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 March 31,2024TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF

2、1934For 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.200Sar

3、asota,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 clas

4、s 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

5、reports 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 Indi

7、cate 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 Ru

8、le 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 re

9、vised 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 May 20,2024,there were 176,700,583 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 MARCH 31,2024 TABLE OF CONTENTS PagePART I-FINANCIAL INFORMATION 1 Item 1.Financial Statements(unaudited)1 Unaudited Condensed Consolidated Balance Sheets 3 Unaudited Condensed Consolidated Sta

11、tements of Operations 4 Unaudited Condensed Consolidated Statements of Changes in Stockholders Equity/(Deficit)5 Unaudited Condensed Consolidated Statements of Cash Flows 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 Item 2.Managements Discussion and Analysis of Financial Condit

12、ion and Results of Operations 20 Item 3.Quantitative and Qualitative Disclosures about Market Risk 39 Item 4.Control and Procedures 40 PART II-OTHER INFORMATION 42 Item 1.Legal Proceedings 42 Item 1A.Risk Factors 47 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3.Default

13、s Upon Senior Securities 47 Item 4.Mine Safety Disclosures 48 Item 5.Other Information 48 Item 6.Exhibits 48 SIGNATURES 51Table of ContentsPART I-FINANCIAL INFORMATIONItem 1.Financial StatementsCONDENSED CONSOLIDATED FINANCIAL STATEMENTSAs of March 31,2024 and December 31,2023 and for the three mont

14、hsending March 31,2024 and March 31,2023+1Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.TABLE OF CONTENTSPage Unaudited Condensed Consolidated Balance Sheets3Unaudited Condensed Consolidated Statements of Operations4Unaudited Condensed Consolidated Statements of Stockholders Equity/(Deficit)5Un

15、audited Condensed Consolidated Statements of Cash Flows6Notes to Unaudited Condensed Consolidated Financial Statements72Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolidated Balance Sheets(Unaudited)(in thousands except share data)March 31,2024 December 31,2023 Assets Current Ass

16、ets:Cash and cash equivalents$233,700.9$2,572.7 Restricted cash 40,028.3 -Prepaid expenses and other current assets 324.7 327.5 Accounts receivable,net 47.2 81.0 Total current assets 274,101.1 2,981.2 Property and equipment,net 23.7 29.2 Right-of-Use Assets,net 313.8 353.2 Total Assets 274,438.6 3,3

17、63.6 Liabilities and Stockholders Equity/(Deficit)Current Liabilities:Accounts payable and accrued expenses 9,704.7 1,600.7 Convertible promissory notes 50,157.8 42,415.5 Related party payables 262.0 -Derivative liability -17,282.5 Unearned revenue 3,717.2 4,413.1 Current portion of operating lease

18、liability 163.1 160.3 Total Current Liabilities 64,004.8 65,872.1 Long-term operating lease liability 159.8 201.6 Convertible promissory notes -2,931.5 Derivative liability -1,120.3 Total liabilities 64,164.6 70,125.5 Commitments and contingencies(Note 14)Stockholders Equity/(Deficit):Preferred Stoc

19、k$0.0001 par value 1,000,000 shares authorized,0 shares issued and outstanding at March 31,2024 and December 31,2023 -Common Stock$0.0001 par value 999,000,000 shares authorized,136,700,583 and 87,500,000 shares issued and outstanding at March31,2024 and December 31,2023 13.7 8.8 Paid in Capital 3,0

20、82,180.9 -Accumulated Deficit (2,871,920.6)(66,770.7)Total stockholders equity/(deficit)210,274.0 (66,761.9)Total liabilities and Stockholders equity/(deficit)$274,438.6$3,363.6 The Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.3Table of

21、ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolidated Statements of Operations(Unaudited)Three Month Periods Ended (in thousands except share and per share data)March 31,2024 March 31,2023 Revenue$770.5$1,116.2 Cost of revenue 93.4 41.3 Gross profit 677.1 1,074.9 Cost of operating expense

22、s(1)Research and development 33,158.6 2,812.1 Sales and marketing 1,070.4 256.1 General and administration 64,795.1 1,836.3 Depreciation 5.6 16.3 Total costs and operating expenses 99,029.7 4,920.8 Loss from operations (98,352.6)(3,845.9)Interest expense (2,817.6)(2,024.3)Interest income 28.8 -Loss

23、on the extinguishment of debt (542.3)-Change in fair value of derivative liabilities (225,916.0)5,659.9 Loss before income taxes (327,599.7)(210.3)Income tax expense/(benefit)-Net loss$(327,599.7)$(210.3)Net loss per Share attributable to common stockholders:Basic$(3.61)$(0.00)Diluted*$(3.61)$(0.00)

24、Weighted Average Shares used to compute net profit/loss per share attributable to common stockholders:Basic 90,743,994 87,500,000 Diluted 90,743,994 87,500,000 (1)Costs of operating expenses include stock based compensation expense as follows:Research and development 30,142.5 -General and administra

25、tion 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 dilutive.The Basic and diluted loss per shareattributable to common stockholders are therefore the same.T

26、he Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.4Table of ContentsTRUMP MEDIA&TECHNOLOGY GROUP CORP.Condensed Consolidated Statements of Stockholders(Deficit)/Equity(Unaudited)(in thousands,except sharedata)Common StockNumber of Shares Par V

27、alue$0.0001 Preferred StockNumber of Shares Par Value$0.0001 Paid in Capital AccumulatedDeficit TotalStockholders(Deficit)/Equity Retroactive application ofrecapitalization to January1,2023 87,500,000$8.8 -$-$-$(8,581.3)$(8,572.5)Net Profit/(Loss)-(210.3)(210.3)Balance at March 31,2023 87,500,000 8.

28、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)Net Profit/(Loss)-(26,033.1)(26,033.1)Balance as September 30,2023 87,500,000 8.8 -(57,592.8)(57,584.0)Net Profit/(Loss)-(9,177.9)(9,177.9)Balance as December 31,2023 87,500,000 8.8

29、 -(66,770.7)(66,761.9)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 s

30、tockupon BusinessCombination 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 The Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.5Table of ContentsTRUMP MEDIA&TECHNOLO

31、GY GROUP CORP.Condensed Consolidated Statements of Cash Flows(Unaudited)Three Month Periods Ended (in thousands)March 31,2024 March 31,2023 Cash flows from operating activities Net income/(loss)$(327,599.7)$(210.3)Adjustments to reconcile net loss to net cash used in operating activities:Non-cash in

32、terest expense on debt 2,817.6 2,024.3 Change in fair value of derivative liability 225,916.0 (5,659.9)Depreciation 5.6 16.5 Loss on extinguishment of debt 542.3 -Stock based compensation 84,588.0 -Non-cash charge for operating lease 0.4 1.8 Prepaid expenses and other current assets 2.8 -Accounts re

33、ceivable 33.8 13.2 Unearned revenue (695.9)-Accounts payable 5,073.1 39.9 Net cash used in operating activities$(9,316.0)$(3,774.5)Cash flows used in investing activities Purchases of property and equipment -Net cash used in investing activities$-$-Cash flows provided by financing activities Proceed

