dated April 7,2014.At thetime of such transaction,Donald J.Trump owned more than 5%of TMTGs common stock.NOTE 9-CONVERTIBLE PROMISSORY NOTES AN

144、D WARRANTSNotes 1 to 7 were Convertible Promissory Notes issued from May 2021 through October 2021 with a cumulative face value of$5,340.0,maturity of 24 months from each respectiveissuance date and interest was accrued at 5%based on the simple interest method(365 days year)for each note.Each of Not

145、es 1-7 contemplated multiple plausible outcomes thatinclude conversion upon a Qualified SPAC Business Combination(SPAC”)and at least one of the following conversion triggers:Qualified Initial Public Offering(IPO”),privateequity transaction and/or change of control.All outstanding principal of these

146、Notes,together with all accrued but unpaid interest on such principal,will convert to equity.Thenumber 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 theCompany Stock(rounded to the near

147、est 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

148、anautomatic 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 wouldbe the number of shares of Company stock(rounded to the nearest whole share)equal to the quotient of:(a)the principal plus accrued

149、interest on the Notes then outstanding(b)divided by 40%of the initial public offering price per share of a qualified 12Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)initial public offering.For Notes 3-7,the number of shares of Company stock to be issued to the Lende

150、r upon a non-SPAC conversion event would be the number of shares ofCompany 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)theinitial public offering price per share of a qualified initial pub

151、lic offering,(ii)the price per share as determined by the valuation of the Company in connection with a qualifiedprivate equity raise,or(iii)in the case of a change of control,the price per share determined in accordance with the Companys then current fair value determined by anindependent valuation

152、 firm.Notes 8 to 12 were Convertible Promissory Notes issued from November 2021 through December 2021 with a cumulative face value of$17,500.0,maturity of between 18 monthsand 36 months and interest was accrued at a range between 5%and 10%based on the simple interest method(365 days year)for each no

153、te.Notes 8 to 12 were convertiblesimultaneously 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

154、 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$20subject to the respective conditions of the individual

155、Notes;provided,however,in the event that the stock price quoted for the Company on NASDAQ or The New York StockExchange(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 pershare subject to the

156、 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$10per share.Notes 13 to 18 were Convertible Promissory Notes issued from January 2022 through March 2022.Note 19 was issued on August 23,2023.Notes

157、 13 to 19 were ConvertiblePromissory Notes issued with a cumulative face value of$18,360.0,maturity of 18 months and interest will be accrued at a range between 5%and 10%based on the simple interestmethod(365 days year)for each note.Notes 13 to 19 were convertible simultaneously with the completion

158、of a SPAC merger agreement or IPO.All outstanding principal of theseNotes,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 uponconversion of the Notes would be the number of shares of the Company

159、Stock(rounded to the nearest whole share)equal to the quotient of:(a)the principal plus accrued intereston 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 Convertible Promissory Notes issued from November

160、2023 through March 2024 with a cumulative face value of$7,955.0,maturity of 18 months and interest willbe 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 or IPO.Theoutstanding principal of th

161、e Notes,accrued but unpaid interest on such principal,would convert to equity.The number of shares of Company stock to be issued to the Lenderupon conversion of the Notes in the event of a SPAC transaction shall be the number of shares of the Company Stock(rounded to the nearest whole share)equal to

162、 the quotientof:(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 uponconversion of the Notes in the event of an IPO would be the number of shares of the Company Stock(rounded to the nearest whole

163、share)equal to the quotient of:(a)the principalplus accrued interest on the Notes then outstanding(b)divided by 50%of the IPO price per share.On March 25,2024,immediately before the Closing,Notes 1 to 23,and their accrued,but unpaid interest,automatically converted into an aggregate 7,854,534 shares

164、 of TMTGcommon stock.Convertible notes and warrants-February 8,2024-Pursuant to a note purchase agreement entered into by and between Digital World and certain institutional investors onFebruary 8,2024(the Note Purchase Agreement”),Digital World agreed to issue up to$50,000.0 in convertible promisso

165、ry notes(the Convertible Notes”).The ConvertibleNotes:(a)accrue interest at an annual rate of 8.00%and are payable on the earlier of(i)the date that is 12 months after the date on which the Company consummates the BusinessCombination,which interest is not payable to the extent the holder exercises t

166、he conversion right and(ii)the date that the winding up of the Company is effective(such date,theMaturity Date”);(b)are convertible(i)at any time following the consummation of the Business Combination,but prior to the Maturity Date,redemption or otherwise therepayment in full of the Convertible Note

167、s,at each holders option,in whole or in part,and subject to the terms and conditions of the Convertible Notes,including any requiredshareholders approval upon the consummation of the Business Combination and(ii)into that number of Digital World Class A common stock and warrants included in the units

168、,each unit consisting of one share of Class A common stock of the Company and one-half of one warrant of the Company(the Conversion Units”),equivalent to(A)the portion ofthe principal amount of the applicable Convertible Note(excluding any accrued interest,which shall not be payable with respect to

169、the Convertible Note that was converted)beingconverted,divided by(B)$8.00(the Conversion Price”);(c)may be redeemed by Digital World,in whole or in part,commencing on the date on which all Digital World Class Acommon stock issuable to the holders has been registered with the SEC,by providing a 10-da

170、y notice of such redemption(the Redemption Right”),which Redemption Right iscontingent upon the trading price of the Digital World Class A common stock exceeding 130%of the applicable conversion price on at least 3 trading days,whether consecutive ornot,within the 15 consecutive trading days ending

