I heard of the SEC filing that the people who invested in this SPAC had to file, which includes necessary portions Trump’s lawyers had to fill out to be public. It’s like looking at a Worst-In-Show of all the stuff that proves Trump is a loser businessman Here’s the link to the SEC filing
And here is part of the filing.
Risks Related to our Chairman President Donald J. Trump
TMTG’s success depends in part on the popularity of its brand and the reputation and popularity of its Chairman, President Donald J. Trump. The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer. Adverse reactions to publicity relating to President Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations and its ability to maintain or generate a consumer base.
While TMTG believes there is sufficient demand for a true free speech platform, the image, reputation, popularity and talent of its Chairman, President Trump will be important factors to its success. According to The Hill, only 30% of people surveyed would use a social media site associated with President Trump. In addition, according to a survey published in The New York Post, only 60% of Republicans would use such a platform. In order to be successful, TMTG will need millions of those people to register and regularly use TMTG’s platform. If President Trump becomes less popular or there are further controversies that damage his credibility or the desire of people to use a platform associated with him, and from which he will derive financial benefit, TMTG’s results of operations could be adversely affected.
The death or incapacity of President Trump, or discontinuation or limitation of his relationship with TMTG, may negatively impact TMTG’s business.
TMTG is highly dependent on the popularity and presence of President Trump, its Chairman and largest stockholder. President Trump has a significant influence on TMTG’s business plan. TMTG believes President Trump’s reputation and relationships are a critical element to the success of TMTG’s business. TMTG’s future success will depend, to a significant extent, upon the continued presence and popularity of President Trump. If President Trump were to discontinue his relationship with TMTG due to death, disability, or any other reason, or limit his involvement with TMTG due to becoming a candidate for political office, TMTG would be significantly disadvantaged.
President Trump is involved in numerous lawsuits and other matters that could damage his reputation, cause him to be distracted from the business or could force him to resign from TMTG’s board of directors. Additionally, TMTG’s business plan relies on President Trump bringing his former social media followers to its platform. In the event any of these, or other events cause his followers to lose interest in his messages, the number of users of TMTG’s platform could decline or not grow as TMTG has assumed.
A congressional committee is investigating President Trump’s role, if any, in violence at the United States Capitol on January 6, 2021. Two groups of U.S. Capitol Police officers, in two separate lawsuits, have sued President Trump for allegedly inciting riots on that date. U.S. Representatives Bennie Thompson and Eric Swalwell have, separately, also sued President Trump for allegedly inciting riots at the Capitol—and Rep. Swalwell has further claimed emotional distress.
There is also ongoing litigation involving President Trump related to the 2020 election. For example, the NAACP Legal Defense & Educational Fund filed a lawsuit against President Trump alleging that he violated the Voting Rights Act of 1965 and the Enforcement Act of 1871 by exerting pressure on state and local officials not to count or certify votes. In February 2021, the Fulton County, Georgia District Attorney’s office launched a criminal probe into President Trump’s alleged interference in the presidential election. In January 2022, the Fulton County District Attorney’s request to impanel a special grand jury – the members of which were selected in early May 2022 for a criminal investigation into President Trump was approved by the Fulton County Superior Court. A Pennsylvania poll worker sued President Trump for damages caused by alleged defamatory statements made by President Trump following the 2020 election. Eric Coomer, a former employee of Dominion Voting Systems, sued President Trump for alleged defamatory statements made by President Trump during the 2020 election.