34、s from convertible promissory notes 47,455.0 -Proceeds from merger 233,017.5 -Net cash provided by financing activities 280,472.5 -Net change in cash and cash equivalents and restricted cash 271,156.5 (3,774.5)Cash and cash equivalents and restricted cash,beginning of period 2,572.7 9,808.4 Cash and

35、 cash equivalents and restricted cash,end of period$273,729.2$6,033.9 Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets Cash and cash equivalents 233,700.9 6,033.9 Restricted cash 40,028.3 -Total cash and cash equivalents and restricted cash

36、,end of period$273,729.2$6,033.9 Supplemental disclosure of cash flow information Cash paid for interest -Cash paid for taxes -Non cash investing and financing activities Shares issued for conversion of convertible notes$300,426.0$-The Notes to the Unaudited Condensed Consolidated Financial Statemen

37、ts 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 share data)(Unaudited)NOTE 1-DESCRIPTION OF BUSINESS The accompanying unaudited condensed consolidated financ

38、ial 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 Techs assault on free speech by opening up the Internet and giving people theirvoices back.TMTG operates Tru

39、th 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 Agreement dated October 20,2021,between Digital World Acquisition Corp.(Digitial World”or DWAC”),DWAC Merg

40、erSub,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 conditions set forth therein,upon the Closing,Merger Sub merged with and into TMTG,with TMTG surviving a

41、s 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 adjustments and earnout provisions,in exchange for TMTG common stock,which is in substance,a continuation

42、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 Convertible Notesimmediately prior to the Closing.Notwithstanding the legal form of the Business Combination purs

43、uant 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 to be the accounting acquirer under Financial Accounting Standards BoardsAccounting Standards Codificati

44、on 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-combination equity holders of TMTG hold the majority of voting rights in Digital World after giving effect

45、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 the directors on the Combined Entity Board;TMTG senior management(executives)are the senior management(ex

46、ecutives)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 TMTG issuing equity for the net assets of Digital World,with no goodwill or intangible assetsrecorded.While

47、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 historical financial statements of the combined company upon the consummation of the Business Combination.As

48、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 TMTGfollowing the closing of the Business Combination;(iii)the assets and liabilities of Predecessor TMTG at the

49、ir historical cost;and(iv)the Companys equity structure for allperiods presented.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 Pre

50、decessor TMTG common shareholders and 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

51、Combination have been retroactively 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 wi

52、th accounting principles generally accepted 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 necess

53、ary for the fair presentation of the periods presented.The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31,2024.These unauditedcondensed consolidated financial statements and related notes shoul

54、d be read in conjunction with our unaudited 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.Liquidity and going concernTMTG commenced operations on February 8,202

55、1,and began the initial launch of its social media platform in the first quarter of 2022.In October of 2021,TMTG entered into adefinitive merger agreement with DWAC,a special purpose acquisition corporation and a Delaware corporation.The companies consummated the merger on March 25,2024.Company oper

56、ations consumed$47,048.0 of cash from February 8,2021(inception)through March 31,2024,primarily funded by$48,155.0 of proceeds(net of repayments)from theissuance of Private TMTG”convertible promissory notes(the Pre-Merger Notes”).The March 25,2024 Closing triggered the automatic conversion of the Pr

57、e-Merger Notes”tocommon stock immediately prior to such closing,thus eliminating the liability.7Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Concurrently,TMTG received$273,017.5 of net cash proceeds from the Business Combination,comprised of$233,017.5 of cash and$4

58、0,000.0 of restricted cash.Prior to Closing,onFebruary 8,2024,Digital World agreed to issue up to$50,000.0 of convertible promissory notes(the Convertible Notes”)to certain institutional investors(the Note PurchaseAgreements”).Principal plus accrued interest on the Convertible Notes”is due in March

59、2025,if the notes have not been converted to common stock.In accordance with theNote Purchase Agreements,Digital World received$10,000.0 of proceeds(from these notes)prior to Closing,and the Company received the remaining$40,000.0 immediately afterClosing.The$40,000.0 of post-merger cash proceeds is

60、 held in a restricted account and will be released upon satisfaction of certain conditions,including the registration of theunderlying shares.As a result,the Company had a total of$273,729.2 in cash(including restricted cash)and$50,157.8 of convertible promissory notes outstanding as of March 31,202

61、4.See the note below titled,NOTE 9 CONVERTIBLE PROMISSORY NOTES,”for a detailed description of the Companys convertible notes.The Company has experienced operating losses in preceding years and in the first quarter of 2024.On average,Company operations consumed approximately$12,577.3 of cash peryear

62、 from its inception(February 8,2021)through year-end 2023.In addition,for the three months ended March 31,2024,and 2023,the Company had negative operating cash flowsof$9,316.0 and$3,774.5,respectively.As of December 31,2023,the Company had a negative working capital position,primarily due to the sho

63、rt-term nature of its Pre-MergerNotes,”which converted to common stock immediately prior to the Closing.Based upon receipt of proceeds from the Business Combination detailed above,and the resultingpositive working capital position(i.e.,$274,101.1 of current assets less$64,004.8 of current liabilitie

64、s,including$50,157.8 of convertible notes as of March 31,2024),managementbelieves there is not substantial doubt regarding the Companys ability to continue as a going concern as of March 31,2024,and the substantial doubt as of December 31,2023,has been mitigated.The Company believes it has sufficien

65、t working capital to fund operations for at least the next twelve months from the date of issuance of these financialstatements.Use of EstimatesThe preparation of financial statements in conformity with U.S.GAAP requires management to make estimates and assumptions that affect the reported amounts o

66、f 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 estimates.Material estimates and assumptions reflected in the unaud

67、ited condensed consolidated financial statements relate to and include,but are not limited to,the valuation of convertible promissory notes and derivative liabilities.Principles of ConsolidationThe unaudited condensed consolidated financial statements include the financial statements of the Company

68、and its wholly owned subsidiaries and have been prepared inaccordance with U.S.GAAP.All intercompany transactions 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 i

69、n the Companys Condensed Consolidated Statement of Operations.Cash and cash equivalents and restricted cashCash represents bank accounts and demand deposits held at financial institutions.Cash is held at major financial institutions with an original maturity of 90 days or less and aresubject to cred

70、it risk to the extent those balances exceed applicable Federal Deposit Insurance Corporation(FDIC)limitations.No losses were incurred for those balancesexceeding the limitations.Restricted cash consist of a holdback from convertible notes which will be released upon satification of certain condition

71、s,including the registration of the underlying shares.Prepaid expenses and other current assetsOther current assets consist of prepaid rent,insurance and prepaid data costs.Property and EquipmentProperty and equipment are recorded at cost less accumulated depreciation.Depreciation is calculated on t

72、he straight-line basis over the estimated useful lives of the assets.Useful lives for property and equipment are as follows:Asset TypeRangeFurniture and computer equipment2-5 yearsComputer equipment3 yearsExpenditures which substantially increase value or extend useful lives are capitalized.Expendit

73、ures 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 when events or change

74、s 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 is being used,a histor

75、y 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 impaired if the undi

76、scountedcash 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 equipment.Assets to be dispo

77、sed 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 products to be sold,lease

78、d,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 presented.Software developme

79、nt costs 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 probable that the project

80、 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.8Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Revenue recognitionThe Company rec

