- A company seeking to merge with Truth Social cited Trump’s reputation as a “significant factor” in its financial success in an SEC filing.
- As Trump struggles with ongoing legal battles, Digital World said its financial condition “could be adversely affected.”
- Truth Social is accused of bilking a vendor of more than $1 million in forced contractual payments.
The future of the former president’s 10-month-old social media platform, Truth Social, is on uncertain ground as the app faces huge financial losses and is accused of cutting its vendors amid Donald Trump’s ongoing legal controversy.
A planned merger between Trump Media & Technology Group (TMTG), the business that created the Truth Social platform, and special purpose acquisition company (SPAC) Digital World Acquisition Corp, has been postponed indefinitely after the Securities and Exchange Commission investigate the platform. business relations.
SPACs like Digital World are companies created either to raise funds through an initial public offering or for the purpose of merging with an existing company. SPACs have no other business operations. In an SEC filing earlier this month, Digital World said it had “neither engaged in any operations nor generated any revenue to date,” as its sole purpose was to prepare to go public. Social.
In another filing, Digital World sought shareholder approval to delay the merger, due to take place on September 8, until next year, citing concerns over the former president’s reputation which could affect the business.
“If President Trump becomes less popular or there are further controversies that damage his credibility or people’s desire to use a platform associated with him, and from which he will derive financial benefits, TMTG’s results of operations, as well as the outcome of the proposed Business Combination, may be adversely affected,” the filing said.
Digital World’s shares have plunged more than 75 percent since their peak in March — from $97.54 a share to $27.52 each — and in a recent SEC filing the company reported a loss of $6.5 million dollars in the first half of the year.
This week, Truth Social was dealt another blow after its trademark application was rejected on Thursday for being too similar to another social app called “Vero — True Social.”
Further shedding light on the social platform’s financial woes, Fox Business News reported Thursday that Truth Social is embroiled in a bitter battle with its vendor, RightForge, and is accused of bilking the hosting service out of $1.6 million in forced contractual payments.
Three people with direct knowledge of the matter told Fox Business News that Truth Social made only three payments to RightForge for its web hosting services and stopped making payments in March.
Other Trump businesses have faced similar payment battles before, including contractors who claim they are owed more than $2.98 million after repairs to the Trump International Hotel and a small business owner who said Trump had hardened piano valued at $100,000. Unpaid bills at the Taj Mahal Casino Resort reached $90 million, while three liens were placed against Trump’s DC hotel after $5 million in contractor fees went unpaid.
Trump’s companies have filed for bankruptcy at least six times — a fact that Digital World noted in SEC filings, the Washington Post reported, saying: “a number of companies that were associated with [Trump] have filed for bankruptcy” and that “there can be no guarantee that [Trump’s media company] won’t go bankrupt either.”
Representatives for Trump, TMTG, Truth Social and RightForge did not immediately respond to Insider’s requests for comment.