Bright Mountain Media, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our consolidated financial condition and results of operations for the years ended December 31, 2025, and 2024 should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the "Risk Factors," "Cautionary Notice Regarding Forward-Looking Statements" and "Business" sections in this annual report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could” and similar expressions to identify forward-looking statements. Overview Organization and Nature of Operations Bright Mountain Media, Inc. is an end-to-end marketing services company that helps brands with the right audiences, at the right time, with the right message, both effectively and efficiently by removing the middlemen in the marketing workflow. Our end-to-end offerings combine consumer insights with creative services, media services, and advertising technology to deliver solutions to improve audience fidelity for brands. We focus on digital publishing, advertising technology, consumer insights, creative services, and media services. Digital Publishing Our digital publishing division focuses on developing content that attracts an audience and monetizes that audience through advertising. The current portfolio of owned and operated websites is focused on moms, parenting, families, and more broadly, women. The portfolio consists of popular websites including Mom.com, Cafemom.com, LittleThings.com, and MamasLatinas.com. This demographic is highly sought after by brands and their advertising agencies. We use internal and external technologies to constantly improve the effectiveness and efficiency of the content we create. Our publishing division monetizes its audiences through both direct and programmatic advertising sales. Advertising Technology Our advertising technology division focuses on delivering targeted ads to audiences on owned and operated sites as well as third-party publishers in a cost-effective manner through the deployment of proprietary technologies. By developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and supply side of the ecosystem. Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both demand (buy side) and publisher supply (sell side) programmatic sales and delivery of digital advertisements using an array of audience targeting tools and advertising formats (display, audio, video, CTV, in-app). Programmatic advertising relies on software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with a bid price offered by advertisers. Consumer Insights Our consumer insights division focuses on providing primary and secondary research and competitive intelligence to address customers' strategic issues. We provide cutting-edge and dynamic research, offering clients a comprehensive perspective on their consumers. This insight extends to strategic guidance on the optimal timing and channels to effectively connect with target audiences. Our cutting-edge approach combines advanced data analytics, artificial intelligence, and comprehensive market research, to uncover actionable insights that drive informed decision-making. Creative Services Our creative services division transforms data into award-winning campaigns. We are uniquely able to leverage insights teams with highly strategic media planning and buying teams to ensure brands not only position their advertising precisely, but also yield impactful business results. Our goal is to combine data-driven decisions with creativity fueled by a deep understanding of modern culture. Media Services Our media services division focuses on advertisers and agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns. Our aim is to empower clients to access the most sought-after advertising spaces across diverse platforms tailored to their specific needs and preferences. Our data-driven approach aims to ensure that ad placements are not only well-targeted, but also continuously optimized for maximum efficiency and return on investment ("ROI"). Our commitment to combining premium inventory access with data-driven programmatic campaign optimization makes us a valuable partner in the success of our clients' advertising and marketing endeavors. 30 Table of Contents The Company generates revenue through: • the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue; • fees for facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs"); • serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; • providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research; and • provision of creative and media services to advertisers. Key Factors Affecting Our Performance Seasonal Fluctuations . Typically, advertising technology companies report a material portion of their revenues during the third and fourth calendar quarter as a result of back-to-school and holiday-related advertising spend. We continue to experience this trend in our advertising technology division. Because of seasonal fluctuations, there can be no assurance that the results of any quarter or full year will be indicative of results for future years or quarters. Limited Number of Customers . For the year ended December 31, 2025, two