Among other matters, the U.S. House of Representatives Committee on Oversight and Reform is investigating President Trump’s alleged destruction and removal of classified documents and White House r
ecords, as well as potential inaccurate financial statements filed by the Trump Organization in relation to the Trump Hotel in Washington, D.C. President Trump is the subject of separate investigations by the New York County (Manhattan) District Attorney, the New York Attorney General, and the Westchester County District Attorney to determine if the Trump Organization made false valuations of property to avoid tax liability and for other financial benefits. On April 25, 2022, a New York state court judge held President Trump in civil contempt for failing to comply with a subpoena for documents related to the New York Attorney General’s investigation of the Trump Organization. President Trump, along with his three eldest children (including Donald Trump, Jr., a TMTG board Member), are defendants in a class action lawsuit accusing them and The Trump Corporation of defrauding investors in exchange for secret payments from multiple companies. The Trump Organization recently paid $750,000 to settle a lawsuit filed by the District of Columbia accusing the organization of misusing nonprofit funds from the 58th Presidential Inaugural Committee.
A group of six protesters filed a lawsuit against President Trump alleging that President Trump and his co-defendants are liable for assault and battery after the protesters were attacked by Trump Tower security guards. President Trump is the defendant in a class action lawsuit filed by tenants of buildings once owned by the Trump family accusing them of fraud and racketeering. President Trump is the defendant in a lawsuit filed by his former personal attorney, Michael Cohen, seeking damages for alleged retaliatory imprisonment. The House Ways and Means Committee remains engaged in a years long attempt to obtain President Trump’s tax returns from the Treasury Department as part of an investigation into the IRS’s oversight of presidential tax returns.
President Trump is the defendant in a defamation lawsuit filed against him by E. Jean Carroll who claims that President Trump defamed her when he denied her allegations of sexual assault against him. In the past, President Trump has been involved in multiple lawsuits and settlements—and the subject of numerous accusations that did not result in legal action—related to sexual conduct and alleged misconduct.
As a plaintiff, President Trump sued NY AG Letitia James to stop the investigation into the Trump Organization. President Trump sued New York City over its decision to cancel the Trump Organization’s contract to operate a golf course in the Bronx. President Trump sued Mary Trump and the New York Times for their disclosure and publication of his tax information. President Trump sued Twitter, for allegedly violating his First Amendment rights by banning him from its social media platform; this lawsuit was dismissed in May 2022.
The foregoing does not purport to be an exhaustive list. In June 2016, USA Today published an analysis of litigation involving President Trump, which found that over the previous three decades President Trump and his businesses had been involved in 3,500 legal cases in U.S. federal and state courts. Of the 3,500 suits, President Trump or one of his companies were plaintiffs in 1,900; defendants in 1,450; and bankruptcy, third party, or other in 150. President Trump was named personally in at least 169 suits in federal court. Over 150 other cases were in the Seventeenth Judicial Circuit Court of Florida (covering Broward County, Florida) since 1983. In the 1,300 cases where the record establishes the outcome, President Trump settled 175 times, lost 38, won 450, and had another 137 cases end with some other outcome. In the other 500 cases, judges dismissed plaintiffs’ claims against President Trump.
Although TMTG is not a party to any of the above-referenced matters, TMTG cannot predict what effect, if any, an adverse outcome to such matters, or even their continued existence, may have on President Trump’s personal reputation and TMTG’s business or prospects.
A publicly-traded entity controlled by President Trump has previously been subject to a cease and desist order issued by the Securities and Exchange Commission.
On January 16, 2002, the SEC issued a cease and desist order against Trump Hotels & Casino Resorts, Inc. (“THCR”) for violations of the anti-fraud provisions of the Exchange Act. As discussed in more detail in the SEC Release No. 45287, on October 25, 1999, THCR had issued a press release announcing its results for the third quarter of 1999 (the “Earnings Release”). To announce those results, the Earnings Release used a net
ncome figure that differed from net income calculated in conformity with U.S. GAAP. Using that non-GAAP figure, the Earnings Release touted THCR’s purportedly positive operating results for the quarter and stated that the Company had beaten analysts’ earnings expectations. The Earnings Release was materially misleading because it created the false and misleading impression that THCR had exceeded earnings expectations primarily through operational improvements, when in fact it had not. The Earnings Release expressly stated that the net income figure excluded a one-time charge. The undisclosed one-time gain was material, because it represented the difference between positive trends in revenues and earnings and negative trends in revenues and earnings, and the difference between exceeding analysts’ expectations and falling short of them. SEC stated that by knowingly or recklessly issuing a materially misleading press release, THCR violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC accepted THCR’s offer of settlement.
