Bright Mountain Media, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Con dition and Results of Operations. The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and in the section "Cautionary Statement Regarding Forward-Looking Information", those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, and those discussed in any subsequent filing we made with the SEC. Business Overview Organization and Nature of Operations Bright Mountain Media, Inc. (together with its wholly-owned subsidiaries, the “Company,” “Bright Mountain” or “we”) 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 and media services, and advertising technology to deliver solutions to improve audience fidelity for brands. We focus on digital publishing, advertising technology, consumer insights, and creative and media services. Digital Publishing Our digital publishing division focuses on developing content that attracts an audience and monetizes that audience through advertising. Our portfolio of owned and operated websites is focused on parenting, families, women's lifestyle, and related consumer interests. As of June 30, 2026, our portfolio includes Cafemom.com, LittleThings.com, MamasLatinas.com, and other digital media properties. We use internal and external technologies to continually improve the effectiveness and efficiency of the content we create. Our publishing division monetizes its audiences through both direct and programmatic advertising sales. During the three and six months ended June 30, 2026, the Company completed the sale of the Mom.com domain name and related assets. See Note 20, Sale of Mom.com Domain Name, to the consolidated financial statements. 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, and 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, competitive intelligence, and expert insight 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 and comprehensive market research, to uncover actionable insights that drive informed decision-making. Creative and Media Services Our creative and media services division provides integrated advertising and marketing solutions that combine data-driven insights, strategic media planning and buying, creative campaign development, and programmatic media execution. By leveraging data, premium advertising inventory, and audience targeting capabilities, we help clients deliver effective campaigns that maximize reach, optimize performance, and improve return on investment. 39 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. Recent Developments Creative and Media Services Consolidation During the second quarter of 2026, the Company consolidated the reporting of its creative services and media services divisions, which were previously presented as separate operating segments. Both divisions operate under the same legal entity (Deep Focus Agency, LLC) and brand (Deep Focus), and the Company determined that combined reporting more accurately reflects the integrated nature of these operations. As a result, financial reporting for the creative and media divisions are now presented on a combined basis, and the description of these divisions' activities is now also presented on a combined basis. This change in presentation does not affect the Company's total consolidated financial figures Sale of Mom.com Domain Name On June 10, 2026, the Company, through its wholly owned subsidiary, CL Media Holdings, LLC, entered into a Domain Name and Social Media Handles Purchase and Sale Agreement with Static Media, Inc., pursuant to which the Company sold the Mom.com domain name and related social media accounts to Static Media, Inc., for a purchase price of $1.1 million. The sale reflects the Company's intention to focus its attention on its core research, advertising, and technology operations rather than digital publishing, as in the Company's view its digital publishing activities were not aligned with its long-term strategic direction In connection with the transaction, the Company obtained the consent of Centre Lane Partners, as administrative agent and collateral agent, and the lenders under the Centre Lane Senior Secured Credit Facility. Pursuant to the consent, the Company agreed to apply approximately $613,000 of the proceeds from the sale to prepay a portion of the First Out Term Loans outstanding under the Centre Lane Senior Secured Credit Facility. The prepayment was applied in full satisfaction of the amortization payment due on the First Out Term Loans on June 30, 2026. Further, the consent provided that all other amounts due under the Centre Lane Senior Secured Credit Facility on June 30, 2026, including the amortization payment due on the Second Out Loans, would be paid-in-kind instead of paid in cash. See Note 10, Centre Lane Senior Secured Credit Facility, to the consolidated financial statements. 