customers represented 13.6% and 11.9% of our revenue, respectively, and for the year ended December 31, 2024, one customer represented 12.2% of our revenue. The loss of either of these customers could have a material adverse impact on our results of operations in future periods. Managing Industry Dynamics . We operate in the rapidly evolving digital advertising industry. Advances in programmatic advertising technologies, and the efficient and automated method of purchasing ads online, has enabled publishers to auction their ad inventory to more buyers simultaneously, in real time. As advertisers stay ahead of evolving trends in consumer engagement with digital media, an expansive opportunity for innovation emerges. Our commitment to understanding customer needs empowers us, and our continuous pursuit of innovation enables swift adaptation to industry shifts. This approach not only facilitates the development of cutting-edge solutions, but also does so in a cost-effective manner. As regulatory concerns accelerate the impact on existing industry standards, companies are actively seeking new methods to finely tailor their messages to target audiences. Tech companies will be limited in how they monetize personal information for advertising purposes. This trend is exemplified by two imminent developments: (1) the anticipated erosion of Google's third-party cookies and (2) the data security measures integrated into Apple iPhones. Consequently, companies must explore innovative methods to better understand their target audiences and have the tools to effectively engage with them. Key Operating and Financial Metrics We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following are the key financial and operational metrics for the years ended December 31, 2025, and 2024: Year Ended December 31, 2025 2024 (in thousands) Revenue $ 59,229 $ 56,681 Cost of revenue 43,443 40,221 Gross margin 15,786 16,460 General and administrative expenses 16,432 21,378 Impairment of goodwill and intangibles 786 - Financing and other expense, net 12,023 12,106 Net loss $ (13,455 ) $ (17,024 ) Adjusted EBITDA (1) $ 2,984 $ 790 (1) For a reconciliation of net loss to Adjusted EBITDA see “Use of Non-GAAP Financial Measures” below. 31 Table of Contents Revenue The Company generates revenue through: • the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue; • fees for facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs"); • serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; • providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research; and • provision of creative and media services to advertisers. Revenue increased approximately $2.5 million, or 4%, for the year ended December 31, 2025 when compared to the same period in 2024. See below for a detailed analysis of revenue for the years ended December 31, 2025, and 2024. Cost of Revenue Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which includes the publisher cost paid for ad exchange on third party sites, advertising fees, personnel costs, technology and data related costs, fees paid for content creation, influencers, writers and sales commission. Cost of revenue increased approximately $3.2 million, or 8%, for the year ended December 31, 2025 compared to 2024. See below for a detailed analysis of cost of revenue for the years ended December 31, 2025, and 2024. General and Administrative Expenses General and administrative expenses consist primarily of (i) personnel and related costs for our executive, finance and accounting, human resources, and, administrative personnel, including salaries, benefits, bonuses, and stock-based compensation; (ii) legal, accounting and other professional service fees; (iii) other corporate expenses; (iv) information technology costs; and (v) facility costs. General and administrative expenses decreased approximately $5.0 million, or 23%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. See below for a detailed analysis of general and administrative expenses for the years ended December 31, 2025 and 2024. Impairment of Goodwill and Intangibles Impairment of goodwill and intangibles increased approximately $786,000, or 100%, for the year ended December 31, 2025, compared to 2024. Results of Operations The following is our analysis of the results of operations for the years ended December 31, 2025, and 2024. This analysis should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K. 32 Table of Contents Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Net loss from operations for the year ended December 31, 2025 was $13.5 million as compared to a net loss of $17.0 million for the year ended December 31, 2024. The following is our analysis for the period. Year Ended December 31, 2025 2024 Change (in thousands) Revenue $ 59,229 $ 56,681 $ 2,548 4 % Cost of revenue 43,443 40,221 3,222 8 % Gross margin 15,786 16,460 (674 ) -4 % General and administrative expenses 16,432 21,378 (4,946 ) -23 % Impairment of goodwill and intangibles 786 — 786 100 % Loss from operations (1,432 ) (4,918 ) 3,486 -71 % Financing and other expense, net (12,023 ) (12,106 ) 83 -1 % Net loss $ (13,455 ) $ (17,024 ) $ 3,569 -21 % Gross margin percentage 27 % 29 % -2 % Revenue Our revenue increased by $2.5 million, or 4%, for the year ended December 31, 2025, compared to the same period in 2024. The Company focuses on digital publishing, advertising technology, consumer insights, creative services, and media services. Changes in revenue generated by each such division are set forth below: Year Ended December 31, 2025 2024 Change (in thousands) Digital publishing $ 1,482 $ 1,733 $ (251 ) -14 % Advertising technology 21,681 18,449 3,232 18 % Consumer insights 26,559 27,021 (462 ) -2 % Creative services 8,519 7,056 1,463 21 % Media services 988 2,422 (1,434 ) -59 % $ 59,229 $ 56,681 $ 2,548 4 % Digital Publishing Digital publishing revenue decreased by $251,000, or 14%, for the year ended December 31, 2025 compared to the same period of 2024. Approximately $1.5 million, or 3%, of the Company’s revenue for the year ended December 31, 2025 was generated from our digital publishing customers compared to $1.7 million, or 3%, for the same period in 2024. This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic. Advertising Technology Advertising technology revenue increased by $3.2 million, or 18%, for the year ended December 31, 2025 compared to the same period of 2024. Approximately $21.7 million, or 36%, of the Company’s revenue for the year ended December 31, 2025 was generated from our advertising technology customers compared to $18.4 million, or 33%, for the same period in 2024. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue. Consumer Insights Consumer insights revenue decreased by $462,000, or 2%, for the year ended December 31, 2025 compared to the same period in 2024. Approximately $26.6 million, or 45%, of the Company’s revenue for the year ended December 31, 2025 was generated from our consumer insights customers, compared to $27.0 million, or 48%, for the same period in 2024. 33 Table of Contents Creative Services Creative services revenue increased by $1.5 million, or 21%, for the year ended December 31, 2025 compared to the same period in 2024. Approximately $8.5 million, or 14%, of the Company’s revenue for the year ended December 31, 2025 was generated from our creative services customers, compared to $7.1 million, or 12% for the same period in 2024. This increase was driven by an increase in the number of projects for smaller tier revenue customers. Media Services Media services revenue decreased by $1.4 million, or 59%, for the year ended December 31, 2025 compared to the same period in 2024. Approximately $988,000, or 2%, of the Company’s revenue for the year ended December 31, 2025 was generated from our media services customers, compared to $2.4 million, or 4%, for the same period in 2024. This decrease was related to the timing of customer needs and the moving of certain projects from 2025 to 2026. Cost of Revenue Year Ended December 31, 2025 2024 Change (in thousands) Direct salaries and labor costs $ 6,526 $ 7,557 $ (1,031 ) -14 % Direct project costs 14,096 11,723 2,373 20 % Non-direct project costs 5,203 6,617 (1,414 ) -21 % Publisher costs 15,143 12,384 2,759 22 % Content creation 761 699 62 9 % Sales commissions 1,288 1,152 136 12 % Other 426 89 337 379 % $ 43,443 $ 40,221 $ 3,222 8 % Cost of revenue increased by $3.2 million, or 8%, for the year ended December 31, 2025, compared to the same period of 2024. This increase was due to the factors discussed below: Direct Salaries and Labor Cost Direct salaries and labor cost decreased by $1.0 million, or 14%, for the year ended December 31, 2025 when compared to the same period in 2024. Approximately $6.5 million, or 15%, of the Company's cost of revenue for the year ended December 31, 2025 was a result of direct salaries and labor cost, compared to $7.6 million, or 19%, for the same period in 2024. This decrease was related to our continued efforts to decrease headcount. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative services, and media services divisions. Direct Project Cost Direct project cost increased $2.4 million, or 20%, for the year ended December 31, 2025 when compared to the same period in 2024. Approximately $14.1 million, or 32%, of the Company's cost of revenue for the year ended December 31, 2025, was a result of direct project cost compared to $11.7 million, or 29%, for the same period in 2024. This increase was related to an increase in customer contracts. These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative services, and media services divisions. Non-Direct Project Cost Non-direct project cost decreased by $1.4 million, or 21%, for the year ended December 31, 2025, when compared to the same period in 2024. Approximately $5.2 million, or 12%, of the Company's cost of revenue for the year ended December 31, 2025, was a result of non-direct project cost compared to $6.6 million, or 16%, for the same period in 2024. This decrease was related to our continued efforts to reduced headcount. These costs represent overall client service costs that are not specifically related to a particular project. 