Paradium.AI, Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2026 and 2025 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in the Annual Report on Form 10-K filed with the SEC on March 16, 2026. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Forward-Looking Statements.”

Overview

The Arena Group Holdings, Inc. (“Arena Group,” “we,” or “our”) is a brand, data and IP company that builds, acquires, and scales high-performing digital assets. We combine technology, storytelling, and entrepreneurship to create deep content verticals that engage passionate audiences across sports & leisure, lifestyle, and finance.

Impact of Macroeconomic Conditions

Uncertainty in the global economy presents significant risks to our business. Increases in inflation, instability in the global banking system, geopolitical factors, including the ongoing conflicts in Ukraine and in the Middle East and the responses thereto, and the impact of tariffs on print production costs and the overall market for advertising may have an adverse effect on our business. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties. For additional information, see the sections titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 16, 2026 and in this Quarterly Report.

Key Operating Metrics

Our key operating metrics are:

• Revenue per page view (“RPM”) – represents the advertising revenue earned per 1,000 page views. It is calculated as our advertising revenue during a period divided by our total page views during that period and multiplied by $1,000; and
• Monthly average page views – represents the total number of page views in a given month or the average of each month’s page views in a fiscal quarter or year, which is calculated as the total number of page views recorded in a quarter or year divided by three months or 12 months, respectively.

We monitor and review our key operating metrics as we believe that these metrics are relevant for our industry and specifically to us and to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition. Our key operating metrics focus primarily on our digital advertising revenue, which is our most significant revenue stream. Management monitors and reviews these metrics because such metrics are readily measurable in real time and can provide valuable insight into the performance of and trends related to our digital advertising revenue and our overall business. We consider only those key operating metrics described here to be material to our financial condition, results of operations and future prospects.

For pricing indicators, we focus on RPM as it is the pricing metric most closely aligned with monthly average page views. RPM is an indicator of yield and pricing driven by both advertising density and demand from our advertisers.

Monthly average page views are measured across all properties hosted on the Platform and provide us with insight into volume, engagement and effective page management and are therefore our primary measure of traffic. We utilize a third-party source, Google Analytics, to confirm this traffic data.

As described above, these key operating metrics are critical for management as they provide insights into our digital advertising revenue generation and overall business performance. This information also provides feedback on the content on our website and its ability to attract and engage users, which allows us to make strategic business decisions designed to drive more users to read or view more of our content and generate higher advertising revenue across all properties hosted on the Platform.

For the three and six months ended June 30, 2026, our RPM was $23.96 and $21.12 compared to $25.12 and $23.85 for the same periods in 2025. The declines were primarily driven by broader advertising yield softness across the digital media landscape and unfavorable traffic mix shift away from higher yielding properties. For the three and six months ended June 30, 2026, monthly average page views were 187,715,312 and 196,971,983 compared to 423,358,110 and 375,434,097 for the same periods in 2025. These contractions were primarily attributable to core search engine algorithm updates in late 2025 that altered external referral patterns. Though these changes had an adverse impact on our first-half of 2026 results, the results of our optimization testing during the first quarter of 2026 are expected to stabilize audience and maximize yield over the remainder of the year. To further mitigate the impact of these algorithm updates, management is actively executing yield-enhancement initiatives, refining site architecture, elevating high-authority core content, and accelerating AI-driven traffic monetization tools. These technical enhancements are intended to stabilize audience reach, maximize yield, and align with evolving search engine indexing practices.

All dollar figures presented below are in thousands unless otherwise stated.

Liquidity and Capital Resources

Liquidity

While we continue to report positive cash flow from operations and currently maintain a cash balance of approximately $11 million, our ability to meet ongoing liquidity needs and support future growth is dependent, in part, on our access to external financing. If we cannot generate or obtain needed funds, we might be forced to make substantial reductions in our operating and capital expenses or pursue restructuring plans, which could adversely affect our business operations and ability to execute our current business strategy. In addition, if a default occurs as a result, our lender could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness. In addition, if repayment of our indebtedness is accelerated as a result of such default, we cannot assure you that we would have sufficient assets or access to credit to repay such indebtedness.

For the three and six months ended June 30, 2026, we reported a loss from continuing operations of $176 and $2,834, respectively. Despite these losses, we generated positive cash flow from operations for the six months ended June 30, 2026, and had cash and cash equivalents of $11,170 as of June 30, 2026.