171、on the day immediately preceding the day on which a redemption notice is issued by Digital World;(d)are initially drawable for20%of the applicable investors commitment amount and a final drawdown for the remaining 80%to occur upon the closing of the Business Combination,with the proceeds ofsuch fina

172、l drawdown to be deposited into a control account as indicated by the Company(the Control Account”).The proceeds from such final drawdown deposited into theControl Account shall remain therein and may not be withdrawn by the Company until such time as(i)the Company exercises the Redemption Rights us

173、ing the proceeds in theControl Account,(ii)any portion of the applicable Convertible Note has been converted,at which time such portion shall be released from the Control Account or(iii)if prior to theconversion,a resale registration statement of the Company covering all common stock issued pursuant

174、 to the Convertible Note has been declared effective by the Commission;(e)are subject to specified events of default;and(f)have registration rights pursuant to the registration rights agreement entered into by the Company and the parties thereto as ofSeptember 2,2021.In addition,pursuant to warrant

175、subscription agreements(each a Warrant Subscription Agreement”)entered into by and between Digital World and certain institutional investorson February 7,2024,Digital World has agreed to issue an aggregate of 3,424,510 warrants(Convertible Note Post IPO Warrants and Post-IPO Warrants”),each warrant

176、entitlingthe holder thereof to purchase one share of the Companys Class A common stock for$11.50 per share.The Convertible Note Post IPO Warrants and Post-IPO Warrants wereissued concurrently with the closing of the Business Combination,and have substantially the same terms as the public warrants is

177、sued by Digital World in connection with itsinitial public offering,except that such Post-IPO Warrants may only be transferred to the applicable holders affiliates.Investors funded$10,000.0 of the$50,000.0 available under the Note Purchase Agreement before the closing of the merger and$40,000.0 imme

178、diately after Closing.The$40,000.0 ofproceeds was held in a restricted account and was released upon the registration of the underlying shares on June 18,2024.On June 18 and 20,the face value of the Note Purchase Agreement was converted into 6,250,000 shares of TMTG common stock and warrants to purc

179、hase up to 3,125,000 shares ofTMTG common stock.13Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Conversion into Paid in CapitalAt the closing of the merger,certain Digital World and TMTG convertible notes were converted into common stock of the Company.The carrying

180、value of the Digital World notesconverted was$8,228.6 and the carrying value of the TMTG notes converted was$300,426.0,including the derivative liability.The Company determined the automatic discounted share-settlement feature upon certain events(e.g.,SPAC,IPO,change in control,etc.)is an embedded d

181、erivative requiringbifurcation accounting as(1)the feature is not clearly and closely related to the debt host and(2)the feature meets the definition of a derivative under ASC 815(Derivative andHedging).Subsequent changes to the fair value of the embedded derivative flows through the Statements of O

182、perations.The Debt(net of initial debt discount and any related debtissuance costs recorded)is accreted using the effective interest rate method under ASC 835(Interest)until maturity.The Convertible Promissory Notes(debt host)are not subjectto Subtopic 480-10.(in thousands)June 30,2024 December 31,2

183、023 Convertible Promissory Notes Notes 1 to 7$5,340.0$5,340.0 Notes 8 to 12 17,500.0 17,500.0 Notes 13 to 20 17,860.0 17,860.0 Notes 21 to 23 7,455.0 -Digital World Convertible Notes 50,103.0 -Total 98,258.0 40,700.0 Debt Issuance costs (240.0)(240.0)Carrying value of Convertible Promissory Notes 98

184、,018.0 40,460.0 Less:Derivative liability component (37,234.8)(37,234.8)Liability component at date of issue 60,783.2 3,225.2 Interest charged 44,781.6 42,121.8 Loss on extinguishment of debt 542.3 -Total liability component 106,107.1 45,347.0 Less:Conversion to Paid in Capital (106,107.1)-Less:Shor

185、t-term liability component -(41,818.8)Liability component at June 30,2024 and December 31,2023$-$3,528.2 Embedded feature component Derivative liability component$37,234.8$37,234.8 Change in fair value of embedded derivative 207,084.1 (18,832.0)Total Derivative Liability Component 244,318.9 18,402.8

186、 Less:Conversion to Paid in Capital (244,318.9)-Less:Short-term derivative liability component -(17,282.5)Derivative Liability Component at June 30,2024 and December 31,2023$-$1,120.3 The interest charged for the periods is calculated by applying the effective interest rate range of between 16.3%to

187、100%+to the liability component for the period since therespective notes were issued.NOTE 10-FAIR VALUE MEASUREMENT The Company uses 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 m

188、arkets 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.The derivative liability component of Convertible promissory notes are

189、 classified as Level 3 due to significant unobservable inputs.The Company had no assets or liabilitiesrequiring classification as of June 30,2024.As of December 31,2023 (in thousands)Quoted prices inactive markets foridentical assets(Level 1)Significantother observableinputs(Level 2)Significantunobs

190、ervableinputs(Level 3)Current Liabilites Derivative liability -17,282.5 Liabilities Derivative liability -1,120.3 The estimated fair value of the conversion feature of the Derivative liability is based on traditional valuation methods including Black-Scholes option pricing models and MonteCarlo simu

191、lations.14Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)NOTE 11-LOSS PER SHAREBasic loss per share is calculated by dividing net loss by the weighted average number of shares of stock outstanding during the period.Diluted loss per share is calculated bydividing net

192、loss by the weighted average number of shares outstanding during the period adjusted for the effect of dilutive potential shares from convertible notes and warrants.There were no dilutive potential common shares for the three and six months ended June 30,2024 and 2023,because the Company incurred a

