Trump Media & Technology Group Corp.(DJT) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) H1 2025 unaudited financials show significant asset growth, reduced net loss, and strong financing cash inflows Unaudited Condensed Consolidated Balance Sheets Total assets increased to $3.25 billion by June 30, 2025, driven by cash and new securities, with liabilities rising Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,343,901.7 | $170,236.1 | | Restricted cash | $1,000,000.0 | - | | Trading securities | $122,366.4 | - | | Total current assets | $3,096,731.1 | $784,258.1 | | Total assets | $3,247,255.7 | $938,287.5 | | Liabilities & Equity | | | | Total current liabilities | $23,354.1 | $17,301.5 | | Convertible notes | $934,300.7 | - | | Total liabilities | $965,127.4 | $24,697.4 | | Total stockholders' equity | $2,281,897.9 | $913,590.1 | | Total liabilities and equity | $3,247,255.7 | $938,287.5 | Unaudited Condensed Consolidated Statements of Operations H1 2025 net loss significantly decreased to $51.7 million due to absence of prior year's derivative liability charge Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $1,704.5 | $1,607.4 | | Total operating costs and expenses | $84,747.5 | $118,618.5 | | Loss from operations | ($83,043.0) | ($117,011.1) | | Interest income | $24,831.7 | $2,161.5 | | Investment income | $11,085.0 | - | | Change in fair value of derivative liabilities | - | ($225,916.0) | | Net loss | ($51,728.5) | ($343,967.7) | | Basic and Diluted Loss per share | ($0.22) | ($2.67) | - Total stock-based compensation expense for the six months ended June 30, 2025 was $35.6 million, a significant decrease from $84.6 million in the same period of 2024[16] Unaudited Condensed Consolidated Statements of Stockholders' Equity/(Deficit) Stockholders' equity dramatically increased to $2.28 billion by June 30, 2025, primarily from reverse recapitalization and PIPE financing - The company issued 55,857,181 shares of common stock in a PIPE financing, resulting in a $1.39 billion increase in paid-in capital during the quarter ended June 30, 2025[20] - Total stockholders' equity grew from $913.6 million at the end of 2024 to $2.28 billion by June 30, 2025[20] Unaudited Condensed Consolidated Statements of Cash Flows H1 2025 saw $7.4 million net cash used in operations, $132.1 million in investing, and $2.31 billion provided by financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($7,434.7) | ($30,754.3) | | Net cash used in investing activities | ($132,056.6) | ($2,141.9) | | Net cash provided by financing activities | $2,313,156.9 | $374,277.9 | | Net change in cash, cash equivalents, and restricted cash | $2,173,665.6 | $341,381.7 | | Cash, cash equivalents, and restricted cash, end of period | $2,343,901.7 | $343,954.4 | - Major financing activities in the first six months of 2025 included $960 million from convertible notes and $1.395 billion from a PIPE financing[23] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the DWAC merger, new business lines, VIE consolidation, major financing, and numerous ongoing legal proceedings - The business combination with DWAC on March 25, 2024, was accounted for as a reverse recapitalization, with TMTG as the accounting acquirer[26] - TMTG has consolidated a Variable Interest Entity (VIE), Yorkville America, LLC, for which it is the primary beneficiary Yorkville America serves as the Registered Investment Advisor for TMTG's Truth.Fi financial products[35][36] - On May 29, 2025, the company issued $1 billion in 0.00% convertible senior secured notes and sold 55.9 million shares for $1.4 billion in a PIPE financing to fund its bitcoin strategy and for general corporate purposes[77][95] - The company is involved in multiple, complex legal proceedings with parties including United Atlantic Ventures (UAV), ARC Global Investments, and Patrick Orlando, concerning stock ownership, conversion ratios, and other matters[106][111][122] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strengthened financial health, strategic expansion into media, financial services, and Bitcoin treasury, with improved operating results Overview The company outlines its strategic initiatives including Truth Social, Truth+, Truth.Fi financial services, and a new Bitcoin treasury strategy - The company ended Q2 2025 with $3.09 billion in cash, cash equivalents, restricted cash, short-term investments, and trading securities[140] - TMTG is expanding into financial services with its Truth.Fi brand, which will offer Separately Managed Accounts (SMAs) and Exchange-Traded Funds (ETFs) focused on 'America First' principles and digital assets[153][155] - The company is implementing a bitcoin treasury strategy, funded by a $1.44 billion equity placement and a $1.0 billion convertible note offering, to acquire bitcoin and ensure financial freedom[156][158] Consolidated Results of Operations H1 2025 revenue increased 6% to $1.7 million, with operating loss narrowing by 29% due to reduced stock-based compensation Comparison of Results for the Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Variance ($) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,704.5 | $1,607.4 | $97.1 | 6% | | Loss from operations | ($83,043.0) | ($117,011.1) | $33,968.1 | (29%) | | Interest income | $24,831.7 | $2,161.5 | $22,670.2 | 1,049% | | Investment income | $11,085.0 | - | $11,085.0 | 100% | | Change in fair value of derivative liabilities | - | ($225,916.0) | $225,916.0 | (100%) | | Loss before income taxes | ($51,418.2) | ($343,967.7) | $292,549.5 | (85%) | - The decrease in operating loss was primarily driven by lower stock-based compensation, which fell from $84.6 million in H1 2024 to $35.6 million in H1 2025[16][179][182] Liquidity and Capital Resources Liquidity significantly strengthened by over $3 billion in cash and investments from recent financing, supporting operations for at least 12 months - The company raised