Based on our current liquidity position, including cash on hand, expected operating cash flows, current operating plans and forecasts, and projected compliance with debt covenants, management believes that we have sufficient liquidity to meet our obligations as they come due for at least the next twelve months.

Cash

As of June 30, 2026, our principal sources of liquidity consisted of cash and cash equivalents of $11,170 and accounts receivable, net of allowance for credit losses, of 18,489. Our cash balance as of the issuance date of our accompanying condensed consolidated financial statements is $11,338.

Debt Refinance

Effective August 7, 2026, we entered into a new debt agreement with Renew that replaced our existing Term Debt and eliminated the $25,000 Simplify Loan. See FN 20*, Subsequent Event,* for further details.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Material Contractual Obligations

We have material contractual obligations that arise in the normal course of business primarily consisting of employment contracts, consulting agreements, leases, liquidated damages, debt and related interest payments. Purchase obligations consist of contracts primarily related to merchandise, equipment, and third party services, the majority of which are due in the next 12 months. See Note 5, Leases, Note 7, Liquidated Damages Payable, and Note 9, Simplify Loan and Note 10, Term Debt, in our accompanying condensed consolidated financial statements for amounts outstanding as of June 30, 2026, related to other material contractual obligations.

Discontinued Operations

On March 18, 2024, we discontinued the Sports Illustrated media business (the “SI Business”) that was operated under the Licensing Agreement with ABG-SI, LLC (“ABG”) dated June 14, 2019 (as amended to date, the “Licensing Agreement”). This discontinuation of the SI Business (i.e., discontinued operations) followed the termination of the Licensing Agreement by ABG on January 18, 2024. Income from our discontinued operations, net of tax, was $0 and $96,227 for the three months ended June 30, 2026 and 2025, respectively. Income from our discontinued operations, net of tax, was $0 and $96,250 for the six months ended June 30, 2026 and 2025, respectively.

On April 29, 2025, the ABG Group Legal Matters (as further described in Note 18) were resolved through a confidential settlement with outstanding liabilities being released by all sides. The remaining assets and liabilities of the SI Business were settled.

Working Capital

We have financed our working capital requirements since inception through issuances of equity securities and various debt financings. Our working capital surplus as of June 30, 2026 and December 31, 2025 is as follows:

As of June 30, 2026, we had working capital of $18,777, consisting of $32,435 in total current assets and $13,658 in total current liabilities as compared to working capital of $18,627 as of December 31, 2025. As of December 31, 2025, our working capital surplus consisted of $35,630 in total current assets and $17,003 in total current liabilities.

Our cash flows for the six months ended June 30, 2026 and 2025 consisted of the following:

For the six months ended June 30, 2026, net cash provided by operating activities was $2,051, consisting primarily of $44,834 of cash received from customers, offset by $37,871 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements and professional services, and $4,912 of cash paid for interest. For the six months ended June 30, 2025, net cash provided by operating activities was $13,970, consisting primarily of $21,501 of cash received from customers, offset by $1,645 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements and professional services and $5,886 of cash paid for interest. Prior period amounts are impacted by the settlement of discontinued operations liabilities.

For the six months ended June 30, 2026, net cash used in investing activities was $1,219, consisting of $769 related to capitalized costs for our Platform and $450 related to purchases of intangible assets. For the six months ended June 30, 2025, net cash used in investing activities consisted of $3,545 for capitalized costs for our Platform.

For the six months ended June 30, 2026, there was no net cash used in financing activities. For the six months ended June 30, 2025, net cash used in financing activities was $8,016, consisting of (i) $16 for tax payments relating to the withholding of shares of common stock for certain employees, and (ii) $8,000 for repayments of the Simplify Loan.

Share Repurchase Program

On July 31, 2025, we announced a share repurchase program under which we may have repurchased up to 3 million shares of our common stock through July 31, 2026, from time to time through open-market transactions, privately negotiated transactions, or otherwise, including under Rule 10b5-1 trading plans, subject to market conditions, share price, and other factors. No shares were repurchased under this program prior to its expiration on July 31, 2026.