193、net loss and the potential dilutiveshares are anti-dilutive.As such,basic and diluted losses per common share are the same.Total common stock equivalents excluded from dilutive loss per share are as follows:June 30,2024 December 31,2023 Convertible notes -Warrants 12,964,436 -Total common stock equi

194、valents excluded from dilutive loss per share 12,964,436 -As noted in Note 14,in connection with the litigation initiated by ARC against DWAC in the Delaware Court of Chancery and the Closing of the Business Combination,theCompany deposited 4,667,033 shares into an escrow account,to be held until th

195、e action concludes.While in escrow,such shares are generally not considered by the Company tobe issued and outstanding.For purposes of basic and diluted loss per share(and the table above),these shares are not included until the contingency(litigation)is resolved.NOTE 12-STOCKHOLDERS EQUITYAt incept

196、ion,the total number of shares of all classes of capital stock that the Company was authorized to issue was 11,000 shares of Company Stock,each having a par value of$0.000001,of which 10,000 shares were issued and outstanding,and an additional 1,000 shares were authorized for issuance in connection

197、with the Companys Equity IncentivePlan.In October 2021,the total number of shares of Common Stock authorized was increased to 110,000,000,each having a par value of$0.000001.Each share of the Companys CommonStock,automatically and without any action on the part of the Company or any respective holde

198、rs thereof,was reclassified into ten thousand(10,000)shares of the CompanysCommon Stock,$0.000001 par value per share,resulting in 110,000,000 shares authorized,of which 100,000,000 shares were issued and outstanding,and an additional 7,500,000shares were authorized for issuance in connection with t

199、he Companys Equity Incentive Plan.In January 2022,the total number of shares of the Companys Common Stock authorized was increased to 120,000,000,each having a par value of$0.000001,of which 100,000,000shares were issued and outstanding,and an additional 7,500,000 shares were authorized for issuance

200、 in connection with the Companys Equity Incentive Plan.In January 2024,the total number of shares of the Companys Common Stock authorized was increased to 1,000,000,000,each having a par value of$0.000001,of which 100,000,000shares were issued and outstanding.100,000,000 of the additional authorized

201、 but unissued shares were classified as non-voting.On March 25,2024,in connection with the merger,Digital World amended(the second amendment)and restated its certification of incorporation.Amoung other matters,DigitalWorlds name was changed to Trump Media and Technology Group Corp.Additionally,the C

202、ompany changed its authorized capital stock to 1,000,000,000 shares,each with a parvalue of$0.0001 per share,consisting of(a)999,000,000 shares of common stock and(b)1,000,000 shares of preferred stock.Warrant Activity Summary Issued and Outstanding Warrants WeightedAverageExercisePrice Weighted Ave

203、rageRemainingContractual Life(in years)AggregateIntrinsicValue Outstanding at January 1,2024 18,366,228$11.50 5.40 -Granted 3,125,000 11.50 -Exercised (8,526,792)11.50 -Expired or cancelled -Outstanding at June 30,2024 12,964,436$11.50 4.82$275,494,265 Exercisable at June 30,2024 12,964,436$11.50 4.

204、82$275,494,265 NOTE 13-STOCK BASED COMPENSATION2024 Equity Incentive PlanIn connection with the Business Combination,TMTGs Board adopted,and our stockholders approved,the Digital World Acquisition Corp.2024 Equity Incentive Plan(the 2024Equity Incentive Plan”),which became effective on March 25,2024

205、.The total number of shares of our common stock reserved and available for delivery under the 2024 EquityIncentive Plan at any time during the term of the 2024 Equity Incentive Plan will be equal to 13,252,544.No activity pursuant to the 2024 Equity Incentive Plan occurred for the sixmonths ended Ju

206、ne 30,2024.Executive Promissory NotesIn March 2024,we issued unsecured Executive Promissory Notes to certain executives,including each of our Named Executive Officers(NEOs”)in an aggregate amount of$10,900.0,as consideration for their service to the Company through the Merger.The Executive Promissor

207、y Notes bore a zero-coupon interest rate,and became payable at theearlier of September 30,2024,an Event of Default,or upon a Change in Control Event.The Maturity Date of the Executive Promissory Notes15Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)could be extended

208、at the sole discretion of each executive individually for any reason,including for the purpose of allowing the Executive Promissory Notes to convert to stock orother securities upon a Change of Control Event.Upon a Change of Control Event,the Executive Promissory Notes automatically converted into e

209、ither(a)shares of common stock at a fixed conversion price of$10.00 per shareupon consummating a merger with DWAC,or(b)a share amount equal to the quotient of the principal amount divided by the price per share based upon the current fair value ofthe common stock of TMTG,for any other Change of Cont

210、rol Events.On March 25,2024,we consummated a merger between DWAC and TMTG at which time the Executive Promissory Notes automatically converted into an aggregate of 1,090,000shares of our common stock.We accounted for the Executive Promissory Notes as a liability award under ASC 718 as the Executive

211、Promissory Notes could be converted into avariable number of shares upon a Change of Control event and the executives had the sole discretion to extend the Maturity Date which could result in the Company beingrequired to settle the Executive Promissory Notes in cash.We remeasured the fair value of t

212、he Executive Promissory Notes at their settlement date and recorded stock-basedcompensation expense for these awards,within general and administration expense in the Statement of Operations,totaling$54,445.5 for the six months ended June,2024.Vendor Convertible NotesIn March 2024,we issued unsecured