81、ords revenue in accordance with ASC 606.The Company determines the amount of revenue to be recognized through application of the following steps-Identification of the contract,or contracts with a customer;-Identification of the performance obligations in the contract;-Determination of the transactio

82、n price;-Allocation ofthe transaction price to the performance 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

83、manager service companies provide advertisingservices through 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

84、 the auction and all payments and actions associated therewith.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

85、ordinances.The Company is an agent in these arrangements,and 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 areprov

86、ided.Unearned revenueUnearned revenue primarily consists of 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 invo

87、ice customers in advance or in milestone-based installments.Unearnedrevenue of$695.9 was recognized as revenue for the three months ended March 31,2024,which was included in the deferred revenue balance as of December 31,2023.As ofMarch 31,2024,deferred revenue is expected to be recognized during th

88、e succeeding 12-month period and is therefore presented as current.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

89、time spent managing 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.Research and developmentResearch a

90、nd 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.In addition,research and development expenses include allocated faci

91、lities 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 engaged insales,sales support,business development and media,marketing,a

92、nd customer service functions.In addition,marketing and sales-related expenses also include advertising costs,market research,trade shows,branding,marketing,public relations costs,allocated facilities costs,and other supporting overhead costs.We expense marketing and sales cost inthe period in which

93、 they are incurred.For the three months ended March 31,2024 and 2023,marketing and sales expenses totaled$1,070.4 and$256.1,respectively.Selling,general and administrative expensesGeneral and administrative expenses consist primarily of personnel-related costs,including salaries,benefits,and stock-b

94、ased compensation for our executive,finance,legal,information technology,corporate communications,human resources,and other administrative employees.In addition,general and administrative expenses include fees and costsfor professional services(including third-party consulting,legal,and accounting s

95、ervices),facilities costs,and other supporting overhead 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 differencesbetwe

96、en the unaudited condensed consolidated financial statement 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 i

97、n the years in which those temporary differencesare 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 t

98、hose positions are more likely than not of being sustained.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 occu

99、rs.Accrued interest expense and penalties related to uncertain tax positions are recorded in Income Tax Expense/(Benefit).See Note 7-Income Taxes.DerivativesThe Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded d

100、erivatives in accordance with ASCTopic 815,Derivatives and Hedging”.Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date,with changes in the fairvalue reported in the statements of operations.Derivative assets and liabilities are classifi

101、ed in the balance sheets as current or non-current 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 Comp

102、any has determined that the warrants qualify for equity treatment in the Companys unaudited condensed consolidated financialstatements.9Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)Commitments and contingenciesLiabilities for loss contingencies arising from claims,

103、assessments,litigation,fines,and penalties and other sources are recorded when it is probable that a liability has beenincurred and the amount can be reasonably estimated.The Company has no liabilities for loss contingencies.Recently issued accounting standardsIn December 2023,the FASB issued Accoun

104、ting Standards Update,or ASU,2023-09 Income Taxes(Topic 740):Improvements to Income Tax Disclosures,”or ASU 2023-09.ASU2023-09 requires additional disaggregated disclosures on an entitys effective tax rate reconciliation and additional details on income taxes paid.ASU 2023-09 is effective on aprospe

105、ctive basis,with the option for retrospective application,for annual periods beginning after December 15,2024 and early adoption is permitted.We do not expect theadoption of ASU 2023-09 to have a material impact on our consolidated financial statements.In November 2023,the FASB issued ASU 2023-07 Se

106、gment Reporting(Topic 280):Improvements to Reportable Segment Disclosures,”or ASU 2023-07.ASU 2023-07 enhancesthe 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 inte

107、rim periods within fiscal years beginning after December 15,2024,and early adoption is permitted.We do not expect the adoption of ASU 2023-07 to have a materialimpact on our consolidated financial statements.In August 2020,the FASB issued ASU 2020-06,DebtDebt with Conversion and Other Options(Subtop

108、ic 470-20)and Derivatives and HedgingContracts in Entitys OwnEquity(Subtopic 815-40)Accounting 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 instr

109、uments with conversion features that are not required to be accounted for as derivatives underTopic 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 al

110、so removes certain conditions that should be considered in the derivatives scope exception 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

111、 to thedisclosures and earnings-per-share(EPS)for convertible instruments and contracts in 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 th

112、at an entity should adopt the guidance as of thebeginning of its annual fiscal year.The Company 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 consolidated financial statements.NOTE 3-RECAPITALIZATION As discussed in N

113、ote 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 elements of the

114、 Business Combination to the condensedconsolidated statements of cash flows and the condensed consolidated statement of changes in stockholders equity(deficit)for the period ended March 31,2024:Cash-trust and cash,net of redemptions 233,017.5 Add:other assets -Less:accrued expenses (3,292.9)Less:not

115、es 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 bonus paymen

116、ts 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 months ended March 31,2024.TMTGdeems these to be non-recurring expens

117、es 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 World convertible note

118、holders,converted immediately prior to Business Combination 1,709,145 Predecessor TMTG Shares(1)87,500,000 Shares Issued to TMTG convertible noteholders 7,854,534 Common stock immediately after the Business Combination(2)136,700,583 (1)Includes 614,640 shares outstanding and held in escrow.(2)Exclud

119、es 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 10Table of ContentsNOTES TO CONDENSED CONSOLIDATED

120、FINANCIAL STATEMENTS(Continued)Public and private placement warrantsIn connection with Digital Worlds initial public offering in 2021,14,375,000 public warrants were issued(the Public Warrants”)and 566,742 warrants were issued in a privateplacement(the Private Placement Warrants”;and the Private Pla

121、cement Warrants together with the Public Warrants,collectively 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 D

122、igital World and certain institutionalinvestors on February 7,2024,Digital World has agreed to issue an aggregate of 3,055,000 warrants(Post-IPO Warrants”),each warrant entitling the holder thereof to purchaseone share of the Companys Class A common stock for$11.50 per share.The Post-IPO Warrants we

123、re issued concurrently with the closing of the Business Combination,and havesubstantially the same terms as the public warrants issued by Digital World in connection with its initial public offering,except that such Post-IPO Warrants may only betransferred to the applicable holders affiliates.TMTG E

124、arnout Shares As noted in Note 1,in connection with the Merger,TMTG shareholders are entitled to up to 40,000,000 shares if certain post merger per share market prices are achieved.The Company utilized a Monte Carlo simulation analysis to determine the fair value of the Earnout Shares at the date of

125、 the merger,which included the following assumptions:The Monte Carlo simulation conclusion for each tranche of the Earnout Shares is the result of the average of 1,000,000 trial outcomes.Within each trial of the simulation:1.The stock price is simulated for the defined term(1.5 years,2 years,and 3 y

126、ears)after the Merger date.2.The vest date is determined as the date the stock price achieves the different stock price thresholds,which are$12.50,$15.00,and$17.50.3.The payoff is calculated as the number of shares issued per tranche(15 million,15 million,and 10 million)multiplied by the simulated s

127、tock price at the vest date,whichvaries with each simulation.4.The payoff is discounted to the present value using the interpolated risk-free rate ranging from 4.31%to 4.70%.Volatility is calculated as the annualized standard deviation of daily returns from a set of Guideline Public Companies(GPC)ov

128、er 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 Shares was first evaluated under ASC718 to determine if the arrangement represents a share-based payment arrangem