34 Table of Contents Publisher Cost Publisher cost was $15.1 million, which represents 35% of overall cost of revenue, and $12.4 million, or 31%, of overall cost of revenue for the years ended December 31, 2025 and 2024, respectively. We experienced an increase of $2.8 million, or 22%, for the year ended December 31, 2025 compared to the same period in 2024. Publisher costs were lower in 2024 because we were running political campaigns, which generate lower publisher costs. We did not run similar campaigns in 2025. These costs represent payments to media providers and website publishers. Gross Margin Gross margin was $15.8 million, and $16.5 million for the years December 31, 2025 and 2024. Our gross margin decreased $674,000, or 4%, for the year ended December 31, 2025, when compared to the same period for 2024. Gross margin as a percentage of revenue decreased to 27% for the year ended December 31, 2025, compared to 29% for the same period of 2024, due to the higher cost of revenue. General and Administrative Expenses Year Ended December 31, 2025 2024 Change (in thousands) Personnel costs $ 6,892 $ 8,750 $ (1,858 ) -21 % Legal fees 1,153 2,618 (1,465 ) -56 % Professional fees 3,233 3,568 (335 ) -9 % Insurance 523 775 (252 ) -33 % Depreciation 56 127 (71 ) -56 % Amortization 1,864 1,924 (60 ) -3 % Data processing 1,767 2,591 (824 ) -32 % Other 944 1,025 (81 ) -8 % $ 16,432 $ 21,378 $ (4,946 ) -23 % Gross margin as a percentage of general and administrative expense 96 % 77 % 19 % General and administrative expenses decreased $5.0 million, or 23%, for the year ended December 31, 2025, compared to the same period in 2024. The decrease was due to a combination of factors as discussed below: Personnel Cost Personnel cost decreased by approximately $1.9 million, or 21%, for the year ended December 31, 2025 compared to the same period in 2024. The Company reduced its headcount in 2025 by 12 employees, including 7 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $70,000 in connection with this reduction. The Company incurred severance cost of approximately $250,000 associated with a headcount reduction during the same period for 2024. We had 107 total employees as of December 31, 2025, compared to 119 total employees as of December 31, 2024. Legal Fees Legal fees decreased by $1.5 million, or 56%, for the year ended December 31, 2025, compared to the same period in 2024. This decrease is due largely to a decrease in payments made as part of the ongoing litigation with Ladenburg. For a full description of litigation matters, see Note 16, Commitments and Contingencies, to the consolidated financial statements. Insurance Cost Insurance cost decreased by $252,000, or 33%, compared to the same period in 2024. This change was mainly driven by a reform of the Company's management liability insurance program, including changes to insurance providers, resulting in a decrease in premiums from the prior year. 35 Table of Contents Data Processing Data processing costs decreased by $824,000, or 32%, during the year ended December 31, 2025, when compared to the same period in 2024. This reduction was due largely to the reclassification of certain components of data processing costs to costs of revenue Financing Expense (Income) Year Ended December 31, 2025 2024 Change (in thousands) Interest expense $ 12,308 $ 12,653 $ (345 ) -3 % Other expense (income) (285 ) (547 ) 262 -48 % Total financing and other expense, net $ 12,023 $ 12,106 $ (83 ) -1 % Financing and other expense, net, decreased by $83,000, or 1%, for the year ended December 31, 2025, compared to the same period in 2024. Liquidity and Capital Resources Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. The following table summarizes total current assets, total current liabilities and net working capital (deficit) as of December 31, 2025 as compared to December 31, 2024. December 31, 2025 December 31, 2024 (in thousands) Total current assets $ 20,689 $ 20,299 Total current liabilities 116,231 33,780 Net working capital (deficit) $ (95,542 ) $ (13,481 ) As of December 31, 2025, we had a cash balance of $1.4 million and a restricted cash balance of $1.9 million, compared with a cash balance of $2.5 million and a restricted cash balance of $1.9 million as of December 31, 2024. The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed below. See –“Going Concern.” During the year ended December 31, 2024, the Company received $1.9 million in debt financing from the Centre Lane Senior Secured Credit Facility. We used these funds to secure a bond in connection with our appeal of the Ladenburg litigation during 2024. During the year ended December 31, 2025, we did not receive additional debt financing from the Centre Lane Senior Secured Credit Facility. Going Concern Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $180.3 million as of December 31, 2025. Cash flows provided by operating activities were $1.3 million and $1.9 million for the years ended December 31, 2025, and 2024, respectively. As of December 31, 2025, the Company had a working capital deficit of approximately $95.5 million, inclusive of $1.4 million in cash and cash equivalents and $1.9 million in restricted cash. The Company’s