213、 convertible notes to certain vendors in exchange for research and development services provided.These Vendor Convertible Notes wereissued with an aggregate face value of$7,500.0,bore a zero-coupon interest rate,and had a maturity date in March 2027.The Vendor Convertible Notes were automatically co

214、nvertible in to shares of our common stock upon consummating a merger between DWAC and TMTG at a conversion price of$10.00 per share.We measured the fair value of these Vendor Convertible Notes on their date of grant and recorded$30,142.5 of stock based compensation expense,withinresearch and develo

215、pment expense in the Statement of Operations for the six months ended June 30,2024.NOTE 14-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 courseof

216、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 andreasonably estimable.Based on current known facts and circumstances,the Company currently believes that any liabilities ultimately

217、 resulting from ordinary course claims,andproceedings will not individually or in aggregate,have a material adverse effect on the Companys financial position,results of operations,or cash flows.However,the outcomesof claims legal proceedings or investigations are inherently unpredictable and subject

218、 to uncertainty,and may have an adverse effect on us because of defense costs,diversion ofmanagement 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 courseof litigation,and there can be no

219、 assurances that favorable final outcomes will be obtained.The final outcome of any current or future claims or lawsuits could adversely affect ourbusiness,financial position,results of operations or cash flows.We periodically evaluate developments in our legal matters that could affect the amount o

220、f liability that haspreviously 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

221、 of ourboard of directors.These indemnity agreements broadly provide for us to advance expenses(including attorneys fees)incurred in connection with any legal proceeding,as wellas indemnification for any and all expenses,actually and reasonably incurred,in connection with the investigation,defense,s

222、ettlement or appeal of such a proceeding,inconnection with matters related to their position.These indemnity agreements provide that the indemnitee shall repay all amounts so advanced if it shall ultimately be determinedby final judicial decision from where there is no further right of appeal that t

223、he indemnitee is not entitled to be indemnified.In connection with the litigation initiated by ARC against DWAC in the Delaware Court of Chancery (see below)and the Closing of the Business Combination,the Companydeposited 4,667,033 shares into an escrow account,to be held until the action concludes.

224、While in escrow,such shares are generally not considered by the Company to be issuedand outstanding.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.We have cooperated with a FINRA inq

225、uiry concerning events(specifically,a review of trading)that preceded the public announcement of the Merger Agreement and theconsummation of the Business Combination.According to FINRAs request,the inquiry should not be construed as an indication that FINRA has determined that any violationsof Nasda

226、q rules or federal securities laws have occurred,or as a reflection upon the merits of the securities involved or upon any person who effected transactions in suchsecurities.Settlement in PrincipleDigital World was the subject of an investigation by the SEC with respect to certain statements,agreeme

227、nts and the timing thereof included in Digital Worlds registrationstatements on Form S-1 in connection with its IPO and Form S-4 relating to the Business Combination(the Investigation”).On July 3,2023,Digital World reached an agreement in principle(the Settlement in Principle”)in connection with the

228、 Investigation.The Settlement in Principle was subject toapproval by the SEC.On July 20,2023,the SEC approved the Settlement in Principle,announcing it settled its dispute with Digital World and entered an order(the Order”)finding that Digital Worldviolated certain antifraud provisions of the Securi

229、ties Act and the Exchange Act,in connection with Digital Worlds IPO filings on Form S-1 and the Form S-4 concerning certainstatements,agreements and omissions relating to the timing and discussions Digital World had with Private TMTG regarding the proposed business combination.In the Order,Digital W

230、orld agreed(i)that any amended Form S-4 filed by Digital World would be materially complete and accurate with respect to certain statements,agreements and omissionsrelating to the timing and discussions that Digital World had with Private TMTG regarding the proposed business combination and(ii)to pa

231、y a civil money penalty in an amountof$18 million to the SEC promptly after the closing of any merger or a comparable business combination or transaction,whether with Private TMTG or any other entity.In connection with the consummation of the Business Combination,on March 25,2024,Digital World paid

232、the$18 million civil penalty to the SEC pursuant to the Order.16Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Section 16 ClaimOn October 20,2023,Robert Lowinger(the Plaintiff”)filed a complaint against Rocket One Capital,LLC(Rocket One”),Michael Shvartsman,Bruce Gar

233、elick,and Digital World inthe U.S.District Court for the Southern District of New York.The case is Lowinger v.Rocket One Capital,LLC,et al.,No.1:23-CV-9243(S.D.N.Y.Oct.20,2023).According to thecomplaint,Digital World was named as a party in the lawsuit because the Plaintiff is seeking relief for the

234、 benefit of Digital World.In the complaint,the Plaintiff contends that,in2021,Mr.Garelick and Rocket One were directors of Digital World and that they purchased securities of Digital World.The Plaintiff further alleges that within a six-month periodfrom the date of their purchases,both Mr.Garelick a

235、nd Rocket One sold securities in Digital World and realized profits from those sales.Additionally,the Plaintiff alleges that Mr.Shvartsman had a financial interest in the profits resulting from Rocket Ones purchases and sales of Digital Worlds securities.According to the Plaintiff,under Section 16(b

236、)ofthe Exchange Act(15 U.S.C.78p(b),Rocket One,Mr.Shvartsman,and Mr.Garelick are each required to disgorge certain trading profits to Digital World.On March 1,2024,Digital World filed a motion to dismiss the claims against Digital World.On June 5,2024,the U.S.District Court for the Southern District

237、 of New York granted amotion by Defendants Michael Shvartsman and Bruce Garelick to transfer the action to the U.S.District Court for the Southern District of Florida.In transferring the action,the U.S.District Court for the Southern District of New York held that pending motions to dismiss,includin