129、ent.Because there are no service conditions nor any requirement of the participants to providegoods or services,the Company determined that the Earnout Shares are not within the scope of ASC 718.Next,the Company determined that the Earnout Shares represent a freestanding equity-linked financial inst

130、rument 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 Company next considered the equity classification conditions in ASC 815-40-25 and concluded that all of the conditions we

131、re met.Therefore,the Earnout Share arrangement isappropriately classified in equity.As the merger has been accounted for as a reverse recapitalization,the fair value of the Earnout Shares arrangement has been accounted for as an equity transaction as of theclosing date of the merger.NOTE 4-PROPERTY

132、AND EQUIPMENTProperty and equipment consist of the following:(in thousands)March 31,2024 December 31,2023 Property and equipment Furniture and equipment$34.5$34.5 Computer equipment 120.8 120.8 Accumulated depreciation (131.7)(126.1)Property and equipment,net$23.7$29.2 Total depreciation expense was

133、$5.6 and$16.5 for the three months ended March 31,2024 and 2023,respectivelyNOTE 5 ACCOUNTS PAYABLE AND ACCRUED EXPENSESAccounts payable and accrued expenses consisted of the following:(in thousands)March 31,2024 December 31,2023 Accounts payable$1,147.7$1,600.7 Other accrued expenses 5,526.1 -Incom

134、e tax payable 2,522.7 -Franchise tax payable 508.2 -Accounts payable and accrued expenses$9,704.7$1,600.7 11Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)NOTE 6-LEASES Operating leases are included in the unaudited condensed consolidated Balance Sheets as follows:(i

135、n thousands)Classification March 31,2024 December 31,2023 Lease assets Operating lease cost ROU assets,net Assets$313.8$353.2 Total lease assets$313.8$353.2 Lease liabilities Operating lease liabilities,current Current liabilities$163.1$160.3 Operating lease liabilities,non-current Liabilities 159.8

136、 201.6 Total lease liabilities$322.9$361.9 The components of lease costs,which are included in loss from operations in our unaudited condensed consolidated Statement of Operations we as follows:Three Month Period Ended (in thousands)March 31,2024 March 31,2023 Lease costs Operating lease costs 44.8

137、44.8 Total lease costs$44.8$44.8(in thousands)March 31,2024 2024(remainder of)$136.1 2025 185.8 2026 31.3 Total future minimum lease payments$353.2 Amount representing interest 30.3 Present value of net future minimum lease payments 322.9 NOTE 7-INCOME TAXESThe estimated annual effective tax rate ap

138、plied to the three month periods ended March 31,2023 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 application of a valuation allowance.As of March 31,2024,TMTG had US Federal net operating loss carry

139、forwards(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 the Digital World sponsor ARC agreed,commencing from the date when Digital Worlds Registration Sta

140、tement 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 services,including office space,utilities and administrative services,as Digital World required from

141、 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 March 31,2024.Advances related partyDuring 2022 and the year ended December 31,2023,the Digital World Sponsor

142、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 March 31,2024,the Companys obligation to the Sponsor for such payments was outstanding in the amount of$41.0.Effective June 13,2022,Private TMTG entered into a Consulting Se

143、rvices 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 relationship was terminated by Private TMTG effective March 25,2024,upon theClosing of the Business Combin

144、ation.During the three months ended March 31,2024 and 2023,TMTG paid$30.0 and$40.0,respectively,to Trishul.As of March 31,2024 and2023,TMTG had an outstanding payable balance of zero and$10.0,respectively to Trishul.The outstanding payable balance at December 31,2023 was zero.Trishul is owned byKash

145、yap 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 Services Agreement with Hudson Digital,LLC(Hudson Digital”).Pursuant to the agreement,which as amended expiresD

146、ecember 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 common shares immediately before the Closing(along with all other Private TMTG Convertible Notes),and a$600.0 rete

147、ntion bonus following the Closing.During the three months ended March 31,2024 and 2023,we paid$60.0 to Hudson Digital.As of March 31,2024 and 2023,TMTG had an outstanding payable balance of$600.0and zero,respectively to Hudson Digital,recorded within accounts payable and accrued liabilities on the c

148、ondensed consolidated balance sheet.Hudson Digital is owned byDaniel 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 director of TMTG.12Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continue

149、d)NOTE 9 CONVERTIBLE PROMISSORY NOTES AND 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

150、(365 days year)for each note.Each of Notes 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 con

151、trol.All outstanding principal of these 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

152、 of theCompany Stock(rounded to the nearest whole share)equal to the quotient of:(a)the principal plus accrued interest on the Notes then outstanding,divided by$4.00.In other,non-SPAC conversion scenarios,the number of shares of Company stock to be issued to the Lender upon conversion of the Notes w

153、as variable based on the application of 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 qu

154、otient of:(a)the principal plus accrued interest on the Notes then outstanding(b)divided by 40%of the initial public offering price per share of a qualified initial public offering.For Notes 3-7,the number of shares of Company stock to be issued to the Lenderupon a non-SPAC conversion event would be

155、 the number of shares of Company stock(rounded to the nearest whole share)equal to the quotient of:(a)the principal plus accruedinterest on the Notes then outstanding(b)divided by 40%of(i)the initial public offering price per share of a qualified initial public offering,(ii)the price per share as de

156、termined bythe valuation of the Company in connection with a qualified private equity raise,or(iii)in the case of a change of control,the price per share determined in accordance with theCompanys then current fair value determined by an independent valuation firm.Notes 8 to 12 were Convertible Promi

157、ssory 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 note.Notes 8 to 12 were convertiblesimultane

158、ously with the completion of a SPAC merger agreement or IPO.All outstanding principal of these Notes,together with all accrued but unpaid interest on such principal,would convert to equity.The number of shares of Company stock to be issued to the Lender upon conversion of the Notes would be the numb

159、er 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 Notes;provided,however,in the event that t

160、he 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 respective conditions of the individual N

161、otes,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 13 to 19 were ConvertiblePromissory Notes

162、 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 of a Qualified SPAC Business Combination(S

163、PAC”)merger agreementor Qualified Initial Public Offering(IPO”).All outstanding principal of these Notes,together with all accrued but unpaid interest on such principal,would convert to equity.Thenumber of shares of Company stock to be issued to the Lender upon conversion of the Notes would be the n

164、umber of shares of the Company Stock(rounded to the nearest wholeshare)equal to the quotient of:(a)the principal plus accrued interest on the Notes then outstanding(b)divided by either US$25 or US$21 subject to the respective conditions ofthe individual notes.Notes 20 to 23 were Convertible Promisso

165、ry Notes issued from November 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 Qualified SPAC BusinessCombin

166、ation(SPAC”)merger agreement or Qualified Initial Public Offering(IPO”).The outstanding principal of the Notes,accrued but unpaid interest on such principal,wouldconvert to equity.The number of shares of Company stock to be issued to the Lender upon conversion of the Notes in the event of a SPAC tra

167、nsaction shall be the number ofshares 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 byUS$10.The number of shares of Company stock to be issued to the Lender upon conversion of the Notes

168、in the event of an IPO would be the number of shares of the CompanyStock(rounded to the nearest whole share)equal to the quotient of:(a)the principal plus accrued interest on the Notes then outstanding(b)divided by 50%of the IPO price pershare.Convertible notes and warrants-February 8,2024-Pursuant

