Digital World Acquisition (US:DWAC)2024-05-20 20:52User Growth and Platform Development - Truth Social has achieved approximately 9.0 million signups across iOS, Android, and web platforms as of mid-February 2024[158]. - TMTG plans to roll out a new live TV streaming platform in three phases, starting with the introduction of a content delivery network (CDN) for streaming live TV[167]. - TMTG aims to enhance its platform by incorporating new technologies, including advanced video streaming services, to improve user experience[158][160]. Financial Performance and Revenue - All revenue for TMTG has been derived from advertising on the Truth Social platform as of March 31, 2024[190]. - Revenue decreased by approximately $345.7 thousand, or 31%, to $770.5 thousand for the three months ended March 31, 2024, compared to $1,116.2 thousand for the same period in 2023[214]. - TMTG's advertising revenue is recognized when advertisements are displayed in users' feeds, aligning with performance obligations[191]. Operating Losses and Cash Flow - The company expects to continue incurring operating losses and negative cash flows as it works to expand its user base and attract more platform partners and advertisers[160]. - Operating loss for the three months ended March 31, 2024, was $(98,352.6) thousand, compared to $(3,845.9) thousand for the same period in 2023, reflecting a variance of $(94,506.7) thousand or 2,457%[213]. - Net cash used in operating activities was approximately $(9,316.0) thousand for the three months ended March 31, 2024, compared to $(3,774.5) thousand for the same period in 2023, an increase of 147%[229]. Expenses and Cost Management - Cost of revenue increased by approximately $52.1 thousand, or 126%, to $93.4 thousand for the three months ended March 31, 2024, primarily due to increased personnel-related expenses[215]. - General and administrative expenses surged by approximately $62,958.8 thousand, or 3,429%, to $64,795.1 thousand for the three months ended March 31, 2024, largely due to non-cash stock-based compensation[217]. - TMTG has paused hiring and reduced non-labor spending in response to current macroeconomic conditions, including inflation and supply chain constraints[175]. Strategic Investments and Financing - TMTG has issued convertible promissory notes totaling $48,155,000 from May 2021 through March 2024, which converted to shares of common stock prior to the Business Combination[163][171]. - The company has historically relied on bridge financing and aims to use funds from the Business Combination for strategic investments in marketing and technology[160]. - TMTG plans to invest in marketing, advertising sales, and new technologies to catalyze growth following the Business Combination[182]. Management and Governance - President Donald J. Trump beneficially holds approximately 64.9% of the outstanding shares of TMTG common stock as of the date of the report[170]. - TMTG's management believes that traditional key performance indicators may not align with long-term innovation and value creation goals[159]. - TMTG has identified a material weakness in its internal control over financial reporting, requiring restatement of financial statements for 2021 and 2022 due to misclassification of income[277]. Compliance and Regulatory Matters - The company anticipates additional expenses related to operating as a public company, including compliance with SEC regulations[201]. - TMTG has elected to take advantage of the extended transition period for complying with new accounting standards as an emerging growth company[252]. Market Risks and Challenges - The company has entered new international markets, facing increased business and economic risks, which may affect monetization[186]. - TMTG is exposed to foreign currency exchange risk, which could negatively impact revenue due to fluctuations in exchange rates[280]. - TMTG aims to minimize financial market risk by maintaining a diversified portfolio of cash equivalents and various securities[281].