238、g the motion filed by Digital World,will be decided by the U.S.District Court forthe Southern District of Florida(C.A.No.24-CV-22429).On July 17,2024,Defendants Rocket One,Mr.Shvartsman,and Mr.Garelick moved to stay the case during the pendencyof SEC v.Garelick,et al.,No.23-CV-05567(S.D.N.Y.)and USA

239、 v.Shvartsman,et al.,No.1:23-CR-00307(S.D.N.Y.).Litigation with United Atlantic Ventures(UAV”)in DelawareOn 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 otherthings,extensive intellec

240、tual property and digital media rights related to President Trump for purposes of commercializing the various Private TMTG initiatives(the ServicesAgreement”).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 le

241、tters from counsel to UAV,a party to the Services Agreement.The letters contained certain assertionsand 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 grantsUAV rights to(1)appoint two

242、 directors to TMTG and its successors(i.e.,TMTG after the Business Combination),(2)approve or disapprove of the creation of additional TMTGshares 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 Servic

243、es Agreement isnot 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 migh

244、t seek to enjoin the BusinessCombination.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 withlegal action regarding UAVs alleged rights in Private TMTG,including,if necessary,an action to enjo

245、in consummation of the Business Combination.On February 28,2024,UAV filed a verified complaint against Private TMTG in the Chancery Court seeking declaratory and injunctive relief relating to the authorization,issuance,and ownership of stock in Private TMTG and filed a motion for expedited proceedin

246、gs(C.A.No.2024-0184-MTZ).On March 4,2024,UAV filed an amended complaint,convertingtheir 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 Chancery Court held a hearing to decide UAVs motion to expedite proceedi

247、ngs.During the oral argument,Private TMTG agreed that any additional sharesof 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.TheChancery Court entered an order consistent with the for

248、egoing 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-suitinjunction related to Private TMTGs filing of a separate

249、 litigation against UAV and others in Florida state court.Private TMTG maintains that the contempt claims are meritless.OnApril 9,2024,the Chancery Court granted the motion for leave to file a second amended complaint on April 9,2024 and re-assigned the case to a new judge.On April 11,2024,UAV filed

250、 its second amended complaint,naming the prior defendants together with five new defendantsTMTG and the current directors on the TMTG Boardwho were not on Private TMTGs board of directors.On April 22,2024,all of the defendants moved to vacate the Chancery Courts prior order expediting the matter.Add

251、itionally,all of the defendants moved to dismiss the secondamended complaint.Following briefing and oral argument on the motion to vacate,on April 30,2024,the Chancery Court vacated the prior provisions of the March 15 orderexpediting the matter.On May 6,2024,UAV filed its Renewed Motion for Contemp

252、t of the March 15,2024 Order against Private TMTG(First Contempt Motion”)seeking,among other things,to enjoinPrivate TMTG and related parties from prosecuting certain claims in Florida state court.A hearing on this motion,which was previously set for July 12,2024,was cancelled by theChancery Court a

253、fter UAV failed to timely submit a reply brief.On May 8,2024,the Chancery Court stayed discovery and granted a protective order with respect to all discoveryserved on defendants and all other persons from whom discovery was being sought.On June 5,2024,UAV filed for leave to again amend its complaint

254、.The Chancery Court granted the motion for leave to amend on July 8,2024,and UAV filed its Third AmendedComplaint on July 9,2024.The Third Amended Complaint dismissed as defendants three current TMTG directors(W.Kyle Green,Linda McMahon,and Robert Lighthizer)andadded four former Digital World direct

255、ors(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 July 23,2024,all of the defendants with the exception of Patrick

256、 F.Orlando moved to dismiss the Third Amended Complaint.This matter remains pending.Lawsuit Against ARC and Patrick Orlando in FloridaOn February 26,2024,representatives of ARC Global Investments II,LLC(ARC”)claimed to Digital World that after a more comprehensive”review,the conversion ratio forDigi

257、tal World Class B common stock into Digital World Class A common stock upon the completion of the Business Combination was approximately 1.8:1.ARCs new claim alsocontradicted the previous assertion by Patrick Orlando,the managing member of ARC,that the conversion ratio was 1.68:1.Digital Worlds boar

258、d of directors viewed these claimsas an attempt by Mr.Orlando to secure personal benefits,breaching his fiduciary duty to Digital World and its shareholders.17Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Digital World and Private TMTG initiated a lawsuit against AR

259、C 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 tortiousinterference with th

260、e contractual and business relationship between Private TMTG and Digital World,and damages for conspiracy with unnamed co-conspirators to interfere withthe same.The complaint also sought damages for Mr.Orlandos breach of fiduciary duty,which exposed Digital World to regulatory liability and resulted

261、 in an$18 million penalty,and for his continuous obstruction of Digital Worlds merger with Private TMTG to extort various concessions that benefited only him and harmed Digital World and itsshareholders.Furthermore,the complaint sought damages for the wrongful assertion of dominion over Digital Worl

262、ds assets inconsistent with Digital Worlds possessory rightsover 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 Floridas Deceptive a

263、nd Unfair Trade Practices Act.Digital Worldfurther 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 aidingand abetting a breach of fiduciary duty.On April 3,2024,Defendants ARC and Mr.Orlan

264、do filed a joint motion to dismiss the amended complaint or,in the alternative,to stay the proceeding pending the DelawareAction.Defendants ARC and Mr.Orlando also filed that same day a motion to stay discovery in the action.On May 29,2024,TMTG f/k/a Digital World moved to compeldiscovery from ARC a