40 Table of Contents Key Factors Affecting Our Performance Seasonal Fluctuations . Typically, advertising technology companies report a material portion of their revenues during the third and fourth calendar quarters 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 . During the six months ended June 30, 2026, three customers represented 46.2% of revenue. During the six months ended June 30, 2025, one customer represented 15.6% of revenue. The loss 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. 41 Table of Contents 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 is our analysis for the three and six months ended June 30, 2026, and 2025: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) Revenue $ 13,632 $ 15,408 $ 27,595 $ 29,598 Cost of revenue 11,214 12,371 20,868 22,289 Gross margin 2,418 3,037 6,727 7,309 General and administrative expenses 3,603 4,021 6,169 8,545 Gain on sale of intangible assets (1,094 ) - (1,094 ) - Income (loss) from operations (91 ) (984 ) 1,652 (1,236 ) Financing and other expense, net (3,110 ) (3,097 ) (6,153 ) (6,076 ) Net loss $ (3,201 ) $ (4,081 ) $ (4,501 ) $ (7,312 ) Adjusted EBITDA (1) $ (190 ) $ (218 ) $ 2,166 $ 599 (1) - For a reconciliation of net loss to Adjusted EBITDA see "Use of Non-GAAP Financial Measures" below. 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 decreased by $1.8 million, or 12%, for the three months ended June 30, 2026, compared to the same period in 2025. Revenue decreased by $2 million, or 7%, for the six months ended June 30, 2026, compared to the same period in 2025. See below for a detailed analysis of revenue for the three and six months ended June 30, 2026, and 2025. 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 decreased by $1.2 million, or 9%, for the three months ended June 30, 2026, compared to the same period in 2025. Cost of revenue decreased by $1.4 million, or 6%, for the six months ended June 30, 2026, compared to the same period in 2025. See below for a detailed analysis of cost of revenue for the three and six months ended June 30, 2026, and 2025. 42 Table of Contents 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 by $418,000, or 10%, for the three months ended June 30, 2026, compared to the same period in 2025. General and administrative expenses decreased by $2.4 million, or 28% for the six months ended June 30, 2026, compared to the same period in 2025. See below for a detailed analysis of general and administrative expenses for the three and six months ended June 30, 2026, and 2025. Results of Operations The following is our analysis of the results of operations for the periods indicated below. This analysis should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Quarterly Report on Form 10-Q. Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 Net loss for the quarter ended June 30, 2026 was $3.2 million, as compared to a net loss of $4.1 million, for the same period in 2025. The following is our analysis for the period: Three Months Ended June 30, 2026 2025 Change (in thousands) Revenue $ 13,632 $ 15,408 $ (1,776 ) -12 % Cost of revenue 11,214 12,371 (1,157 ) -9 % Gross margin 2,418 3,037 (619 ) -20 % General and administrative expenses 3,603 4,021 (418 ) -10 % Gain on sale of intangible assets (1,094 ) - (1,094 ) 0 % Loss from operations (91 ) (984 ) 893 -91 % Financing and other expense, net (3,110 ) (3,097 ) (13 ) 0 % Net loss $ (3,201 ) $ (4,081 ) $ 880 -22 % Gross margin percentage 18 % 20 % -2 % Revenue Revenue decreased by $1.8 million, or 12%, for the three months ended June 30, 2026, compared to the same period in 2025. The Company focuses on digital publishing, advertising technology, consumer insights, and creative and media services. Changes in revenue generated by each such division are set forth below: Three Months Ended June 30, 2026 2025 Change (in thousands) Digital publishing $ 297 $ 359 $ (62 ) -17 % Advertising technology 6,430 5,115 1,315 26 % Consumer insights 4,949 7,332 (2,383 ) -33 % Creative and media services 1,956 2,602 (646 ) -25 % Total revenue $ 13,632 $ 15,408 $ (1,776 ) -12 % Digital Publishing Digital publishing revenue decreased by $62,000, or 17%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $297,000, or 2%, of the Company’s revenue for the three months ended June 30, 2026, was generated from our digital publishing customers, compared to $359,000, or 2%, for the same period in 2025. 43 Table of Contents Advertising Technology Advertising technology revenue increased by $1.3 million, or 26%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $6.4 million, or 47%, of the Company’s revenue for the three months ended June 30, 2026, was generated from our advertising technology customers compared to $5.1 million, or 33%, for the same period in 2025. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn 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 $2.4 million, or 33%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $4.9 million, or 36%, of the Company’s revenue for the three months ended June 30, 2026, was generated from our consumer insights customers compared to $7.3 million, or 48%, for the same period in 2025. This decrease was driven by a decrease in contract value for certain larger tier revenue customers. Creative and Media Services Creative and media services revenue decreased by $646,000, or 25%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $2.0 million, or 14%, of the Company’s revenue for the three months ended June 30, 2026, was generated from our creative and media services customers compared to $2.6 million, or 17%, for the same period in 2025. This decrease was driven by a decrease in the number of projects for certain larger tier revenue customers. Cost of Revenue Three Months Ended June 30, 2026 2025 Change (in thousands) Direct salaries and labor costs $ 259 $ 1,864 $ (1,605 ) -86 % Direct project costs 3,331 4,911 (1,580 ) -32 % Non-direct project costs 2,224 1,153 1,071 93 % Publisher costs 4,748 3,700 1,048 28 % Content creation 131 222 (91 ) -41 % Sales commissions 286 316 (30 ) -9 % Other 235 205 30 15 % Total cost of revenue $ 11,214 $ 12,371 $ (1,157 ) -9 % Cost of revenue decreased by $1.2 million, or 9%, for the three months ended June 30, 2026, compared to the same period in 2025. This decrease was due to the factors discussed below: Direct Salaries and Labor Cost Direct salaries and labor cost decreased by $1.6 million, or 86%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $259,000, or 2%, of the Company's cost of revenue for the three months ended June 30, 2026, was a result of direct salaries and labor cost compared to $1.9 million, or 15%, for the same period in 2025. This decrease was primarily attributable to continued headcount reductions within our consumer insights and creative and media services divisions as part of our ongoing cost optimization initiatives. In connection with these workforce reductions, the Company increased its use of third-party consultants to support customer projects, with those costs included within direct project costs. These costs represent salary and labor cost of employees who work directly on customer projects for our consumer insights and creative and media services divisions. Direct Project Cost Direct project cost decreased by $1.6 million, or 32%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $3.3 million, or 30%, of the Company's cost of revenue for the three months ended June 30, 2026, was a result of direct project cost compared to $4.9 million, or 40%, during the same period in 2025. This decrease was primarily attributable to a reduction in customer contracts, partially offset by increased third-party consultant costs incurred to support customer projects following workforce reductions. 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 and creative and media services divisions. 44 Table of Contents Non-Direct Project Cost Non-direct project cost increased by $1.1 million, or 93%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $2.2 million, or 20%, of the Company's cost of revenue for the three months ended June 30, 2026, was a result of non-direct project cost compared to $1.2 million, or 9%, for the same period in 2025. This increase was primarily attributable to the Company's increased use of third-party contractors to support client service activities following workforce reductions. Contractor costs are included within both direct project cost and non-direct project cost depending on the nature of the services provided. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights and creative and media services divisions. Publisher Cost Publisher cost increased by $1.0 million, or 28%, for the three months ended June 30, 2026, compared to the same period in 2025. Approximately $4.7 million, or 42%, of the Company's cost of revenue for the three months ended June 30, 2026, was a result of publisher cost compared to $3.7 million, or 30%, for the same period in 2025. This increase is consistent with the increase noted in revenue from our advertising technology division. These costs represent payments to media providers and website publishers. Gross Margin Gross margin was approximately $2.4 million and $3.0 million for the three months ended June 30, 2026, and 2025, respectively. Our gross margin decreased $619,000, or 20%, for the three months ended June 30, 2026, compared to the same period of 2025. Gross margin as a percentage of revenue decreased to 18% for the three months ended June 30, 2026, compared to 20% for the same period of 2025. General and Administrative Expenses Three Months Ended June 30, 2026 2025 Change (in thousands) Personnel costs $ 1,519 $ 1,820 $ (301 ) -17 % Legal fees 104 202 (98 ) -49 % Professional fees 868 824 44 5 % Insurance 127 131 (4 ) -3 % Depreciation 17 15 2 13 % Amortization 450 485 (35 ) -7 % Data processing 310 289 21 7 % Other 208 255 (47 ) -18 % Total general and administrative expense $ 3,603 $ 4,021 $ (418 ) -10 % Gross margin as a percentage of general and administrative expense 67 % 76 % General and administrative expenses decreased by $418,000, or 10%, for the three months ended June 30, 2026, compared to the same period in 2025. The decrease was due to a combination of factors as discussed below: Personnel Cost Personnel cost decreased by $301,000, or 17%, for the three months ended June 30, 2026, compared to the same period in 2025. This change was mainly driven by a decrease in the Company's head count by a net change of 33 employees. The Company's employee headcount was 82 and 115 at June 30, 2026, and 2025, respectively. Gain on Sale of Intangible Assets During the three months ended June 30, 2026, Company recognized a gain on the sale of intangible assets of approximately $1.1 million, related to the sale of the Mom.com domain name and related social media accounts. The gain resulted from the proceeds received from the transaction exceeding the carrying value of the intangible assets sold. The transaction was completed on June 10, 2026. See Note 20, Sale of Mom.com Domain Name, to the consolidated financial statements. 45 Table of Contents Financing Expense (Income) Three Months Ended June 30, 2026 2025 Change (in thousands) Interest expense $ 3,234 $ 3,141 $ 93 3 % Other expense (income) (124 ) (44 ) (80 ) 182 % Total financing and other expense, net $ 3,110 $ 3,097 $ 13 0 % Financing and other expense, net, increased slightly by $13,000 for the three months ended June 30, 2026, compared to the same period in 2025. Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 Net loss for the six months ended June 30, 2026 was $4.5 million, as compared to a net loss of $7.3 million, for the same period in 2025. The following is our analysis for the period: Six Months Ended June 30, 2026 2025 Change (in thousands) Revenue $ 27,595 $ 29,598 $ (2,003 ) -7 % Cost of revenue 20,868 22,289 (1,421 ) -6 % Gross margin 6,727 7,309 (582 ) -8 % General and administrative expenses 6,169 8,545 (2,376 ) -28 % Gain on sale of intangible assets (1,094 ) - (1,094 ) 0 % Income (loss) from operations 1,652 (1,236 ) 2,888 -234 % Financing and other expense, net (6,153 ) (6,076 ) (77 ) 1 % Net loss $ (4,501 ) $ (7,312 ) $ 2,811 -38 % Gross margin percentage 24 % 25 % -1 % Revenue Revenue decreased by $2.0 million, or 7%, for the six months ended June 30, 2026, compared to the same period in 2025. The Company focuses on digital publishing, advertising technology, consumer insights, and creative and media services. Changes in revenue generated by each such division are set forth below: Six Months Ended June 30, 2026 2025 Change (in thousands) Digital publishing $ 578 $ 942 $ (364 ) -39 % Advertising technology 13,070 9,347 3,723 40 % Consumer insights 9,994 14,371 (4,377 ) -30 % Creative and media services 3,953 4,938 (985 ) -20 % Total revenue $ 27,595 $ 29,598 $ (2,003 ) -7 % Digital Publishing Digital publishing revenue decreased by $364,000, or 39%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $578,000, or 2%, of the Company’s revenue for the six months ended June 30, 2026, was generated from our digital publishing customers, compared to $942,000, or 3%, for the same period in 2025. This reduction was primarily due to macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns. 46 Table of Contents Advertising Technology Advertising technology revenue increased by $3.7 million, or 40%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $13.1 million, or 47%, of the Company’s revenue for the six months ended June 30, 2026, was generated from our advertising technology customers compared to $9.3 million, or 32%, for the same period in 2025. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn 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 $4.4 million, or 30%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $10.0 million, or 36%, of the Company’s revenue for the six months ended June 30, 2026, was generated from our consumer insights customers compared to $14.4 million, or 49%, for the same period in 2025. This decrease was driven by a decrease in contract value for certain larger tier revenue customers. Creative and Media Services Creative and media services revenue decreased by $985,000, or 20%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $4.0 million, or 14%, of the Company’s revenue for the six months ended June 30, 2026, was generated from our creative and media services customers compared to $4.9 million, or 17%, for the same period in 2025. This decrease was driven by a decrease in the