169、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 promissory notes(the Convertible Notes”).The ConvertibleNotes:(a)accrue interest at a

170、n 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 the conversion right and(ii)the date that the winding up of the Company is eff

171、ective(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 Notes,at each holders option,in whole or in part,and subject to the terms and con

172、ditions 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,each unit consisting of one share of Class A common stock of the Company and

173、 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 the Convertible Note that was converted)beingconverted,divided by(B)$8.00(the

174、 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-day notice of such redemption(the Redemption Right”),which Redemption Right isc

175、ontingent 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 on the day immediately preceding the day on which a redemption notice is issu

176、ed 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 final drawdown to be deposited into a control account as indicated by the Company

177、(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 using the proceeds in theControl Account,(ii)any portion of the applicable Conv

178、ertible 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 to the Convertible Note has been declared effective by the Commission;(e)are

179、 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 subscription agreements(each a Warrant Subscription Agreement”)entered into b

180、y and between Digital World and certain institutional investorson February 7,2024,Digital World has agreed to issue an aggregate of 3,055,000 warrants(Post-IPO Warrants”),each warrant entitling the holder thereof to purchase one share ofDigital World Class A common stock for$11.50 per share.The Post

181、-IPO Warrants were issued concurrently with the closing of the Business Combination,and have substantiallythe same terms as the public warrants issued by Digital World in connection with its initial public offering,except that such Post-IPO Warrants may only be transferred to theapplicable holders a

182、ffiliates.13Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)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 immediately after Closing.The$40,000.0 ofproceeds is held in a restricted ac

183、count and will be released upon satisfaction of certain conditions,including the registration of the underlying shares.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 value of th

184、e 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 derivative r

185、equiringbifurcation 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 Statement of Operations.Th

186、e 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)March 31,2024 December 31,2023 Convert

187、ible 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 98,018.0 40,4

188、60.0 Less:Derivative liability component (37,234.8)(37,234.8)Liability component at date of issue 60,783.2 3,225.2 Interest charged 44,939.4 42,121.8 Loss on extinguishment of debt 542.3 -Total Liability component$106,264.9$45,347.0 Less:Conversion to Paid in Capital (56,107.1)-Less:Short-term liabi

189、lity component (50,157.8)(42,415.5)Liability component at March 31,2024 and December 31,2023$-$2,931.5 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 L

190、ess:Conversion to Paid in Capital (244,318.9)-Less:Short-term derivative liability component -(17,282.5)Derivative Liability Component at March 31,2024 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 1

191、00%+to the liability component for the period since therespective notes were issued.As of March 31,2024,our future minimum payment of our note payable in the amount of$50,157.8 is due in March 2025.NOTE 10-FAIR VALUE MEASUREMENT The Company uses a three-tier fair value hierarchy,which prioritizes th

192、e inputs used in the valuation methodologies in measuring fair value:Level 1.Quoted prices(unadjusted)in active markets for identical assets or liabilities.Level 2.Significant other inputs that are directly or indirectly observable in the marketplace.Level 3.Significant unobservable inputs which are

193、 supported by little or no market activity.The derivative liability component of Convertible promissory notes are classified as Level 3 due to significant unobservable inputs.14Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)As of March 31,2024 (in thousands)Quoted pr

194、ices inactive markets foridentical assets(Level 1)Significantother observableinputs(Level 2)Significantunobservable inputs(Level 3)Current Liabilites Derivative liability -Liabilities Derivative liability -As of December 31,2023 (in thousands)Quoted prices inactive markets foridentical assets(Level

195、1)Significantother observableinputs(Level 2)Significantunobservableinputs(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 includi

196、ng Black-Scholes option pricing models and MonteCarlo simulations.NOTE 11 LOSS PER SHAREBasic loss per share is calculated by dividing net income by the weighted average number of shares of stock outstanding during the period.Diluted loss per share is calculated bydividing net loss by the weighted a

197、verage 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 three months ended March 31,2024 and 2023,because the Company incurred a net loss and the potential diluti

198、ve shares areanti-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:March 31,2024 March 31,2023 Convertible notes 6,250,000 -Warrants 21,491,229 -Total common stock equivalents excluded from dil

199、utive loss per share 27,741,229 -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 the action concludes.While

200、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 inception,the total number of s

201、hares 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 with the Companys Equity

202、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 holders thereof,was reclassifi

203、ed 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 the Companys Equity Incent

204、ive 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 in connection with the C

205、ompanys 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 but unissued shares were

206、 classified as non-voting.15Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)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

207、 Trump Media and Technology Group Corp.Additionally,the Company 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.NOTE 13 STOCK BASED COMPENSATION2024 Equi

208、ty 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.The total number of shares of our common stock reserved

209、 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 threemonths ended March 31,2024.Executive Promissory NotesIn March 2024,we

210、 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 Promissory Notes bore a zero-coupon interest rate,and became p

211、ayable at theearlier of September 30,2024,an Event of Default,or upon a Change in Control Event.The Maturity Date of the Executive Promissory Notes could be extended at the solediscretion of each executive individually for any reason,including for the purpose of allowing the Executive Promissory Not

212、es to convert to stock or other securities upon aChange of Control Event.Upon a Change of Control Event,the Executive Promissory Notes automatically converted into either(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 e

213、qual 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 Control Events.On March 25,2024,we consummated a merger between DWAC and TMTG at which time the Executive Promissory Notes automatically co

214、nverted 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 Promissory Notes could be converted into avariable number of shares upon a Change of Control event and the executives had the sole disc

215、retion 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 the Executive Promissory Notes at their settlement date and recorded stock-basedcompensation expense for these awards,within general and

216、 administration expense in the Statement of Operations,totaling$54,445.5 for the three months ended March 31,2024.Vendor Convertible NotesIn March 2024,we issued unsecured convertible notes to certain vendors in exchange for research and development services provided.These Vendor Convertible Notes w

217、ereissued 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 convertible in to shares of our common stock upon consummating a merger between DWAC and TMTG at a conversion price of$10.00 per sh

218、are.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 development expense in the Statement of Operations for the three months ended March 31,2024.NOTE 14-COMMITMENTS AND CONTINGENCIES From

219、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 business,and other unasserted claims.We investigate claims as they arise and accrue estimates for resolution of legal and othe

220、r contingencies when losses are probable andreasonably estimable.Based on current known facts and circumstances,the Company currently believes that any liabilities ultimately resulting from ordinary course claims,andproceedings will not individually or in aggregate,have a material adverse effect on

221、the Companys financial position,results of operations or cash flows.However,the outcomesof claims legal proceedings or investigations are inherently unpredictable and subject to uncertainty,and may have an adverse effect on us because of defense costs,diversion ofmanagement resources and other facto

222、rs 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 assurances that favorable final outcomes will be obtained.The final outcome of any current or future claims or lawsuits could

223、 adversely affect ourbusiness,financial position,results of operations or cash flows.We periodically evaluate developments in our legal matters that could affect the amount of liability that haspreviously been accrued or the reasonably possible losses that we have disclosed,and make adjustments as a

224、ppropriate.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.While in escrow,such shares are gener