Results of Operations

Three Months Ended June 30, 2026 and 2025

The following table sets forth revenue, cost of revenue, gross profit, income from operations, income (loss) from continuing operations and net income (loss):

For the three months ended June 30, 2026, loss from continuing operations was $176, as compared to income from continuing operations of $12,412 in the prior period. The decline in profitability was primarily attributable to a $22,829 decrease in revenue, largely attributable to lower digital advertising revenue driven by reduction in traffic volumes between periods. This decline was partially offset by decreases of $6,062 in cost of revenues, $2,635 in operating expenses, and $1,049 benefit from income tax and $495 from interest expense.

Revenue

The following table sets forth revenue, cost of revenue, and gross profit:

For the three months ended June 30, 2026, we generated gross profit of $8,668, as compared to $25,435 for the three months ended June 30, 2025, a decrease of $16,767. Gross margin for the three months ended June 30, 2026 was 39.1%, compared to 56.5% for the three months ended June 30, 2025.

Total revenue decreased by 50.7% during the period, primarily due to lower digital advertising revenue. The decline was driven by changes in referral traffic patterns compared to the prior-year period. In addition, broader market dynamics in the digital advertising industry, exacerbated by aforementioned traffic volatility and unfavorable traffic mix shift away from higher yielding properties, negatively impacted advertising demand and monetization during the period.

Cost of revenue decreased by 31.0%, primarily driven by lower external cost of content enabled by our variable cost structure under the entrepreneurial publishing model. Cost of revenue reductions were partially offset by an increase in cost of goods sold related to our ShopHQ e-commerce business which increased as revenues associated with ShopHQ increased.

The following table sets forth revenue by category:

For the three months ended June 30, 2026, total revenue decreased by $22,829, or a 50.7% decrease, to $22,183 from $45,012 for the three months ended June 30, 2025. There was a 50.9% decrease in total digital revenue from $44,767 for the three months ended June 30, 2025 to $21,972 for the three months ended June 30, 2026.

The $18,356 decrease in digital advertising revenue was primarily attributable to lower audience traffic, including the impact of search algorithm changes that reduced referral traffic, together with a modest decline in monetization yield between periods. Performance marketing revenue decreased by $2,842 primarily due to lower traffic and changes in affiliate rates. Publisher revenue declined by $2,117 as traffic levels across certain distribution partners decreased. These decreases were partially offset by a $1,194 increase in other digital revenue, primarily attributable to an increase in revenue from the ShopHQ e-commerce platform. ShopHQ broadened our e-commerce reach by adding drop-ship e-commerce operations, and interactive social selling capabilities, while accelerating first-party data collection efforts that are expected to yield audience and customer insights and improve engagements throughout our business. To mitigate the impact of search and traffic related volatility, we continue to refine our content, yield and distribution strategies.

Cost of Revenue

The following table sets forth cost of revenue by category:

For the three months ended June 30, 2026, we recognized cost of revenue of $13,515 as compared to $19,577 for the three months ended June 30, 2025, a decrease of $6,062. The decrease reflected the variable nature of the Company’s content cost structure, as lower traffic volumes drove reductions in external cost of content and third-party content costs. Internal costs of content was lower due to continued cost discipline. The Company also realized lower technology costs during the period as reduced traffic and ad-serving activity lowered related variable platform costs. These savings were partially offset by higher costs of products sold associated with the ShopHQ e-commerce business, which increased as revenues associated with ShopHQ increased.

Operating Expenses

Selling and Marketing

The following table sets forth selling and marketing expenses from continuing operations by category:

For the three months ended June 30, 2026, we incurred selling and marketing expenses of $1,825 as compared to $1,942 for the three months ended June 30, 2025. The decrease of $117 reflects savings achieved through ongoing cost-optimization initiatives across advertising, marketing and advertising operations tools, partially offset by incremental marketing spend supporting the expansion of our ShopHQ e-commerce business launched in late 2025.

General and Administrative

The following table sets forth general and administrative expenses by category:

General and administrative expenses totaled $3,655 for the three months ended June 30, 2026 compared to $6,200 for the three months ended June 30, 2025, a decrease of $2,545. The decrease was primarily driven by lower legal and other professional fees following the successful resolution of legacy corporate matters, complemented by ongoing overhead cost discipline and better receivable collections resulting in lower bad debt expense.

Segment Revenue

We report our segment results as Sports & Leisure, Finance, Lifestyle, and Platform & Other. Additionally, certain expenses are not allocated to our segments because they represent centralized activities which cannot be accurately allocated.