ability to continue as a going concern is dependent upon its ability to meet its liquidity needs through a combination of factors. During the next year, we anticipate that we will need approximately $86.3 million to meet our contractual obligations in addition to amounts needed for our working capital needs. The Company is currently exploring several strategic alternatives, including restructuring or refinancing its debt, or seeking additional debt, including borrowing under the Centre Lane Senior Secured Credit Agreement or raising equity capital. Any refinancing or additional financing may require the consent of Centre Lane under the terms of the Centre Lane Senior Secured Credit Agreement, and there can be no assurance that such consent would be obtained. The ability to access the capital markets is also dependent upon the volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, or reducing general and administrative expenses, including a reduction in headcount. If the Company is unable to successfully implement one or more of these alternatives, it may be required t seek protection under applicable bankruptcy or insolvency laws. The ultimate success of these plans is not guaranteed and if we are unable to refinance or restructure the Centre Lane Senior Secured Credit facility, we may not be able to continue as a going concern. 36 Table of Contents The Company's current cash and working capital, as of the filing of this Annual Report on Form 10-K, is not expected to be sufficient to fund its anticipated level of operations over the next twelve months. As a result, such matters create a substantial doubt regarding the Company’s ability to meet its financial needs and continue as a going concern. The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern. Financing Arrangement Summary Centre Lane Senior Secured Credit Facility On June 5, 2020, the Company and its subsidiaries entered into the Amended and Restated Senior Secured Credit Facility between themselves, the lenders party thereto and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent (“Centre Lane Partners”), as amended (the “Credit Agreement”). The Credit Agreement has been amended numerous times to change the terms, including the amounts outstanding, the interest rate, the maturity date and other payment terms. As of December 31, 2025, Centre Lane Partners has loaned the Company $39.9 million through Amendments One through Eight (the "Second Out Loans"), Amendments Nine through Sixteen (the "First Out Loans"), and Amendments Seventeen and Twenty-One (the "Third Out Loans"). Effective March 31, 2025, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Second Amendment to the Credit Agreement, pursuant to which the following adjustments were made to the outstanding loans: • Extending the maturity date of the First Out Loans (which no longer include the Seventeenth Amendment Term Loans and the Twenty-First Amendment Term Loans), Second Out Loans (formerly defined as the Last Out Loans), and Third Out Loans (comprised of the Seventeenth Amendment Term Loans and the Twenty-First Amendment Term Loans) from April 20, 2026, to December 20, 2026; • Changing the Second Out Loans PIK rate to the Term Secured Overnight Financing Rate (“SOFR”) plus 3% and the Second Out loans cash interest rate to 2%; • Changing the First Out Loans cash interest rate to the Term SOFR plus 2%; • Changing the Third Out Loans PIK rate to 15%; • Adjusting the amortization of the Second Out Loans such that quarterly installments of 1% of the aggregate principal amount (after giving effect to capitalized PIK interest) are paid for each quarter in 2025, and quarterly installments of 2% of the aggregate principal amount (after giving effect to capitalized PIK interest) are paid thereafter until maturity; and • Adjusting the amortization of the First Out Loans such that an installment of $700,000 was paid on March 31, 2025, and quarterly installments of $575,000 are paid thereafter until maturity. Effective September 30, 2025, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Third Amendment to the Credit Agreement, which applied the following adjustments to loans with outstanding payments due on September 30, 2025, including the following modifications: • Converting the First Out Loans cash interest due on September 30, 2025, to interest PIK; • Reducing the First Out Loans amortization payment from $575,000 to $250,000 due on September 30, 2025, with the difference deferred to the maturity date of the First Out Loans, which is December 20, 2026; • Incurring an amendment fee equal to 25 basis points of the First Out Loans, approximately $8,000, which was added to the principal balance as of September 30, 2025; • Converting the Second Out Loans cash interest due on September 30, 2025, to interest PIK; and • Deferring the Second Out Loans amortization payment due on September 30, 2025, to the maturity date of the Second Out Loans, which is December 20, 2026; • Following the payments made on September 30, 2025, all loan terms, including cash interest and PIK rates, reverted to the terms established under the Twenty-Second Amendment. Effective December 31, 2025, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Fourth Amendment to the Credit Agreement, which applied the following adjustments to loans with outstanding payments due on December 31, 2025, including the following temporary modifications: • Converting the Second Out Loans cash interest due on December 31, 2025, to interest PIK; and • Deferring the Second Out Loans amortization payment due on December 31, 2025, to March 31, 2026. • Following the payments made on December 31, 2025, all loan terms, including cash interest and PIK rates, reverted to the terms established under the Twenty-Second Amendment. Quarterly amortization payments resumed and were due on March 31, 2026. 