225、ally not considered by the Company to be issuedand outstanding.On March 22,2024,the Chancery Court entered a Scheduling Order setting the case for a single-day trial on June 26,2024.Except as indicated below,to the knowledge of our management team,there is no litigation currently pending or contempl

226、ated against us or against any of our property.We have cooperated with a FINRA inquiry 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 b

227、e construed as an indication that FINRA has determined that any violationsof Nasdaq 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

228、 subject of an investigation by the SEC with respect to certain statements,agreements 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”).16Table of ContentsNOTES TO COND

229、ENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)On July 3,2023,Digital World reached an agreement in principle(the Settlement in Principle”)in connection with the Investigation.The Settlement in Principle was subject toapproval by the SEC.On July 20,2023,the SEC approved the Settlement in Principl

230、e,announcing it settled its dispute with Digital World and entered an order(the Order”)finding that Digital Worldviolated certain antifraud provisions of the Securities Act and the Exchange Act,in connection with Digital Worlds IPO filings on Form S-1 and the Form S-4 concerning certainstatements,ag

231、reements and omissions relating to the timing and discussions Digital World had with Private TMTG regarding the proposed business combination.In the Order,Digital World agreed(i)that any amended Form S-4 filed by Digital World would be materially complete and accurate with respect to certain stateme

232、nts,agreements and omissionsrelating to the timing and discussions that Digital World had with Private TMTG regarding the proposed business combination and(ii)to pay a civil money penalty in an amountof$18 million to the SEC promptly after the closing of any merger or a comparable business combinati

233、on 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 the$18 million civil penalty to the SEC pursuant to the Order.Section 16 ClaimOn October 20,2023,Robert Lowinger(the Plaintiff”)filed a

234、complaint against Rocket One Capital,LLC(Rocket One”),Michael Shvartsman,Bruce Garelick,and Digital World inthe U.S.District Court for the Southern District of New York.According to the complaint,Digital World was named as a party in the lawsuit because the Plaintiff is seeking relief forthe benefit

235、 of Digital World.In the complaint,the Plaintiff contends that,in 2021,Mr.Garelick and Rocket One were directors of Digital World and that they purchased securities ofDigital World.The Plaintiff further alleges that within a six-month period from the date of their purchases,both Mr.Garelick and Rock

236、et One sold securities in Digital World andrealized 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 ofDigital Worlds securities.According to the Plaintiff,under Section 16(b)of the E

237、xchange Act(15 U.S.C.78p(b),Rocket One,Mr.Shvartsman,and Mr.Garelick are each requiredto disgorge certain trading profits to Digital World.On January 11,2024,Digital World filed a pre-motion letter with the court,indicating Digital Worlds intention to file a motion todismiss in relation to the matte

238、r.This pre-motion letter was subsequently endorsed by the court on January 17,2024.The court provided a deadline of January 22,2024 for thePlaintiff to respond to Digital Worlds pre-motion letter.On March 1,2024,Digital World filed a motion to dismiss the claims against Digital World.On March 15,202

239、4,the Plaintiff filed an opposition to Digital Worlds motion to dismiss.On March 22,2024,Digital World filed a reply in support of its motion to dismiss the claims against Digital World.The case is Lowinger v.Rocket One Capital,LLC,et al.,No.1:23-cv-9243(S.D.N.Y.Oct.20,2023).Litigation with United A

240、tlantic 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 TMTG,among other things,extensive intellectual property and digital media rights related to President Trump for purposes

241、of commercializing the various Private TMTG initiatives(the Services Agreement”).Neither Private TMTG nor Digital World was a party to such agreement.On each of January 18,2024 and February 9,2024,Digital World received letters from counsel to UAV,a party to the Services Agreement.The letters contai

242、ned 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 directors to TMTG and its successors(i.e.,TMTG after the Business Combination

243、),(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 Services Agreementis not void ab initio and claims that certain events following the

244、 July 30,2021 notification support its assertion that such Services Agreement was not void.On February 6,2024,a representative of UAV sent a text message to a representative of a noteholder of TMTG suggesting that UAV might seek to enjoin the BusinessCombination.On February 9,2024,Private TMTG recei

245、ved 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 enjoin consummation of the Business Combination.On February 28,2024,UAV filed a ve

246、rified 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 proceedings.On March 4,2024,UAV filed an amended complaint,converting their action from

247、 a directaction to a purported derivative action,and adding members of the Private TMTG board as defendants.On March 6,2024,Private TMTG filed an opposition to UAVs motion to expedite,and UAV filed its response on March 8,2024.On March 9,2024,the Chancery Court held ahearing to decide UAVs motion to

248、 expedite proceedings.During the oral argument,Private TMTG agreed that any additional shares of Private TMTG issued prior to or upon theconsummation of the Business Combination would be placed in escrow pending a resolution of the dispute between the parties.The Chancery Court entered an order cons

249、istentwith the foregoing on March 15,2024,and scheduled a status conference for April 1,2024.On March 18,2024,Private TMTG and the former board filed a motion to dismiss theamended complaint for,among other things,failure to state a claim.On April 2,2024,UAV filed a motion for leave to file a second

250、 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 litigation against UAV and others in Florida state court.Private TMTG maintains that the contempt claims are meritless.Additionally,UAV

251、 filed a motion for a case scheduling order seeking to expedite discovery in advance of a hearing scheduled for April 30,2024.On April 3,2024,Defendants(Private TMTG and its former board)filed an opposition to the motion for scheduling order.On April 5,2024,Defendants filed an opposition to the moti

252、on for leave to file a secondamended complaint.On April 8,2024,Defendants filed a motion to stay discovery and for protective order.The Chancery Court granted the motion for leave to file a secondamended complaint on April 9,2024,but the Chancery Court also re-assigned the case to a new judicial off

253、icer.On April 11,2024,UAV filed 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

254、order expediting the matter.Additionally,all of the Defendants moved to dismiss the secondamended complaint.Following briefing and oral argument on the motion to vacate,the Chancery Court vacated the prior provisions of the March 15 order expediting the matter.On May 8,2024,the Chancery Court stayed

255、 discovery.17Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)This matterincluding Defendants Motion to Dismiss and UAVs Renewed Motion for Contemptremains pending.Lawsuit Against ARC and Patrick OrlandoOn February 26,2024,representatives of ARC Global Investments II,L

256、LC(ARC”)claimed to Digital World that after a more comprehensive”review,the conversion ratio forDigital 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

257、 Patrick Orlando,the managing member of ARC,that the conversion ratio was 1.68:1.Digital Worlds board of directors viewed these claimsas an attempt by Mr.Orlando to secure personal benefits,breaching his fiduciary duty to Digital World and its shareholders.Digital World and Private TMTG initiated a

258、lawsuit against ARC(Case No.192862534)in the Civil Division for the Twelfth Judicial Circuit Court in Sarasota County,Florida,onFebruary 27,2024.The complaint sought a declaratory judgment affirming the appropriate conversion ratio as 1.34:1,as previously disclosed,damages for tortious interference

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

260、sulted in an$18 million penalty,and for hiscontinuous obstruction of Digital Worlds merger with Private TMTG to extort various concessions that benefited only him and harmed Digital World and its shareholders.Furthermore,the complaint sought damages for the wrongful assertion of dominion over Digita