265、nd Mr.Orlando.On July 15,2024,the Court entered an order denying the foregoing discovery motions.In an order dated July 29,2024,the Court denied themotion to dismiss or,in the alternative,stay the proceeding.On July 30,2024,Defendants ARC and Mr.Orlando filed a notice of appeal regarding the Courts

266、denial of their jointmotion to dismiss,and filed a motion for stay pending appeal on August 2,2024.On July 31,2024,TMTG filed a motion for leave to file a second amended complaint,which has been set for a hearing on September 10,2024.At a June 17,2024,status hearing,the Court set a proposed trial da

267、te of August 2025.Litigation with ARC in DelawareOn 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 animpending violation of the Digital World Charter for failure to commit to issue the numbe

268、r of conversion shares to ARC that ARC claims it is owed upon the consummation of theBusiness Combination.The complaint claimed a new conversion ratio of 1.78:1 and sought specific performance and damages for the alleged breach of the Digital World Charter,adeclaratory judgment that the certain deri

269、vative securities of Digital World should be included in the calculation of the conversion ratio,a finding that the directors of DigitalWorld breached their fiduciary duties,and a preliminary injunction to enjoin the Business Combination until Digital World corrected”the conversion ratio.We do not b

270、elieve ARCs 1.78:1 conversion ratio and related claims are supported by the terms of the Digital World Charter.As a result,we have vigorously defended DigitalWorlds calculation of the conversion ratio and related rights.In addition to its complaint,ARC also filed a motion with the Chancery Court req

271、uesting that the case schedule beexpedited to enable the Chancery Court to conduct an injunction hearing prior to the March 22,2024 shareholder vote.On March 5,2024,the court denied ARCs motion,statingthat it would not conduct a merits or injunction hearing before March 22,2024.Consequently,the Chan

272、cery Court also denied ARCs request to postpone the vote until after amerits hearing.The Chancery Court ruled that Digital Worlds proposal to deposit disputed shares into an escrow account at the close of the Business Combination was adequate to preventpotential irreparable harm related to ARCs shar

273、e conversion.The court also found that Digital Worlds public disclosures about ARCs claims and possible conversion scenariosat the close of the Business Combination further mitigated the risk of irreparable harm due to insufficient disclosure for the March 22,2024 vote.On May 23,2024,ARC filed a mot

274、ion for leave to amend its complaint.ARC requested leave to add new factual allegations and legal theories,in addition to a cause of action forbreach of implied covenant of good faith and fair dealing.On June 5,2024,the Court denied leave to add a cause of action for breach of implied covenant of go

275、od faith and fairdealing,but granted leave in part to add new legal theories to existing claims and adjust its claimed conversion ratio from 1.78:1 to 1.81:1.A one-day trial in this matter took place on July 29,2024.The ultimate resolution as to whether none,a portion,or all of the disputed conversi

276、on shares will be issued remains tobe determined as of August 8,2024In relation to the Delaware Lawsuit,Digital World notified its shareholders on March 14,2024,of its intention to apply a conversion ratio to all Digital World Class B common stockshares to ensure that ARC and the Non-ARC Class B Sha

277、reholders receive an equal number of common stock shares in the Company per share of Digital World Class B commonstock.Accordingly,on March 21,2024,Digital World entered into the Disputed Shares Escrow Agreements with the Escrow Agent,pursuant to which TMTG deposited intoescrow the number of shares

278、of TMTG Common Stock representing the difference between the actual conversion ratio,determined by Digital Worlds board of directors uponclosing of the Business Combination(which was determined to be 1.348:1),and a conversion ratio of 2.00.Any release of shares is subject to the terms and conditions

279、 of theDisputed Shares Escrow Agreements.Lawsuit With Patrick Orlando in DelawareOn March 15,2024,Plaintiff Patrick Orlando brought a lawsuit against Digital World in the Chancery Court seeking advancement of legal fees associated with Mr.Orlandosinvolvement in civil litigation against Digital World

280、 in Florida and certain other matters(the Advancement Lawsuit”)(C.A.No.2024-0264-LWW).Mr.Orlandos allegations relate to certain provisions in the Digital World Charter,Digital Worlds bylaws,and an indemnity agreement allegedly entered into between Mr.Orlandoand Digital World.Mr.Orlando alleges that

281、those certain provisions require Digital World to pay the legal fees Mr.Orlando incurred and will incur in connection with legalproceedings 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

282、 entitledto 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

283、 World to pay pre-and post-judgment interest on the amounts owedto Mr.Orlando.On April 3,2024,the Chancery Court entered a Stipulation and Advancement Order(Stipulation”)stating that Mr.Orlando is entitled to advancement of attorneys fees and costsincurred with legal proceedings described in the Sti

284、pulation,subject to Digital Worlds right to challenge the reasonableness of those attorneys fees and costs.The Stipulationfurther 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 foradv

285、ancement of attorneys fees and costs.As of August 8,2024,TMTG had paid or agreed to pay more than$800,000 to Mr.Orlandos attorneys pursuant to such Stipulation.18Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)On April 23,2024,Mr.Orlando filed a motion for leave to su

286、pplement the Advancement Lawsuit to add a claim for advancement of legal fees and expenses Mr.Orlando hasincurred and will incur in connection with his defense of an action for declaratory judgment brought by members of ARC regarding Mr.Orlandos removal as the managing memberof ARC.Mr.Orlando also s

287、ought reimbursement for the legal fees and expenses incurred in connection with his supplement to the Advancement Lawsuit,as well as pre-judgmentand post-judgment interest on the amounts he claims are owed to him.The Chancery Court granted Mr.Orlandos motion for leave,adding the additional claim to