number of projects for certain larger tier revenue customers. Cost of Revenue Six Months Ended June 30, 2026 2025 Change (in thousands) Direct salaries and labor costs $ 630 $ 3,677 $ (3,047 ) -83 % Direct project costs 4,528 8,545 (4,017 ) -47 % Non-direct project costs 4,652 2,152 2,500 116 % Publisher costs 9,635 6,725 2,910 43 % Content creation 273 401 (128 ) -32 % Sales commissions 630 575 55 10 % Other 520 214 306 143 % Total cost of revenue $ 20,868 $ 22,289 $ (1,421 ) -6 % Cost of revenue decreased by $1.4 million, or 6%, for the six months ended June 30, 2026, compared to the same period in 2025. This decrease was due to the factors discussed below: Direct Salaries and Labor Cost Direct salaries and labor cost decreased by $3.0 million, or 83%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $630,000, or 3%, of the Company's cost of revenue for the six months ended June 30, 2026, was a result of direct salaries and labor cost compared to $3.7 million, or 16%, for the same period in 2025. This decrease was primarily attributable to continued headcount reductions within our consumer insights and creative and media services divisions as part of our ongoing cost optimization initiatives. In connection with these workforce reductions, the Company increased its use of third-party consultants to support customer projects, with those costs included within direct project costs. These costs represent salary and labor cost of employees who work directly on customer projects for our consumer insights and creative and media services divisions. Direct Project Cost Direct project cost decreased by $4.0 million, or 47%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $4.5 million, or 22%, of the Company's cost of revenue for the six months ended June 30, 2026, was a result of direct project cost compared to $8.5 million, or 38%, during the same period in 2025. This decrease was primarily attributable to a reduction in customer contracts, partially offset by increased third-party consultant costs incurred to support customer projects following workforce reductions. 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 and creative and media services divisions. 47 Table of Contents Non-Direct Project Cost Non-direct project cost increased by $2.5 million, or 116%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $4.7 million, or 22%, of the Company's cost of revenue for the six months ended June 30, 2026, was a result of non-direct project cost compared to $2.2 million, or 10%, for the same period in 2025. This increase was primarily attributable to the Company's increased use of third-party contractors to support client service activities following workforce reductions. Contractor costs are included within both direct project cost and non-direct project cost depending on the nature of the services provided. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights and creative and media services divisions. Publisher Cost Publisher cost increased by $2.9 million, or 43%, for the six months ended June 30, 2026, compared to the same period in 2025. Approximately $9.6 million, or 46%, of the Company's cost of revenue for the six months ended June 30, 2026, was a result of publisher cost compared to $6.7 million, or 30%, for the same period in 2025. This increase is consistent with the increase noted in revenue from our advertising technology division. These costs represent payments to media providers and website publishers. Gross Margin Gross margin was approximately $6.7 million and $7.3 million for the six months ended June 30, 2026, and 2025, respectively. Our gross margin decreased $582,000, or 8%, for the six months ended June 30, 2026, compared to the same period of 2025. Gross margin as a percentage of revenue decreased slightly to 24% for the six months ended June 30, 2026, compared to 25% for the same period of 2025. General and Administrative Expenses Six Months Ended June 30, 2026 2025 Change (in thousands) Personnel costs $ 3,174 $ 3,648 $ (474 ) -13 % Legal fees (1,013 ) 655 (1,668 ) -255 % Professional fees 1,696 1,588 108 7 % Insurance 262 262 - 0 % Depreciation 34 28 6 21 % Amortization 895 970 (75 ) -8 % Data processing 691 922 (231 ) -25 % Other 430 472 (42 ) -9 % Total general and administrative expense $ 6,169 $ 8,545 $ (2,376 ) -28 % Gross margin as a percentage of general and administrative expense 109 % 86 % General and administrative expenses decreased by $2.4 million, or 28%, for the six months ended June 30, 2026, compared to the same period in 2025. The decrease was due to a combination of factors as discussed below: Personnel Cost Personnel cost decreased by $474,000, or 13%, for the six months ended June 30, 2026, compared to the same period in 2025. This change was mainly driven by a decrease in the Company's head count by a net change of 33 employees. The Company's employee headcount was 82 and 115 at June 30, 2026 and 2025, respectively. Legal Fees Legal fees decreased by $1.7 million, or 255%, for the six months ended June 30, 2026, compared to the same period in 2025. This decrease was due largely to a $1.1 million gain related to a non-recurring settlement of litigation with Ladenburg. See Note 15, Commitments and Contingencies, to the consolidated financial statements. 