261、l Worlds assets inconsistent with Digital Worlds possessory rights over thoseassets.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 amendedcomplaint,adding a claim for violation of Floridas Decept

262、ive and Unfair Trade Practices Act.Digital World further alleged breach of fiduciary duty of loyalty,breach of fiduciaryduty of care,and conversion claims against Mr.Orlando.With respect to ARC,Digital World alleged aiding and abetting a breach of fiduciary duty.Defendants ARC and Mr.Orlando filed m

263、otions to dismiss the amended complaint and stay discovery in the action on April 3,2024.No hearing has been set on the motions,and a case managementconference is scheduled for June 17,2024.On the afternoon of February 28,2024,ARCs registered agent in Wilmington,Delaware,and Mr.Orlando were served w

264、ith the complaint filed by Digital World and Private TMTG.Later that day,ARCs counsel electronically mailed Digital Worlds counsel a lawsuit,filed in the Court of Chancery of the State of Delaware,alleging an impending violation of theDigital World Charter for failure to commit to issue the number o

265、f conversion shares to ARC that ARC claims it is owed upon the consummation of the Business Combination(theDelaware Lawsuit”).The complaint claims a new conversion ratio of 1.78:1 and seeks specific performance and damages for the alleged breach of the Digital World Charter,adeclaratory judgment tha

266、t the certain derivative 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

267、 ratio.We do not believe ARCs 1.78:1 conversion ratio and related claims are supported by the terms of the Digital World Charter.As a result,we intend to vigorously defend DigitalWorlds calculation of the conversion ratio and related rights.In addition to its complaint filed on February 28,2024,ARC

268、also filed a motion with the Chancery Court requestingthat the case schedule be expedited to enable the Chancery Court to conduct an injunction hearing prior to the March 22,2024 shareholder vote.On March 3,2024,Digital Worldfiled an opposition to ARCs motion to expedite,and ARC filed a reply on Mar

269、ch 4,2024.On March 5,2024,the Chancery Court conducted a hearing to consider ARCs request toexpedite the case schedule.After hearing arguments from both sides,the Vice Chancellor denied ARCs motion,stating that the court would not conduct a merits or injunctionhearing before March 22,2024.Consequent

270、ly,the Vice Chancellor also denied ARCs request to postpone the vote until after a merits 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

271、 to ARCs share 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.In its ruling,the

272、 Chancery Courtordered ARC and Digital World to propose a schedule by March 8,2024,for resolving the action within 150 days following the Business Combination.The court also asked theparties to provide a stipulation by March 8,2024,regarding ARCs ability to maintain standing over its claim after vot

273、ing in favor of the Business Combination.The court furtherrequested the parties to agree to the creation of an escrow account for the deposit of disputed shares after the Business Combination,to be held until the action concludes.Lastly,the court asked Digital Worlds counsel to submit a letter by Ma

274、rch 8,2024,outlining how this litigation will proceed alongside the Florida litigation filed by Digital World onFebruary 27,2024,in the Circuit Court of Sarasota County,Florida.On March 8,2024,Digital World submitted a letter to the Chancery Court,stating that it voluntarily haddismissed its claim f

275、or declaratory judgment in the Circuit Court of Sarasota County,Florida.On March 22,2024,the Chancery Court entered a Scheduling Order setting the casefor a single-day trial on June 26,2024.Discovery is ongoing.In relation to the Delaware Lawsuit,Digital World notified its shareholders on March 14,2

276、024,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 Shareholders 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 W

277、orld entered into the Disputed Shares Escrow Agreements with the Escrow Agent,pursuant to which TMTG deposited intoescrow the number of shares of TMTG Common Stock representing the difference between the actual conversion ratio,determined by Digital Worlds board of directors uponclosing of the Busin

278、ess 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 of theDisputed Shares Escrow Agreements.The ultimate resolution as to whether none,a portion or all of the disputed conversion shares will be issued is not

279、determinable at this time.As a general matter,the pursuit of theclaims may be costly and time consuming and could have a material adverse effect on TMTGs reputation and its existing stockholders and may result in counterclaims.Litigation With Patrick Orlando in DelawareOn March 15,2024,Plaintiff Pat

280、rick 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 in Florida and certain other matters(the Advancement Lawsuit”).Mr.Orlandos allegations relate to certain provi

281、sions in theDigital World Charter,Digital Worlds bylaws,and an indemnity agreement allegedly entered into between Mr.Orlando and Digital World.Mr.Orlando alleges that those certainprovisions require Digital World to pay the legal fees Mr.Orlando incurred and will incur in connection with legal proce

282、edings in which he is involved by reason of the fact that heis or was a director or officer of Digital World.Mr.Orlando seeks a court order that(i)declares that he is entitled to legal fees for certain proceedings described in the complaint,(ii)requires Digital World to pay for legal fees incurred a

283、nd future legal fees to be incurred for those proceedings,(iii)requires Digital World to pay the fees incurred to bring theAdvancement Lawsuit,and(iv)requires Digital World to pay pre-and post-judgment interest on the amounts owed to Mr.Orlando.18Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINA

284、NCIAL STATEMENTS(Continued)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 Stipulation,subject to Digital Worlds right to challe

285、nge 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 foradvancement of attorneys fees and costs.As of May,10,

286、2024,TMTG had paid or agreed to pay a total of$235.1 thousand to Mr.Orlandos attorneys pursuant to suchStipulation.On April 23,2024,Mr.Orlando filed a motion for leave to supplement the Advancement Lawsuit to add a claim for advancement of legal fees and expenses Mr.Orlando hasincurred and will incu

287、r 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 seeks reimbursement for the legal fees and expenses incurred in connection with his supplement to the Advancement Lawsuit,and he

288、 seeks pre-judgment and post-judgment interest on the amounts he claims are owed to him.Lawsuit Against ARC in New York On March 19,2024,Plaintiff Digital World filed a lawsuit against ARC in New York state court alleging breach of contract and seeking injunctive relief.Digital Worlds claimsrelated

289、to an agreement between Digital World and ARC entered into in September 2021(the Letter Agreement”),whereby ARC promised to vote in favor of any merger agreementpresented to Digital World shareholders for a vote.Digital World alleged that it presented a merger agreement to its shareholders,but ARC w

290、ithheld its vote in favor of the mergerin advance of the March 22,2024 shareholder vote.Digital Worlds suit requested that the court declare ARCs obligation to vote its shares in favor of the merger,per the LetterAgreement,and an order compelling ARC to specifically perform its obligations under the

291、 Letter Agreement.Digital World also sought an award of consequential damages forbreach of contract.On March 22,2024,Digital World voluntarily discontinued its action without prejudice after ARC cast its vote in favor of the Business Combination at theSpecial Meeting.Lawsuit Against UAV,Litinksy,Mos

292、s,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(Case No.2024 CA 001545 NC)against UAV,Andrew Litinsky,Wesley Moss,and Patrick Orlando.In view of UAVs repeated demands concerning its alleged stock o

293、wnership and director appointment rights,the complaintalleges claims for a declaratory judgment against UAV determining that the Services Agreement is unenforceable against Private TMTG.The complaint also asserts a claim forunjust enrichment against UAV based on its failure to competently provide se

294、rvices 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 dealings with Orlando,(b)aiding and abetting and conspiracy to breach fiduciary duty against Mr.Orlando based on the same events,and(c)br