Upon becoming a public company, the Combined Entity will be required to provide an annual management report on the effectiveness of its internal control over financial reporting commencing with its annual report on Form 10-K. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on its business and operating results and cause a decline in the price of the Combined Entity’s common stock.
A number of companies that were associated with President Trump have filed for bankruptcy. There can be no assurances that TMTG will not also become bankrupt.
Entities associated with President Trump have filed for bankruptcy protection. The Trump Taj Mahal, which was built and owned by President Trump, filed for Chapter 11 bankruptcy in 1991. The Trump Plaza, the Trump Castle, and the Plaza Hotel, all owned by President Trump at the time, filed for Chapter 11 bankruptcy in 1992. THCR, which was founded by President Trump in 1995, filed for Chapter 11 bankruptcy in 2004. Trump Entertainment Resorts, Inc., the new name given to Trump Hotels & Casino Resorts after its 2004 bankruptcy, declared bankruptcy in 2009. While all of the foregoing were in different businesses than TMTG, there can be no guarantee that TMTG’s performance will exceed the performance of those entities.
A number of companies that had license agreements with President Trump have failed. There can be no assurances that TMTG will not also fail.
Trump Shuttle, Inc., launched by President Trump in 1989, defaulted on its loans in 1990 and ceased to exist by 1992. Trump University, founded by President Trump in 2005, ceased operations in 2011 amid lawsuits and investigations regarding the company’s business practices. Trump Vodka, a brand of vodka produced by Drinks Americas under license from the Trump Organization, was introduced in 2005 and discontinued in 2011. Trump Mortgage, LLC, a financial services company founded by President Trump in 2006, ceased operations in 2007. GoTrump.com, a travel site founded by President Trump in 2006, ceased operations in 2007. Trump Steaks, a brand of steak and other meats founded by President Trump in 2007, discontinued sales two months after its launch. While all these businesses were in different industries than TMTG, there can be no guarantee that TMTG’s performance will exceed the performance of these entities.
The terms of a license agreement with President Trump is not terminable by TMTG when it may be desirable to TMTG. The license agreement does not require President Trump to use Truth Social in certain circumstances and could require TMTG to make payments to President Trump for content on TMTG+.
As further described in the section titled, “Information about TMTG,” President Trump is generally obligated to make any social media post on TruthSocial and may not make the same post on another social media site for 6 hours. Thereafter, he is free to post on any site to which he has access. Thus, TMTG has limited time to benefit from his posts and followers may not find it compelling to use TruthSocial to read his posts that quickly. In addition, he may make a post from a personal account related to political messaging, political fundraising or get-out-the-vote efforts on any social media site at any time.
With respect to TMTG+, if President Trump receives a bona fide offer to be featured in any production intended to be streamed on a different VOD service, TMTG has the right to create a substantially similar video production on terms more favorable than those offered by the other service. TMTG may be unable to create a substantially similar or production or offer more favorable terms to President Trump and the content would not be available to TMTG+ subscribers.
TMTG has entered into a license agreement with President Trump wherein neither the personal nor political conduct of President Trump, even if such conduct could negatively reflect on TMTG’s reputation or brand or be considered offensive, dishonest, illegal, immoral, or unethical, or otherwise harmful to TMTG’s brand or reputation, shall be considered a breach of the license agreement. TMTG expressly acknowledges the controversial nature of being associated with President Trump and the possibility of any associated controversies affecting TMTG adversely.
President Trump will significantly influence, or depending on the amount of redemptions, may control the Combined Entity through his stock ownership, enabling him to elect who sits on the Combined Entity’s board of directors, and potentially to block matters requiring stockholder approval, including any potential changes of control.