48 Table of Contents Professional Fees Professional fees increased by $108,000, or 7%, for the six months ended June 30, 2026, compared to the same period in 2025. This increase was primarily driven by transaction-related professional fees associated with the sale of the Mom.com domain name and related social media accounts, completed during the second quarter of 2026. See Note 20, Sale of Mom.com Domain Name, to the consolidated financial statements. Data Processing Data processing expenses decreased by $231,000, or 25%, for the six months ended June 30, 2026, compared to the same period in 2025. This decrease was related to a reclassification of certain components of software costs from website expenses to cost of revenue. Gain on Sale of Intangible Assets During the six months ended June 30, 2026, Company recognized a gain on the sale of intangible assets of approximately $1.1 million, related to the sale of the Mom.com domain name and related social media accounts. The gain resulted from the proceeds received from the transaction exceeding the carrying value of the intangible assets sold. The transaction was completed on June 10, 2026. See Note 20, Sale of Mom.com Domain Name, to the consolidated financial statements. Financing Expense (Income) Six Months Ended June 30, 2026 2025 Change (in thousands) Interest expense $ 6,339 $ 6,167 $ 172 3 % Other expense (income) (186 ) (91 ) (95 ) 104 % Total financing and other expense, net $ 6,153 $ 6,076 $ 77 1 % Financing and other expense, net, increased slightly by $77,000, or 1%, for the six months ended June 30, 2026, compared to the same period in 2025. 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 accounting principles generally accepted in the United States of America ("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. 49 Table of Contents A reconciliation of net loss before taxes to non-GAAP EBITDA and Adjusted EBITDA is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) Net loss before income tax $ (3,201 ) $ (4,081 ) $ (4,501 ) $ (7,312 ) Depreciation expense 17 15 34 28 Amortization of intangible assets 450 485 895 970 Gain on sale of intangible assets (1,094 ) - (1,094 ) - Amortization of debt discount 486 556 946 1,189 Other interest expense 5 6 9 12 Interest expense - Centre Lane Senior Secured Credit Facility 2,743 2,579 5,384 4,966 EBITDA (loss) (594 ) (440 ) 1,673 (147 ) Stock compensation expense (3 ) 34 18 71 Non-recurring professional fees 100 20 100 261 Non-recurring legal fees 6 111 6 357 Non-recurring severance expense 301 57 369 57 Adjusted EBITDA (loss) $ (190 ) $ (218 ) $ 2,166 $ 599 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 June 30, 2026, as compared to December 31, 2025: June 30, 2026 December 31, 2025 (in thousands) Total current assets $ 16,250 $ 20,689 Total current liabilities 115,250 116,231 Net working capital (deficit) $ (99,000 ) $ (95,542 ) As of June 30, 2026, we had a cash balance of $1.0 million and no restricted cash, compared with a cash balance of $1.4 million and a restricted cash balance of $1.9 million as of December 31, 2025. The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed below. See "Going Concern" below. Going Concern Historically, the Company has incurred losses, which have resulted in an accumulated deficit of approximately $184.8 million as of June 30, 2026. Cash flows provided by (used in) operating activities were $(483,000) and $1.2 million for the six months ended June 30, 2026, and 2025, respectively. As of June 30, 2026, the Company had a working capital deficit of approximately $99.0 million, inclusive of $1.0 million in cash and cash equivalents. The Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10-Q, are 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 obligations and continue as a going concern. 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 $88.9 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 Facility, or raising equity capital. The ability to access the capital markets depends, in part, upon the volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, and reducing general and administrative expenses, including a reduction in headcount. The ultimate success of these plans is not guaranteed. The accompanying unaudited 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. 