Trump Media admits ‘material weakness’ in its financial controls

Trump Media & Technology Group said its financial control systems are broken, and it doesn’t have the people or policies in place to handle its own accounting. The company released this information on Thursday in a filing, confirming that it found a “material weakness” in how it handles financial reports. The issue increases the risk that serious mistakes in the company’s numbers might go unnoticed. The company said it failed to set up proper systems to track and report its financial activity. The team also doesn’t have enough qualified staff with real experience in SEC reporting, which the company admitted openly. It said there’s a clear risk of errors that wouldn’t be found on time. The internal review was part of a check on the firm’s reporting process for the first quarter of the year. Trump Media loses $31.7 million, hires new staff to fix issue The company reported a net loss of $31.7 million for the quarter ending March 31. Despite that, it said it closed the quarter with $759 million in cash, cash equivalents, and short-term investments. The company’s statement said the weak financial controls were mostly caused by missing accounting policies and a lack of staff with the right skills. In the company’s own words: “TMTG’s management determined that the material weakness primarily related to its failure to design and maintain formal accounting policies, processes, and controls to analyze, account for, and properly disclose income recordation as well as a need for additional accounting personnel who have the requisite experience in SEC reporting regulation.” Trump Media claimed it’s already started fixing the problem by bringing in new accountants who understand how to handle reporting rules. It didn’t say how many people were hired or how long the fixes might take. But the company said this was part of a larger effort to fix the internal systems that broke down. Trump Media pushes expansion, signs crypto partnerships During the same quarter, Trump Media said it rolled out a new fintech brand called Truth.Fi and signed a partnership with Crypto.com and Yorkville America Digital to work on new exchange-traded funds and related products. These developments came while the company was still dealing with weak financial controls. The firm said its current cash pile and low spending give it enough room to expand, keep building its platforms, and go after new acquisitions. It also claimed this setup would let it invest in areas like crypto and retail investment tools without running into cash problems. In a letter to shareholders, CEO Devin Nunes said the company is still “hunting for top-quality assets.” Devin said the goal is for Trump Media to become a much larger firm that owns and operates many types of products and services, not just its Truth Social app. In April, the company said it signed a binding agreement to roll out a full set of retail investment products, including crypto. The move attracted pushback from ethics watchdogs, who questioned how the company would manage conflicts of interest between its media platform and its financial ambitions. Despite all this, Trump Media’s stock barely moved after the announcement. The company said its net sales went up a little—rising 6% to $8.2 million. But the $31.7 million in losses still overshadowed that. The company did not say when it expects to return to profit. Trump Media closed its filing by saying the $759 million in liquidity will help fund the company’s next phase, even as it scrambles to fix its accounting. The company made it clear that it still wants to grow—by pushing into crypto, expanding its media footprint, and going after more deals. But for now, its financial controls are still a work in progress. KEY Difference Wire helps crypto brands break through and dominate headlines fast Source: https://www.cryptopolitan.com/trump-media-weakness-in-financial-controls/