37 Table of Contents The outstanding principal owed to Centre Lane Partners was $86.1 million and $78.8 million as of December 31, 2025, and December 31, 2024, respectively. Of the amount outstanding at December 31, 2025, approximately $1.8 million is due on March 31, 2026, $1.4 million is due on June 30, 2026, and $1.4 million is due on September 30, 2026. The remaining principal balance of $81.5 million is due on December 20, 2026. For a full description of the Centre Lane Senior Secured Credit Facility, see Note 10, Centre Lane Senior Secured Credit Facility, to the consolidated financial statements. Summary of Cash Flows The following table summarizes cash flow activities during the years ended December 31, 2025, and 2024: Year Ended December 31, (in thousands) 2025 2024 Cash flow provided by operating activities $ 1,252 $ 1,878 Cash flow used in investing activities (111 ) (110 ) Cash flow used in financing activities (2,313 ) (1,361 ) Net (decrease) increase in cash and cash equivalents, net of impact of exchange rates $ (1,175 ) $ 406 Operating Activities Our largest source of operating cash is cash collections from customers from revenue. Our primary uses of our operating cash, are for cost of revenue expenses, personnel-related expenditures and other general administrative expenses. For the year ended December 31, 2025, cash provided by operating activities was $1.3 million. The primary factors affecting our operating cash flows during the period were our net loss of $13.5 million, adjusted for non-cash charges of $1.9 million for amortization of intangible assets, $2.2 million of amortization of debt discount, $9.6 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $786,000 of impairment of goodwill and intangible assets, $125,000 for stock option compensation expense, and a $320,000 net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $1.5 million increase in accounts receivable, a $311,000 increase in prepaid expenses and other assets, and a $363,000 decrease in other liabilities, partially offset by a $2.0 million increase in accounts payable and accrued expenses. For the year ended December 31, 2024, cash provided by operating activities was $1.9 million. The primary factors affecting our operating cash flows during the period were our net loss of $17.0 million, adjusted for non-cash charges of $1.9 million for amortization of intangible assets, $2.7 million of amortization of debt discount, $9.4 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $254,000 for stock option compensation expense, and a $4.4 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $1.7 million decrease in deferred revenue, a $369,000 decrease in accounts receivable, a $198,000 decrease in prepaid expenses and other current assets, a $5.2 million increase in accounts payable and accrued expenses, and a $1.2 million increase in other liabilities. Investing Activities During the year ended December 31, 2025, the Company used cash of $111,000 in investing activities, which was attributable to the purchase of property and equipment of $111,000. During the year ended December 31, 2024, the Company used cash of $110,000 in investing activities, which was largely attributable to the purchase of property and equipment of $14,000, and website enhancements of $96,000. Financing Activities During the year ended December 31, 2025, the Company used cash of $2.3 million in financing activities, which is largely attributable to repayment of principal on the Centre Lane Senior Secured Credit Facility of $2.3 million. During the year ended December 31, 2024, the Company used cash of $1.4 million in financing activities, which is largely attributable to repayment of principal on the Centre Lane Senior Secured Credit Facility of $3.1 million, partially offset by the draw of $1.9 million on the Centre Lane Senior Secured Credit Facility that we used to secure a bond in connection with our appeal of the Ladenburg litigation. 