288、theAdvancement Lawsuit.A merits hearing in this matter has been scheduled for September 23,2024.Lawsuit Against UAV,Litinsky,Moss,and Orlando in FloridaOn 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-001

289、545-NC)against UAV,Andrew Litinsky,Wesley Moss,and Patrick Orlando.In view of UAVs repeated demands concerning its alleged stock ownership and director appointment rights,the complaintalleges claims for a declaratory judgment against UAV determining that the Services Agreement is unenforceable again

290、st Private TMTG.The complaint also asserts a claim forunjust 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 thefiduciary duty of loyalty against Mr.Litinsky and Mr.Moss based on their dealing

291、s 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 c

292、onsolidate this lawsuit with the Lawsuit Against ARC and Patrick Orlando in Sarasota County,Florida described above forpurposes of discovery and pretrial proceedings.The motion to consolidate was denied without prejudice on August 2,2024.On June 27,2024,the court granted Mr.Moss,Mr.Litinsky,and UAVs

293、 motion to stay proceedings pending resolution of the Delaware litigation involving UAV.The court alsodenied Private TMTGs motion for an anti-suit injunction.On July 3,2024,Mr.Orlando filed a motion to dismiss.On July 15,2024,UAV,Mr.Litinsky,and Mr.Moss filed a notice of inactive status,stating that

294、 the court should place theaction on inactive status.On July 17,2024,Private TMTG sought review of the courts order granting UAVs motion to stay in Floridas Second District Court of Appeal by filing a petition for a writ ofcertiorari with that court(Case No.2D2024-1642).On August 2,2024,Private TMTG

295、 filed a motion to stay the stay pending certiorari review.Lawsuit By Orlando and Benessere in Miami,FloridaOn April 2,2024,Patrick Orlando and Benessere Investment Group,LLC filed suit against TMTG in the Circuit Court of the Eleventh Judicial District in Miami-Dade County Florida(Docket No.2024-00

296、5894-CA-01).Orlando and Benessere seek a declaratory judgment that TMTG is restricted from disclosing material exchanged with Orlando and Benesserepursuant 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 agr

297、eement.Also on April 2,2024,Orlando and Benessere filed a motion for preliminary injunction for enforcement of the joint defense agreement.As of August 8,2024,the motion for preliminary injunctionhad not been set for hearing.On July 10,2024,the Court scheduled a case management conference for Septem

298、ber 16,2024.Litigation with ARC Noteholders in Miami,FloridaOn May 8,2024,a group of ARC noteholders(Edwin B.Tucker et al.)filed suit against ARC and Digital World n/k/a TMTG in the Circuit Court of the Eleventh Judicial District inMiami-Dade County,Florida(Docket No.2024-008668-CA-01).The noteholde

299、rs seek specific performance and compensatory damages from both defendants or,in the alternative,damages for breach of contract from ARC,in connection with shares of TMTG to which the ARC noteholders assert they are entitled.TMTG was served in this action on June 11,2024,and filed a motion to dismis

300、s on July 26,2024.On July 11,2024,ARC filed a motion to dismiss for,among other things,improper venue.The court granted ARCs motion todismiss on August 7,2024,indicating that the noteholders intend to refile in New York County,New York.Lawsuit filed in Small Claims Court Pinellas County,FloridaOn Ap

301、ril 29,2024,a small claims action(Case No.24-003593-SC)was filed in Pinellas County by Keith Rossignol and Richard Epp,appearing pro se,against Digital WorldAcquisition,Inc.”,demanding the return of one hundred shares in Digital World to each Plaintiff(i.e.,200 shares total)or,alternatively,an$8,000

302、 Judgment,plus court costs,ifDigital World fails to reinstate the 200 shares promptly.”The court granted TMTGs motion to dismiss the action for lack of subject matter jurisdiction,improper venue,failure tostate a claim,failure to include an indispensable party,and failure to sue the right defendant.

303、On June 17,2024,Rossignol filed an amended statement of claim,demanding thatTMTG sell back one hundred shares in Digital World to Rossignol at the original price or,alternatively,an$8,000 Judgment.On July 8,2024,TMTG filed a motion to dismiss.Apre-trial conference has been scheduled for August 21,20

304、24.Litigation with Odyssey Transfer&Trust Company in DelawareOn June 20,2024,TMTGs 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 pertainsto a dispute regarding share ownership between Michael Melkersen and

305、ARC and includes TMTG as a nominal defendant.Odyssey is seeking an order from the Court dischargingOdyssey 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 22,2024,TMTG filed a motion for discharge

306、 and dismissal.This matter remains pending.NOTE 15-SUBSEQUENT EVENTSOn July 3,2024,TMTG;WorldConnect Technologies,L.L.C.(WCT”);WorldConnect IPTV Solutions,LLC(Solutions”);and JedTec,L.L.C.(JedTec”)entered into an assetacquisition agreement,pursuant to which TMTG is to acquire substantially all of th

307、e assets of WCT or its affiliate,which mainly included certain agreements,including an optionagreement,dated February 5,2024,by and between WCT,Perception Group,Inc.,Perception TVCDN Ltd.,and FORA,FOrum RAunalnitva,d.o.o.,as amended and restated(each of the parties thereto other than WCT,collectivel

308、y,Perception”),as well as ancillary agreements related to the source code purchase and support and maintenance.Thetransaction closed on August 9,2024.Pursuant to the asset acquisition agreement,TMTG agreed to issue to Solutions and JedTec as consideration up to 5,100,000 shares ofTMTG common stock,2