After giving effect to the Business Combination, President Trump owns approximately 73.3 million of the Combined Entity’s outstanding shares of common stock, representing approximately 46.3% of its voting power (assuming no redemptions and full issuance of the common stock issuable upon conversion of the Preferred Stock, but not including the contingent right to receive Earnout Shares as described more fully in the Merger Agreement). As a result, President Trump has the ability to significantly influence, and may depending on the level of redemptions may control, the outcome of all matters requiring stockholder approval, including the election and removal of the Combined Entity’s entire board of directors and any merger, consolidation or sale of all or substantially all of the Combined Entity’s assets, and the ability to control the Combined Entity’s management and affairs. This concentrated control could, among other things, discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to the Combined Entity’s businesses. If President Trump were to own more than 50% of the voting power, the Combined Entity would be a “controlled company” within the meaning of applicable Nasdaq corporate governance standards. Under these corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including the requirements; (1) that a majority of the Combined Entity’s board of directors consist of independent directors, (2) that the Combined Entity’s board of directors have a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (3) that the Combined Entity’s board of directors have a nominating and corporate governance committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. The Combined Entity may intend to take advantage of these exemptions. While TMTG has elected to not be treated as a “controlled company,” it could change that election in the future.
TMTG may be subject to greater risks than typical social media or streaming videos services because of the focus of its offerings and the involvement of President Trump. These risks include active discouragement of users, harassment of advertisers or content providers, increased risk of hacking of TMTG’s platform and increased stockholder suits.
TMTG is aware that Big Tech platforms, such as YouTube, “de-monetize” certain content because they disagree with its message. There have been numerous calls to ban or encourage advertisers to boycott content providers who express or permit views contrary to the prevailing narrative. It is likely that these same people calling for boycotts will seek to do the same for companies that may advertise on TruthSocial or provide programming for TMTG+. To the extent these calls are successful, or the mere threat of them sufficient, to prevent advertisers from appearing on TMTG’s platform or providing content to TMTG+, TMTG may not generate the revenues TMTG anticipates and the price of TMTG’s stock could likely decline.
All social media sites are subject to risks of hackers or people who try to disrupt their operations and post false or malicious information or make it seem as if innocent third persons are posting such information. Such people may also try to steal personal information about TMTG’s users. TMTG believes it will be subject to greater risks in this regard than other social media companies currently are. Accordingly, TMTG will have to spend more money to build more robust security to protect against these attacks. There can be no assurance that these efforts will be successful. Any increase of expenditures to protect against attacks will increase TMTG’s expense and thus, decrease its ability to achieve and remain profitable. In the event these attacks are successful, TMTG will have to devote resources to correct problems as well as possibly pay damages to its users for losses they suffer.
TMTG will be a Delaware corporation after giving effect to the Business Combination. As a result, TMTG’s stockholders will have certain rights under Delaware law to information and to make inquiries of TMTG’s board of directors. It is possible that people will invest in TMTG’s common stock simply with the intention to see such information and disrupt TMTG’s management and board’s attention on TMTG’s business. The costs of these matters will increase TMTG’s expenses and thus decrease TMTG’s ability to achieve profitability and remain profitable.
TMTG depends on numerous third-parties to operate successfully, and many of these third parties may not want to engage with TMTG to provide any services. This may limit TMTG’s ability to operate or raise capital.
To operate successfully, TMTG is dependent on third parties to provide services to operate successfully, such as web hosting, content monitoring and technology development. To date, several potential third-party partners have expressed an unwillingness or reluctance to work on TMTG’s products or provide services due to TMTG’s connection with President Trump. Similarly, to the extent TMTG needs to raise additional capital, TMTG will need to engage with investment bankers and investors and it is possible that some will not want to engage with TMTG for similar reasons. For example, it was widely reported that at least one of the initial investors of Digital World sold their stock rather than invest in a company associated with President Trump. There can be no assurance that TMTG will be able to develop and improve its products or raise additional capital if it is unable to engage third parties.