approximately $2.4 billion in May 2025 through a PIPE financing ($1.395 billion gross proceeds) and the issuance of convertible notes ($1 billion principal amount)[196] - A $1 billion restricted cash balance serves as collateral for the convertible notes and may be used to purchase Bitcoin[189] - On June 23, 2025, the Board of Directors authorized a share repurchase program for up to $400 million of common stock, with no shares repurchased as of June 30, 2025[200] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk profile shifted to high bitcoin volatility, which will materially impact earnings due to its price fluctuations - The company's primary market risk has shifted to the high volatility of bitcoin, which it began acquiring subsequent to June 30, 2025, as part of its new treasury strategy[222] - Bitcoin will be accounted for as an indefinite-lived intangible asset, with changes in fair value recognized in the consolidated statements of operations each period[222] Item 4. Controls and Procedures Disclosure controls were ineffective as of June 30, 2025, due to a material weakness in internal controls over financial reporting - As of June 30, 2025, management concluded that disclosure controls and procedures were not effective[224] - The ineffectiveness is due to a material weakness in internal control over financial reporting, specifically the failure to design and maintain formal accounting policies for complex transactions and a lack of sufficient personnel with SEC reporting experience[224][225] - Remediation efforts are underway, including hiring additional staff, engaging third-party experts, and formalizing business processes and internal controls[225] PART II - OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 16 of the financial statements for details on the company's multiple ongoing and complex legal litigations - For information regarding legal proceedings, the report directs readers to Note 16 - Commitments and Contingencies in the financial statements[228] Item 1A. Risk Factors This section details material risks, including new disclosures related to the digital asset treasury strategy and substantial indebtedness Risks Related to Our Digital Asset Treasury Strategy Bitcoin strategy introduces significant risks from high volatility, adverse accounting/tax impacts, regulatory uncertainty, and counterparty risks - Bitcoin is identified as a highly volatile asset, and its price fluctuations are likely to significantly influence the company's financial results and stock price[229][243] - The adoption of ASU 2023-08, which requires marking bitcoin to fair value through net income, could increase earnings volatility and potentially subject the company to the Corporate Alternative Minimum Tax (CAMT)[237][239][241] - The company faces significant counterparty risks, particularly with custodians holding its bitcoin, as insolvency could lead to a loss of assets[235][294] Risks Related to our Convertible Notes and Potential Future Indebtedness Substantial indebtedness could adversely affect capital raising, operations, debt servicing, and constrain the bitcoin strategy - The company's level of debt could limit its ability to obtain additional financing, dedicate cash flow to business activities, and react to competitive pressures[299] - The company may not have the ability to raise the funds necessary to repurchase the Convertible Notes upon a fundamental change or at the mandatory repurchase date of November 30, 2026[302][304] - Collateral requirements for the Convertible Notes, which mandate a specific Loan-to-Collateral ratio involving bitcoin and cash, may constrain the company's bitcoin strategy[310] Risks Related to Our Share Repurchase Program The $400 million share repurchase program is discretionary, not guaranteed to enhance value, and could impact stock price or liquidity - The Board authorized a $400 million share repurchase program, but there is no guarantee any shares will be purchased or that the program will enhance stockholder value[311][312] - The share repurchase program could negatively impact the stock's trading price, increase volatility, reduce market liquidity, or reduce available cash[313] Risks Related to TMTG's Business and Industry Operational risks include service disruptions, cybersecurity threats, investment activity risks, and challenges from unfavorable media coverage - The company is a particularly attractive target for cyber-attacks due to its prominence and association with Donald J Trump A recent cyber-attack compromised its auditor's internal drive, which contained TMTG-related data[316][320] - The company has filed multiple defamation lawsuits against media outlets, including The Washington Post and others, for what it alleges is false and misleading coverage[332][333] - The company may engage in complex financial transactions, including writing covered call/put options, reverse repurchase agreements, and short sales, each carrying significant risk of loss[321][324][326] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds occurred during the period, nor any issuer repurchases - There were no unregistered sales of equity securities or use of proceeds from such sales during the reporting period[336] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - None[337] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[338] Item 5. Other Information No other material information required to be disclosed, and no director/officer trading agreements were adopted or terminated - During the quarter ended June 30, 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading agreement[340] Item 6. Exhibits This section lists key exhibits including corporate documents, convertible note indenture, PIPE financing agreements, and certifications - Exhibits filed include the Indenture for the May 2025 Convertible Senior Secured Notes and the subscription agreements for the PIPE and Convertible Note financings[343]