309、,600,000 shares of which were issuable on such closing date,and 2,500,000 shares of which will be issuable upon the satisfaction of certain Milestones(asthat term is defined in the asset acquisition agreement).On July 3,2024,TMTG entered into a Standby Equity Purchase Agreement(SEPA”)with YA II PN,L

310、TD.,a Cayman Islands exempt limited partnership(Yorkville”).Pursuant tothe SEPA,TMTG shall have the right,but not the obligation,to sell to Yorkville up to$2.5 billion of its Common Stock,subject to certain limitations and conditions set forth in theSEPA,from time to time during the term of the SEPA

311、.Sales of shares to Yorkville under the SEPA,and the timing of any such sales,are at TMTGs option,and TMTG is under noobligation to sell any securities to Yorkville under the SEPA.A registration statement filed in accordance with the SEPA was declared effective by the SEC on July 15,2024.19Table of

312、ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of Operations2References in this report(this Quarterly Report”)to TMTG,”we,”us”or the Company”refer to Trump Media&Technology Group Corp.References to ourmanagement”or our management team”refer to our officers and

313、directors.The following discussion and analysis of the Companys financial condition and results ofoperations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.All amounts are in thousands,ex

314、cept per share data.Certain information contained in the discussion and analysis set forth below includes forward-looking statements thatinvolve risks and uncertainties.Our actual results could differ materially from such forward-looking statements.Factors that could cause or contribute to those dif

315、ferencesinclude,but are not limited to,those identified below and those discussed in the sections titled Risk Factors”and Cautionary Note Regarding Forward-Looking Statements”included elsewhere in this report.Cautionary Note Regarding Forward-Looking StatementsThis Quarterly Report on Form 10-Q incl

316、udes forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933,as amended(the SecuritiesAct”)and Section 21E of the Exchange Act of 1934,as amended(the Exchange Act”)that are not historical facts,and involve risks and uncertainties that could cause actualresults to d

317、iffer materially from those expected and projected.All statements,other than statements of historical fact included in this Quarterly Report including,without limitation,statements under Managements Discussion and Analysis of Financial Condition and Results of Operations”regarding the Companys finan

318、cial position,business strategy andthe plans and objectives of management for future operations,are forward-looking statements.When used in this Quarterly Report,words such as expect,”believe,”anticipate,”intend,”estimate,”aim,”plan,”may,”will,”continue,”should,”seek”and variations and similar words

319、 and expressions identify forward-looking statements.Such forward-looking statements are based on the beliefs of management,as well as assumptions made by,and information currently available to management.A number of factorscould cause actual events,performance or results to differ materially from t

320、he events,performance and results discussed in the forward-looking statements.For informationidentifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements,please refer to the Risk Factors section ofthe Companys Form 10-K f

321、iled with the U.S.Securities and Exchange Commission(the SEC”)on April 1,2024,as amended by Amendment Number 1 to Form 10-K filed with theSEC on April 3,2024,and other documents filed with the SEC,which describe additional factors that could adversely affect our business,financial condition,or resul

322、ts ofoperations.The Companys securities filings can be accessed on the EDGAR section of the SECs website at www.sec.gov.Except as expressly required by applicable securitieslaw,the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of

323、 new information,future events or otherwise.OverviewTMTG aspires to build a media and technology powerhouse to rival the liberal media consortium and promote free expression.TMTG was founded to fight back againstthe big tech companies-Meta(Facebook,Instagram,and Threads),X(formerly Twitter),Netflix,

324、Alphabet(Google),Amazon and others-that it believes collude to curtail debate inAmerica and censor voices that contradict their woke”ideology.TMTG aims to safeguard public debate and open dialogue,and to provide a platform for all users to freelyexpress themselves.TMTG Sub Inc.(formerly known as Tru

325、mp 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 techs assault on free speech by opening up the internet and giving the American people their voices back.It is apublic,rea

326、l-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 cancelleddue to their political viewpoints.TMTG does not restrict whom a user can follow,which it believes will greatly enhance the breadth and

327、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.20Table of ContentsTruth Social was generally made available in the first quarter of 2022.TMTG prides itself on opera

328、ting its platform,to the best of its ability,without relying on big techcompanies.Partnering with pro-free-speech alternative technology firms,Private TMTG fully launched Truth Social for iOS in April 2022.Private TMTG debuted the Truth Socialweb application in May 2022,and the Truth Social Android

329、App became available in the Samsung Galaxy and Google Play stores in October 2022.Private TMTG introduced directmessaging 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 June2023.Since i

330、ts launch,Truth Social has experienced substantial growth,from zero to an aggregate of approximately 9.0 million signups for Truth Social via iOS,Android and theweb as of mid-February 2024.However,investors should be aware that since its inception,TMTG has not relied on any specific key performance

331、metric to make business oroperating decisions.Consequently,it has not been maintaining internal controls and procedures for periodically collecting such information,if any.While many mature industrypeers may gather and analyze certain metrics,given the early development stage of the Truth Social pla

332、tform,TMTGs management team believes that such metrics are not criticalin the near future for the business and operation of the platform.This stance is due to TMTGs long-term commitment to implementing a robust business plan,which may involveintroducing innovative features and potentially incorporat

333、ing new technologies,such as advanced video streaming services on its platform.These initiatives may enhance therange of services and experiences TMTG can offer on its Truth Social platform.At this juncture in its development,TMTG believes that adhering to traditional key performance indicators,such as signups,average revenue per user,ad impressionsand pricing,or active user accounts including mon