295、each of the fiduciary duty of care against Mr.Litinsky and Mr.Moss for their gross negligence in managing the company.On April 25,2024,Private TMTG filed a motion to consolidate this lawsuit with the Lawsuit Against ARC and Patrick Orlando in Sarasota County,Florida described above forpurposes of di

296、scovery and pretrial proceedings.That motion is currently pending before the court,as is Mr.Moss,Mr.Litinsky,and UAVs motion to stay proceedingswhich isset for a hearing on June 5,2024.Litigation with Orlando and Benessere in Miami,FloridaOn April 2,2024,Patrick Orlando and Benessere Investment Grou

297、p,LLC filed suit against TMTG in the Circuit Court of the Eleventh Judicial District in Miami-Dade County,Florida.Orlando and Benessere seek a declaratory judgment that TMTG is restricted from disclosing material exchanged with Orlando and Benessere pursuant to a joint defenseagreement previously en

298、tered into by the Parties in addition to a request for damages for any breach of the joint defense agreement.Also on April 2,2024,Orlando and Benesserefiled a motion for preliminary injunction for enforcement of the joint defense agreement.As of May 2,2024,the motion for preliminary injunction had n

299、ot been set for hearing.Litigation with ARC Noteholders in Miami,Florida On May 8,2024,a group of ARC noteholders(Edwin B.Tucker et al.)filed suit against ARC and DWAC n/k/a TMTG in the Circuit Court of the Eleventh Judicial District in Miami-Dade County,Florida.The noteholders seek specific perform

300、ance and compensatory damages from both defendants or,in the alternative,damages for breach of contract fromARC,in connection with shares of TMTG to which the ARC noteholders assert they are entitled.As of May 10,2024,TMTG had not been served in this action.NOTE 15 SUBSEQUENT EVENTSOn April 15,2024,

301、TMTG filed a registration statement on form S-1,which,as of May 20,2024,had not yet been declared effective and remained subject to amendment andcompletion.On April 16,2024,TMTG announced that it had finished the research and development phase of its new live TV streaming platform and would begin sc

302、aling up its own contentdelivery network.On May 16 and 17,2024,respectively,the Company signed agreements to obtain data center services and purchase servers and related equipment for theproject.On April 26,2024,in accordance with the terms of the Merger Agreement,the Company officially determined t

303、hat 40,000,000 Earnout Shares had been earned,after which suchshares were issued.19Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsReferences in this report(this Quarterly Report”)to TMTG,”we,”us”or the Company”refer to Trump Media&Technolo

304、gy Group Corp.References to ourmanagement”or our management team”refer to our officers and 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

305、 notes thereto contained elsewhere in this Quarterly Report.All amounts are in thousands,except per share data.Certain information contained in the discussion and analysis set forth below includes forward-looking statements thatinvolve risks and uncertainties.Our actual results could differ material

306、ly from such forward-looking statements.Factors that could cause or contribute to those differencesinclude,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.

307、Cautionary Note Regarding Forward-Looking StatementsThis Quarterly Report on Form 10-Q includes forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933,as amended(the SecuritiesAct”)and Section 21E of the Exchange Act of 1934,as amended(the Exchange Act”)that are n

308、ot historical facts,and involve risks and uncertainties that could cause actualresults to differ materially from those expected and projected.All statements,other than statements of historical fact included in this Quarterly Report including,without limitation,statements under Managements Discussion

309、 and Analysis of Financial Condition and Results of Operations”regarding the Companys financial 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,”inte

310、nd,”estimate,”aim,”plan,”may,”will,”continue,”should,”seek”and variations and similar words and expressions identify forward-looking statements.Such forward-looking statements are based on the beliefs of management,as well as assumptions made by,and information currently available to management.A nu

311、mber of factorscould cause actual events,performance or results to differ materially from the 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 for

312、ward-looking statements,please refer to the Risk Factors section ofthe Companys Form 10-K filed with the U.S.Securities and Exchange Commission(the SEC”)on April 1,2024,as amended by Amendment Number 1 to Form 10-K filed with theSEC on April 3,2024.The Companys securities filings can be accessed on

313、the EDGAR section of the SECs website at www.sec.gov.Except as expressly required by applicablesecurities law,the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information,future events orotherwise.OverviewTMTG aspires to

314、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,Alphabet(Google),Amazon and others-that it believes collude to curta

315、il 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 Trump Media&Technology Group Corp.)(Private TMTG”)was incorporated on F

316、ebruary 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,real-time platform where any user can create content,follow other users

317、,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 depth of available content.Additionally,users can be followed by oth

318、er 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 operating its platform,to the best of its ability,without relying on big

319、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 App became available in the Samsung Galaxy and Google Play stores in

320、 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 its launch,Truth Social has experienced substantial growth,from zero

321、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 metric to make business oroperating decisions.Consequently,it has no

322、t 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 platform,TMTGs management team believes that such metrics are not criti

323、calin 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 incorporating new technologies,such as advanced video streaming services on it

324、s 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 ac

325、tive user accounts including monthly and daily active users,could potentially divert its focus from strategic evaluation with respect to the progress and growth ofits business.TMTG believes that focusing on these KPIs might not align with the best interests of TMTG or its stockholders,as it could le

326、ad to short-term decision-making at theexpense of long-term innovation and value creation.Therefore,TMTG believes that this strategic evaluation is critical and aligns with its commitment to a robust business planthat includes introducing innovative features and new technologies.To foster a flourish

327、ing digital public forum,TMTG seeks to prevent illegal and other prohibited content from contaminating its platform.In accordance with Truth Socialsterms of service,illegal and prohibited content includes,but is not limited to a)sexual content or language;b)content that includes sexual activity,sexu

328、al intercourse or any typeof sexual act;c)any content that portrays or suggest explicit sexual acts or sexually suggestive positions or poses;d)sexually suggestive(explicit or vague)statements,texts orphrases;or e)content in which sexual acts are requested or offered,including pornography,prostituti

329、on,sugar babies,sex trafficking or sexual fetishes.Using human moderatorsand an artificial intelligence vendor known as HIVE,Truth Social has developed what TMTG believes is a robust,fair,and viewpoint-neutral moderation system and that itsmoderation practices are consistent with,and indeed help fac

330、ilitate,TMTGs objective of maintaining a public,real-time platform where any user can create content,follow otherusers,and engage in an open and honest global conversation without fear of being censored or cancelled due to their political viewpoints.”Prior to the Closing(as hereinafter defined)Priva

331、te TMTG relied primarily on bridge financing,in the form of convertible promissory notes,to build the Truth Socialplatform.TMTG aims to use the funds available as a result of the Business Combination(as hereinafter defined)to catalyze growth,including through strategic investments inmarketing,advert

332、ising sales,and the technology described below,while continuing to prioritize feature development and user experience.Private TMTG has historically incurredoperating losses and negative cash flows from operating activities.For the reasons described below,TMTG expects to continue to incur operating l

333、osses and negative cash flowsfrom operating activities for the foreseeable future,as it works to expand its user base,attracting more platform partners and advertisers.TMTGs ability to become profitable andgenerate positive cash flow depends on TMTGs success in growing its user base,platform partners,and advertisers.This growth is expected to come from the overall appeal ofthe Truth Social Platfor