50 Table of Contents 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 June 30, 2026, in addition to the acquisition financing provided to the Company effective June 1, 2020, Centre Lane Partners had loaned the Company an additional $39.9 million through Amendments One through Eight (the “Second Out Loans”), Amendments Nine through Sixteen and Nineteen (the “First Out Loans”), and Amendments Seventeen and Twenty-One (the “Third Out Loans”) to provide liquidity to fund operations. 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 of the First Out Loans 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 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. Quarterly amortization payments resumed and were due on December 31, 2025. 51 Table of Contents 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 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 payments made on December 31, 2025, all loan terms, including cash interest rates, reverted to the terms established under the Twenty-Second Amendment. Quarterly amortization payments resumed and were due on March 31, 2026. Effective March 31, 2026, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Fifth Amendment to the Credit Agreement, which applied the following adjustments to loans with outstanding payments due on March 31, 2026, including the following modifications: • Converting the Second Out Loans cash interest due on March 31, 2026, to interest PIK; and • Deferring the Second Out Loans amortization payment due on March 31, 2026, to the maturity date of the Second Out Loans, which is December 20, 2026. • Following payments made on March 31, 2026, all loan terms, including cash interest rates, were reverted to the terms established under the Twenty-Second Amendment. Quarterly amortization payments resumed and were due on June 30, 2026. On May 21, 2026, the Company entered into the Twenty-Sixth Amendment to the Credit Agreement with Centre Lane Partners. The amendment modified certain provisions applicable to the Twenty-First Amendment Term Loans, including prepayment provisions, and provided for the waiver of certain potential events of default related to the timing of required prepayments following settlement of the Ladenburg litigation and release of the related bond collateral. In connection with the amendment, approximately $994,000 of restricted cash collateral securing the Ladenburg litigation bond was applied to reduce the outstanding principal balance of the Twenty-First Amendment Term Loan. The remaining restricted cash collateral was released and returned to Centre Lane Partners as of June 30, 2026. On June 10, 2026, in connection with the sale of the Mom.com domain name and related assets (as described further in Note 20, Sale of Mom.com Domain Name, to the consolidated financial statements), the Company obtained a consent of Centre Lane Partners under the Credit Agreement to the sale. Pursuant to the consent, the Company agreed to apply approximately $613,000 of the proceeds from the sale to prepay a portion of the First Out Term Loans outstanding under the Centre Lane Senior Secured Credit Facility. The prepayment was applied in full satisfaction of the amortization payment due on the First Out Term Loans on June 30, 2026. Further, the consent provided that all other amounts due under the Centre Lane Senior Secured Credit Facility on June 30, 2026, including the amortization payment due on the Second Out Loans, would be paid-in-kind instead of paid in cash. Effective June 30, 2026, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Seventh Amendment to the Credit Agreement, which applied the following adjustments to loans with outstanding payments due on June 30, 2026, including the following modifications: • Converting the Second Out Loans cash interest due on June 30, 2026, to interest PIK; and • Deferring the Second Out Loans amortization payment due on June 30, 2026, to the maturity date of the Second Out Loans, which is December 20, 2026. • Following payments made as of June 30, 2026, all loan terms, including cash interest rates, were reverted to the terms established under the Twenty-Second Amendment. Quarterly amortization payments resumed and are due on September 30, 2026. As of June 30, 2026, we owed Centre Lane $88.8 million under the Centre Lane Senior Secured Credit Facility. Of this amount, $1.4 million is due on September 30, 2026, and the remaining principal balance of $87.4 million is due on December 20, 2026. Pursuant to the terms of the amended credit facility, the total contractual amount payable at maturity, including interest PIK, is approximately $94.9 million, consistent with the amount disclosed in the Company’s Current Report on Form 8-K filed on July 7, 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. 