The following table sets forth revenue by segment:

Sports & Leisure – the decrease of $10,636 was primarily driven by lower digital advertising and publisher revenue, reflecting industry-wide declines in organic traffic volume and monetization.

Finance – the decrease of $7,187 was attributable to a reduction in digital advertising revenue and in performance marketing revenue, reflecting industry-wide declines in referral traffic volume and changes to commission structures at affiliate partners and a reduction in digital subscription revenue as we transition our portfolio toward more efficient, ad-supported monetization channels.

Lifestyle – the decrease of $4,152 was primarily driven by lower digital advertising revenue, reflecting industry-wide declines in organic traffic volume.

Platform & Other – the decrease of $854 was primarily driven by a reduction in underperforming partner sites, partially offset by an increase in other digital revenue attributable to the ShopHQ e-commerce business.

Segment Gross Profit

The following table sets forth segment gross profit:

The $16,897 decrease in total segment gross profit across all categories was primarily driven by the aforementioned reductions in digital advertising revenue resulting from compounded traffic volume headwinds and lower monetization rates, which collectively outpaced the variable cost savings realized from our strategic transition to an entrepreneurial publishing model, lower internal cost of content and lower technology costs.

The following table reconciles segment gross profit to gross profit:

Other Expenses

The following table sets forth other expenses:

Interest Expense – We incurred interest expense of $2,450 for the three months ended June 30, 2026 compared to $2,945 for three months ended June 30, 2025. The $495 decrease in interest expense reflects lower interest charges following repayment of the Simplify Loan throughout 2025 and the $13,000 curtailment payment applied to the Company’s term debt in December 2025 pursuant to Amendment No. 4 to the Third Amended and Restated Note Purchase Agreement.

Liquidated Damages – We recorded liquidated damages of $76 for the three months ended June 30, 2026, as compared to $76 for the three months ended June 30, 2025. The liquidated damages related to (i) certain registration rights agreements that provide for damages if we do not register certain shares of the Company’s common stock within the requisite time frame; and (ii) certain securities purchase agreements that provide for damages if the we do not maintain our periodic filings with the SEC within the requisite time frame.

Six Months Ended June 30, 2026 and 2025

The following table sets forth revenue, cost of revenue, gross profit, income from operations, income (loss) from continuing operations and net income (loss):

For the six months ended June 30, 2026, loss from continuing operations was $2,834, as compared to income from continuing operations of $16,409 in the prior period. The decline in profitability was primarily attributable to a $34,238 decrease in revenue, largely attributable to lower digital advertising and performance marketing resulting from lower traffic volumes, changes in referral traffic patterns and reduced monetization between periods. This revenue decline was partially offset by the Company’s flexible cost structure and expense discipline, including decreases of $8,883 in cost of revenues, $3,557 in operating expenses, $1,477 benefit from income tax and $1,078 from interest expense.

Revenue

For the six months ended June 30, 2026, we generated gross profit of $15,749, as compared to $41,104 for the six months ended June 30, 2025, a decrease of $25,355. Gross margin for the six months ended June 30, 2026 was 37.0%, compared to 53.5% for the six months ended June 30, 2025.

Total revenue for the period decreased by 44.6%, principally reflecting decreased digital advertising revenue resulting from lower traffic volumes, altered referral trends and softer ad pricing compared to the prior-year period. Revenue in the first quarter of 2026 was also impacted by ongoing digital platform enhancements, which prioritize long-term audience expansion but created short-term revenue headwinds in select areas during the period. Though revenue increased in the second quarter of 2026, it lagged prior year performance due to the aforementioned lower traffic volumes and an unfavorable traffic mix shift away from higher yielding properties which reduced monetization in comparison to 2025.

Cost of revenue decreased by 24.9% partially offsetting lower revenues, primarily driven by lower external cost of content enabled by our variable cost structure under the entrepreneurial publishing model and as traffic volumes declined. Gross margin contracted year over year as the decline in higher-margin digital advertising revenue more than offset cost reductions and was further impacted by added cost of products sold from the ShopHQ e-commerce business.

The following table sets forth revenue from continuing operations by category:

For the six months ended June 30, 2026, total revenue decreased by $34,238, or a 44.6% decrease, to $42,589 from $76,827 for the six months ended June 30, 2025. There was a 44.9% decrease in total digital revenue from $76,375 for the six months ended June 30, 2025 to $42,117 for the six months ended June 30, 2026.