38 Table of Contents Contractual Obligations and Commitments The following table represents our contractual obligations as of December 31, 2025, aggregated by type: Total Due in less than 1 year Due 1-3 years Due 3-5 years More than 5 years ($ in thousands) Operating lease $ 173 $ 96 $ 77 $ - $ - Finance lease 20 20 - - - Centre Lane Senior Secured Credit Facility 86,140 86,140 - - - Interest payable - Centre Lane Senior Secured Credit Facility 59 59 - - - $ 86,392 $ 86,315 $ 77 $ - $ - The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed above. See –“Going Concern.” Use of Non-GAAP Financial Measures Non-GAAP results are presented only as a supplement to the financial statements and for use within management's discussion and analysis based on U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial information is provided to enhance the reader's understanding of the Company's financial performance, but non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. All of the items included in the reconciliation from net loss before taxes to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business. We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company's performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. 39 Table of Contents A reconciliation of net loss before taxes to non-GAAP EBITDA and Adjusted EBITDA is as follows: Year Ended December 31, 2025 2024 (in thousands) Net loss before tax $ (13,455 ) $ (17,024 ) Depreciation expense 56 127 Amortization of intangibles 1,864 1,924 Impairment of goodwill and intangibles 786 - Amortization of debt discount 2,150 2,697 Other interest expense 22 39 Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes 10,136 9,917 EBITDA (loss) 1,559 (2,320 ) Stock compensation expense 125 254 Non-recurring professional fees 380 390 Non-recurring legal fees 850 2,216 Non-recurring severance expense 70 250 Adjusted EBITDA $ 2,984 $ 790 Critical Accounting Policies Critical Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. Note 2, "Summary of Significant Accounting Policies," to the consolidated financial statements, describes the significant accounting policies used in preparation of the consolidated financial statements. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. The most significant areas involving management judgments and estimates are described below. Actual results in these areas could differ from management's estimates. Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No. 606, Revenue from Contracts with Customers, (ASC 606) . The Company recognizes revenue at a point in time when control is transferred to the customer or over time as a percentage of completion or otherwise in accordance with the terms of the contract. Cash received by the Company prior to when control of services is transferred to the customer, is recorded as deferred revenue. Digital publishing and advertising technology revenues are generated by audiences seeing or clicking on digital advertisements utilizing several advertising partners. The Company recognizes revenue once the performance obligation is satisfied at a point in time, on a gross basis, net of adjustments based on the number of advertisements delivered. Consumer insights revenues are generated from providing primary and secondary research, competitive intelligence, expert insight, data solutions, and analytic services designed to address customers’ strategic needs. For research engagements where services are delivered over time and progress can be measured, the Company recognizes revenue using a percentage of completion method on a cost-to-cost basis. Under this method, progress toward satisfaction of the performance obligation is measured based on costs incurred to date relative to total estimated costs expected to be incurred. Costs that do not contribute to progress toward satisfying the performance obligation are excluded. For subscription-based offerings, revenue is recognized ratably over the contractual service period as the customer receives the benefits of the services. For research deliverables, revenue is recognized at a point in time when control of the deliverable transfers to the customer. For certain data and platform-based solutions, revenue is recognized either (i) monthly based on variable consideration as invoiced or (ii) at a point in time when the underlying service or data is made available, depending on the contractual terms. 40 Table of Contents Creative services revenues are generated by delivering campaign services to customers. Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for the individual performance obligations separately if they are distinct. If recurring services are performed, the Company recognizes revenue as the services are rendered over time, generally on a ratable basis over the contract term beginning on the date that the service is made available to the customer. For campaign services that require a one-time deliverable, we recognize revenue once the performance obligation is satisfied at a point in time. Media services revenues are generated through the access to programmatic campaigns. The Company recognizes revenue as the services are rendered over time, on a ratable basis over the contract term, beginning on the date that the service is made available to the customer. See Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements. Goodwill We have generated goodwill as a result of our acquisitions. At the time of acquisition, we account for business acquisitions using the purchase method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. The fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed. We review our goodwill for impairment on an annual basis at October 1 or more frequently if events or a change in circumstances indicates that the carrying amount may not be recoverable. We test goodwill for impairment at a level within the Company referred to as a reporting unit. We have determined that there are three reporting units: “Owned & Operated”, “Ad Network” and “Insights”. In accordance with FASB Accounting Standards Codification No. 350, Goodwill and Other, (ASC 350) , we initially perform a qualitative assessment (commonly known as "step zero") to determine whether further impairment testing is necessary before performing the two-step test. The qualitative assessment requires judgment by management about economic conditions including the entity's operating environment, its industry and other market considerations, entity-specific events related to financial performance or loss of key personnel and other events that could impact the reporting unit. If management concludes, based on assessment of relevant events, facts, and circumstances, that it is more likely than not that a reporting unit's fair value is greater than its carrying value, no further impairment testing is required. If we determine, based on this assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a quantitative goodwill impairment test by comparing the reporting unit's fair value with its carrying value. An impairment loss is recognized for the amount by which the reporting unit's carrying value exceeds its fair value, up to the total amount of goodwill allocated to the reporting unit. No impairment loss is recognized if the fair value of the reporting unit exceeds its carrying value. See Note 7, Goodwill, to the consolidated financial statements. Valuation for Debt Modifications and Extinguishment The Company enters into various amendments to our credit facility for additional loans used for working capital. Part of the amendments include fees that would be added and capitalized to the principal amount of the original loan. The Company is required to perform an analysis of the change in each amendment to determine whether the change represents a modification or an extinguishment of debt. As part of this analysis, the Company must first evaluate whether the amendment constitutes a troubled debt restructuring before assessing whether the change should be accounted for as a modification or an extinguishment of debt. Under a modification, no gain or loss is recorded, and a new effective interest rate is established based on the carrying value of the debt and revised cash flow. If the debt is extinguished, the old debt is de-recognized and the new debt is recorded at fair value, which becomes the new carrying value. Significant, complex calculations are inherently required in determining the proper accounting treatment. For each amendment, we calculate the present value of the cash flows under the terms of the amendment, and determine if it is considered substantially different by at least a 10% difference from the present value of the remaining cash flow of the original debt instrument. See Note 10, Centre Lane Senior Secured Credit Facility, to the consolidated financial statements. 41 Table of Contents Income Taxes We use the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws in the period those differences are expected to reverse. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized. The Company follows the provisions of FASB Accounting Standards Codification No. 740, Income Taxes (ASC 740). When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax expenses are recognized as tax expenses in the consolidated statements of operations and comprehensive loss. See Note 20, Income Taxes, to the consolidated financial statements. Segment Reporting Consistent with FASB Accounting Standards Codification No. 280, Segment Reporting (ASC 280), our Chief Financial Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Our components are digital publishing, advertising technology, consumer insights, creative services, and media services. There are no segment managers who are held accountable by the Chief Financial Officer, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. Accordingly, we determined we have one operating and reportable segment. Off Balance Sheet Arrangements As of December 31, 2025 and 2024, there were no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders. Foreign Currency We translate the financial statements of our foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S. dollars using month-end exchange rates for assets and liabilities and actual exchange rates for revenue, costs and expenses on the date of the transaction. Translation gains and losses as a result of consolidation are included in accumulated other comprehensive income. Transaction gains and losses are included within “general and administrative expense” on the consolidated statements of operations and comprehensive loss. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, we are not required to include information otherwise required by this Item 7A to Form 10-K.