52 Table of Contents Summary of Cash Flows The following table summarizes cash flow activities during the six months ended June 30, 2026, and 2025: Six Months Ended June 30, 2026 2025 (in thousands) Net cash provided by (used in) operating activities $ (483 ) $ 1,234 Net cash provided by (used in) investing activities 1,013 (49 ) Net cash used in financing activities (2,733 ) (2,051 ) Net decrease in cash and cash equivalents, net of impact of exchange rates $ (2,203 ) $ (868 ) 53 Table of Contents 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 six months ended June 30, 2026, cash used in operating activities was $483,000. The primary factors affecting our operating cash flows during the period were our net loss of $4.5 million, adjusted for non-cash charges of $895,000 for amortization of intangible assets, $946,000 of amortization of debt discount, $5.3 million in interest paid-in-kind on the Centre Lane Senior Secured Credit Facility, $1.1 million of a gain on the sale of intangible assets, and a $2.2 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $4.6 million decrease in accounts payable and accrued expenses and a $2.0 million decrease in other liabilities, partially offset by a $2.1 million increase in deferred revenue and a $2.1 million decrease in accounts receivable. For the six months ended June 30, 2025, cash provided by operating activities was $1.2 million. The primary factors affecting our operating cash flows during the period were our net loss of $7.3 million, adjusted for non-cash charges of $970,000 for amortization of intangible assets, $1.2 million of amortization of debt discount, $4.5 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, and a $1.7 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $3.7 million increase in deferred revenue, a $904,000 decrease in accounts receivable, partially offset by a $2.0 million decrease in other liabilities. Investing Activities For the six months ended June 30, 2026, cash provided by investing activities was $1.0 million, which was primarily attributable to the proceeds from the sale of the Mom.com domain name. See Note 20, Sale of Mom.com Domain Name, to the consolidated financial statements. For the six months ended June 30, 2025, cash used in investing activities was $49,000, attributable to the purchase of property and equipment. Financing Activities For the six months ended June 30, 2026, cash used in financing activities was $2.7 million, which was primarily attributable to repayments of principal on the Centre Lane Senior Secured Credit Facility. For the six months ended June 30, 2025, cash used in financing activities was $2.1 million, which was primarily attributable to repayments of principal on the Centre Lane Senior Secured Credit Facility. Contractual Obligations and Commitments There were no other material changes in our contractual obligations and commitments from those disclosed above in Note 10, Centre Lane Senior Secured Credit Facility, and Note 11, Leases, to the consolidated financial statements, and in the Annual Report on Form 10-K for the year ended December 31, 2025. Off-Balance Sheet Arrangements As of June 30, 2026, and December 31, 2025, 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. 54 Table of Contents Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of our unaudited consolidated financial statements as well as reported amounts of revenue and expenses during the periods presented. Our unaudited consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. Significant estimates included in the accompanying consolidated financial statements include, valuation of goodwill and intangible assets, allowance for current expected credit losses, the determination of the relative selling prices of our services, percentage of completion for revenue recognition, estimates of amortization period for intangible assets, estimates of depreciation period for property and equipment, discount rates used in the valuation of right-of-use assets and lease liabilities, litigation reserves, the valuation of equity-based transactions, the valuation of the Centre Lane Senior Secured Facility to determine whether a debt modification or extinguishment has occurred, and the valuation allowance on deferred tax assets. Critical accounting policies are those policies that management believes are very important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or otherwise complex. For further information on all of our significant accounting policies, see the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Recent Accounting Pronouncements Recent accounting pronouncements are detailed in the “Summary of Significant Accounting Policies” in Note 2 to our unaudited consolidated financial statements. Smaller Reporting Company Status We are a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may continue to be a smaller reporting company even though we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. 55 Table of Contents