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When Truth Social launched in 2022, the social network’s backers touted it as a conservative-friendly alternative to big tech platforms that would attract advertisers eager to court former President Donald Trump’s millions of followers. But a new regulatory filing reveals that Truth Social’s owner, Trump Media & Technology Group, generated just $2.3 million in sales through June of this year, while losing 10 times that amount.
The disclosure also contains a warning from Trump Media and Technology Group’s accountants, who said they had “substantial doubt about the company’s ability to continue as a going concern.”
Financial details of Trump Media & Technology Group were announced Monday Deposit From Digital World Acquisition Corp. (DWAC), or the so-called special purpose acquisition company, or SPAC, Formed to merge With Trump’s actions. SPACs allow a company to sell shares to the public more quickly than a traditional initial public offering, which requires more regulatory steps.
The filing marks “a critical milestone in our journey toward a potential merger with TMTG,” DWAC CEO Eric Swider. He said In a statement on Monday.
The cautionary language used by Trump Media’s accountants is known as a “going concern” warning, which indicates that the accounting firm believes the company may not have enough cash on hand to repay its debts and may default within the next year. According to Or Standard & Poor’s Global.
To be sure, the warning only reflects a snapshot in time, and Trump Media’s pending deal with DWAC could provide the financing the combined company needs to meet its obligations and help drive growth.
The filing indicated that Trump, who heads Trump Media and owns a stake in the company, agreed to post on Truth Social before any other competing social media service.
Trump Media did not immediately respond to a request for comment.
Burn through cash
The financial picture that emerges from the filing depicts a company facing mounting losses in the face of rising, but meager, sales. The filing indicated that Trump Media announced revenues of $2.3 million for the first six months of 2023, compared to no revenues in the same period of the previous year.
As its losses mount, Trump Media is also burning through cash, ending June with $2.4 million in cash, down from $19 million a year earlier, according to the filing. The company reported an operating loss of $23.3 million in 2022, although it reported a net profit of $50.5 million after a change in value related to its convertible bonds.
Trump Media is negotiating with lenders over its debts, and the filing includes a warning that its management has concerns about its ability to repay the company’s obligations and fulfill its obligations to lenders.
“During the 12 months following the signing of these financial statements, management had substantial doubt that the Company would have sufficient funds to meet its obligations as they fell due, including obligations related to the promissory notes previously issued by the Company,” the filing said.
(tags for translation) Donald Trump