Digital revenue declined year over year primarily as search and referral traffic pressures reduced advertising impressions and high-intent commerce activity. Digital advertising revenue decreased $28,812 due to lower audience traffic and traffic referral patterns, while performance marketing revenue decreased $5,122 due to lower commerce-oriented traffic and changes in affiliate rates. Digital subscription revenue decreased $1,529 as the Company continued to reposition portions of its portfolio toward ad-supported monetization models. These declines were partially offset by a $2,175 increase in Other digital revenue, primarily from the ShopHQ e-commerce business, which broadened the Company’s revenue base by adding transaction-based e-commerce capabilities and incremental first-party customer engagement opportunities. Management continues to address traffic volatility through ongoing refinement of content, distribution and yield strategies, while also pursuing revenue diversification initiatives intended to reduce reliance on search-driven advertising revenue over time.

The following table sets forth cost of revenue by category:

For the six months ended June 30, 2026, we recognized cost of revenue of $26,840 as compared to $35,723 for the six months ended June 30, 2025, a decrease of $8,883. The decrease reflected the Company’s ability to flex portions of its cost structure in response to lower traffic and revenue levels, including reduced external cost of content and active reductions of internal cost of content. The Company also benefited from lower technology costs as reduced traffic and ad-serving volumes lowered variable platform costs. These savings were partially offset by higher cost of products sold from the ShopHQ e-commerce operations as a result of increased ShopHQ revenue.

Operating Expenses

Selling and Marketing

The following table sets forth selling and marketing expenses from continuing operations by category:

For the six months ended June 30, 2026, we incurred selling and marketing expenses of $3,676 as compared to $4,076 for the six months ended June 30, 2025. The $400 decrease was primarily attributable to continued cost discipline and optimization across advertising, marketing and advertising operations tools, partially offset by incremental marketing investments supporting the growth of the Company’s ShopHQ e-commerce business, which was launched in late 2025. Although selling and marketing costs decreased period over period, they still represent a higher percentage of revenues in the current period due to the decline in revenue levels between periods.

General and Administrative

The following table sets forth general and administrative expenses by category:

For the six months ended June 30, 2026, we incurred general and administrative expenses of $8,296 as compared to $11,483 for the six months ended June 30, 2025. The $3,187 decrease primarily reflected lower legal and other professional fees following the successful resolution of certain legacy corporate matters, as well as continued overhead spending discipline, lower bad debt expense from improved accounts receivable collections processes, and reduced corporate and state sales and use tax-related costs associated with lower revenue levels.

Segment Revenue

We report our segment results as Sports & Leisure, Finance, Lifestyle, and Platform & Other. Additionally, certain expenses are not allocated to our segments because they represent centralized activities which cannot be accurately allocated.

The following table sets forth revenue by segment:

Sports & Leisure – the decrease of $16,873 was primarily driven by lower digital advertising revenue, reflecting industry-wide declines in organic traffic volume and monetization rates. In addition, performance marketing revenue declined due to reduced traffic and changes in affiliate partner commission structures.

Finance – the decrease of $10,070 primarily reflected lower digital advertising revenue from industry-wide declines in organic traffic and monetization, lower performance marketing revenue due to changes in referral traffic patterns and affiliate partner commission structures, and reduced digital subscription revenue as the Company continued transitioning portions of its portfolio toward ad-supported monetization channels.

Lifestyle – the decrease of $5,522 was primarily driven by lower digital advertising revenue, reflecting industry-wide declines in organic traffic volume.

Platform & Other – the decrease of $1,773 was primarily driven by a reduction in underperforming partner sites, partially offset by an increase in other digital revenue attributable to ShopHQ e-commerce business.

Segment Gross Profit

The following table sets forth segment gross profit:

The $25,047 decrease was primarily attributable to lower digital advertising revenue as a result of traffic-volume headwinds and lower monetization rates, which reduced digital advertising revenue across the portfolio. Revenue declines were partially offset by reductions in external cost of content under the entrepreneurial publishing model. Internal content costs and technology-related expenses were also reduced due to disciplined spending.

The following table reconciles segment gross profit to gross profit:

Other Expenses

The following table sets forth other expenses:

Interest Expense – We incurred interest expense of $4,871 for the six months ended June 30, 2026 compared to $5,949 for six months ended June 30, 2025. The $1,078 decrease in interest expense reflects lower interest charges following repayment of the Simplify Loan throughout 2025 and the $13,000 curtailment payment applied to the Company’s term debt in December 2025 pursuant to Amendment No. 4 to the Third Amended and Restated Note Purchase Agreement.

Liquidated Damages – We recorded liquidated damages (as described above) of $151 for the six months ended June 30, 2026, as compared to $151 for the six months ended June 30, 2025.

Use of Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain items that are noncash in nature or not related to our core business operations. We calculate Adjusted EBITDA as net income (loss) as adjusted for income from discontinued operations, interest expense (net), income taxes, and depreciation and amortization. We further adjust for stock-based compensation and other special items that do not reflect our ongoing core operational performance, including impairment costs, third-party vendor or professional settlement fees, liquidated damages, and government tax incentive credits. Our non-GAAP measure may not be comparable to similarly titled measures used by other companies, have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP measure as superior to, or a substitute for, the equivalent measure calculated and presented in accordance with GAAP. Some of the limitations are that our non-GAAP measure:

• does not reflect interest expense and financing fees, or the cash required to service our debt, which reduces cash available to us;
• does not reflect income tax provision or benefit, which is a noncash income or expense;
• does not reflect depreciation and amortization expense and, although this is a noncash expense, the assets being depreciated may have to be replaced in the future, increasing our cash requirements;
• does not reflect stock-based compensation and, therefore, does not include all of our compensation costs;
• does not reflect the change in valuation of contingent consideration, and, although this is a noncash income or expense, the change in the valuations each reporting period are not impacted by our actual business operations but is instead strongly tied to the change in the market value of our common stock;
• does not reflect liquidated damages and, therefore, does not include future cash requirements if we repay the liquidated damages in cash instead of shares of our common stock (which the investor would need to agree to);
• does not reflect any losses from the impairment of assets, which is a noncash operating expense;
• does not reflect any losses from the sale of assets, which is a noncash operating expense;
• does not reflect the employee retention credits recorded by us for payroll related tax credits under the CARES Act;
• does not reflect payments related to employee severance and employee restructuring charges for our former executives;
• does not reflect the professional and vendor fees incurred by us for services provided by consultants, accountants, lawyers, and other vendors, which services were related to certain types of events that are not reflective of our business operations; and
• may not reflect proper non-direct cost allocations.

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The following table presents a reconciliation of Adjusted EBITDA to net (loss) income, which is the most directly comparable GAAP measure, for the periods indicated:

(1) Interest expense is related to our capital structure and varies over time due to a variety of financing transactions. Interest expense includes $14 and $31 for amortization of debt costs for the three months ended June 30, 2026 and 2025, respectively. Interest expense includes $28 and $63 for amortization of debt discounts for the six months ended June 30, 2026 and 2025, respectively. These amounts are noncash items. Investors should note that cash interest payments will recur in future periods.

(2) Depreciation and amortization related to our developed technology and our Platform is included within cost of revenues of $1,078 and $1,108 for the three months ended June 30, 2026 and 2025, respectively, and depreciation and amortization is included within operating expenses of $908 and $881 for the three months ended June 30, 2026 and 2025, respectively. Depreciation and amortization related to our developed technology and our Platform is included within cost of revenues of $2,128 and $2,384 for the six months ended June 30, 2026 and 2025, respectively, and depreciation and amortization is included within operating expenses of $1,801 and $1,771 for the six months ended June 30, 2026 and 2025, respectively. We believe (i) the amount of depreciation and amortization expense in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.

(3) Stock-based compensation represents noncash costs arising from the grant of stock-based awards to employees, consultants and directors. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

(4) Liquidated damages (or interest expense related to accrued liquidated damages) represents amounts we owe to certain of our investors in private placements offerings conducted in fiscal years 2018 through 2020, pursuant to which we agreed to certain covenants in the respective securities purchase agreements and registration rights agreements, including the filing of resale registration statements and becoming current in our reporting obligations, which we were not able to timely meet.

(5) Represents acquisition-related fair value adjustments associated with contract assets acquired in the Parade acquisition. Management excludes these transaction-related adjustments as they are not reflective of our ongoing operational performance.

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Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the condensed consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders’ equity, revenue, expenses, and related disclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.

Except as described in Note 1, Summary of Significant Accounting Policies, of the notes to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on March 16, 2026.

Recently Issued Accounting Standards Updates

Note 1, Summary of Significant Accounting Policies, in our accompanying condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q includes Recently Issued Accounting Standards updates.

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer(s) and principal financial officer(s), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our Chief Executive Officer and Principal Financial Officer, concluded that our disclosure controls and procedures were not effective as of June 30, 2026 in providing reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms due to the material weakness described below.

Material Weakness in Internal Control over Financial Reporting and Remediation Plan

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of our Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on March 16, 2026, our management concluded that our internal control over financial reporting was not effective as of December 31, 2025 due to the following material weakness which we previously reported and continues to exist: we did not design and maintain effective controls over the completeness and accuracy of information received from a third-party programmatic advertising services provider used in recording certain advertising revenues.

This material weakness has not been remediated as of the date of filing of this Quarterly Report. We intend to expand and formalize documentation around the review and oversight procedures performed to validate data provided by the third party providing ad serving services, provide training to relevant personnel on the enhanced documentation requirements, and, as necessary, implement additional controls to independently verify completeness and accuracy of third party data used in financial reporting to address this material weakness. We will continue to evaluate and adjust remediation actions as needed to ensure the remedial measures remain appropriate and sustainable.

We believe that the actions listed above will provide appropriate remediation of the material weakness. Due to the nature of the remediation process and the need for sufficient time after implementation to evaluate and test the design and effectiveness of the controls, no assurance can be given as to the timing for completion of remediation. The material weakness will be fully remediated when we conclude that the controls have been operating for sufficient time and independently validated by management.

We believe that, notwithstanding the material weakness mentioned above, the unaudited condensed consolidated financial statements contained in this Quarterly Report present fairly, in all material respects, the condensed consolidated balance sheets, statements of operations, stockholders’ deficiency, and cash flows of the Company and its subsidiaries in conformity with U.S. generally accepted accounting principles as of the dates and for the periods stated therein.

Changes in Internal Control over Financial Reporting

Except as described above under “Material Weakness in Internal Control over Financial Reporting and Remediation Plan”, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

There are numerous factors that affect our business and operating results, many of which are beyond our control. The following risk factors supplement and, to the extent inconsistent, supersede, the risk factors described in Part I, “Item IA. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 16, 2026 (the “2025 Form 10-K”). The risk factors included herein as well as the risk factors described in the 2025 Form 10-K should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC in connection with evaluating us, our business and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not known to us at present, or that we currently deem immaterial, may affect us. The occurrence of any of these known or unknown risks could have a material adverse impact on our business, financial condition and results of operations.

Our use and incorporation of a broad range of artificial intelligence technologies in our services and operations present risks, uncertainties, and challenges that could adversely affect our business, financial condition, and results of operations.

Our ability to attract and retain publisher partners, expert contributors, audience, and customers depends on our capacity to develop and support innovative products and services, including through developing or deploying emerging technologies such as artificial intelligence. Some of our products, services, publishing tools and processes leverage AI, including both machine learning and Generative and Agentic AI, and we continue to make investments in initiatives focused on the further development and deployment of these technologies. However, there is no assurance that our use or development of AI will enhance our offerings or services or their marketability, improve operating results, or deliver anticipated benefits, and our initiatives involving AI may be unsuccessful. While implementation of these technologies offers the potential for innovation and competitive differentiation, it also poses significant risks and uncertainties, especially given its early stage of commercial adoption. The use of AI in our initiatives and offerings or services, or in our internal business operations, may give rise to risks related to accuracy, bias, discrimination, intellectual property infringement, misappropriation or leakage of proprietary, confidential and personal information, defamation, data privacy, and cybersecurity. Furthermore, the use of AI in the creation of content could have an adverse impact on both traffic and revenue. Any error, defect, or vulnerability in our AI-powered business processes could undermine the quality of our offerings and services, adversely impact our partners’ businesses, subject us or our partners to regulatory scrutiny, fines or litigation and cause reputational harm.

These technologies are subject to an evolving and fragmented legal and regulatory landscape. The absence of a unified regulatory framework, and the risk of divergent or conflicting regulations across jurisdictions applicable to our business, could increase the complexity and costs of compliance for us and our partners. New or changing legal requirements may limit or restrict our use of AI, impose burdensome obligations, or require us to modify or discontinue certain offerings. Any of these factors, alone or in combination, could adversely affect our business, reputation, or results of operations.