Newsmax Inc. 10-K

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Readers should carefully review this document and the other documents filed by Newsmax Inc. with the Securities and Exchange Commission (the “SEC”). This section should be read together with the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. The consolidated financial statements are referred to as the “Financial Statements” herein. Overview of the Company's Business Founded in 1998 as a digital media brand, Newsmax Inc. entered the cable news market in 2014. Since then, the network has had an astonishing rise, climbing into the top tier of cable channels, and is now the fourth highest-rated cable news channel in the United States, just behind CNN. We have developed a significant audience, reaching over 58 million Americans each month through its television broadcasts and multi-platform content, and has demonstrated remarkable growth. As of December 31, 2025 revenues are up 353% since 2019. In June 2024, a Reuters global survey of media found Newsmax Inc. was one of the nation’s “top news brands,” identifying the network as one of only 12 major media outlets Americans are turning to regularly. For the second year in a row, Newsmax was voted the "most trusted" cable news outlet in the nation by attendees at the 2025 Conservative Political Action Conference. Newsmax Inc. is a holding company that owns 100% of the equity interests of its operating company Newsmax Media, Inc. and the other Subsidiaries operate the businesses described in this Annual Report, and none of those businesses are operated by Newsmax Inc. Newsmax Inc. is a television broadcaster and multi-platform content publisher that produces original news and editorial content for consumers through various media outlets, including through its TV news channels, digital and print publications, its popular website Newsmax.com and affiliated sites, its syndicated radio show and podcasts, social media accounts and other platforms in order to sell advertising to third-party marketers as well as offering paid subscriptions to more than a dozen digital and print products sold by Newsmax Media. Newsmax Broadcasting content, notably its Newsmax channel, is carried by all major linear cable and satellite pay TV platforms, or MVPDs. Newsmax Broadcasting also airs its World at War military documentary channel on several MVPDs. Newsmax2, Newsmax Broadcasting's free streaming and FAST channel is carried on almost all top OTT streaming platforms. Newsmax Broadcasting's TV content is now available to over 100 million homes in the U.S. In addition, international companies have licensed Newsmax Broadcasting’s channels and brand for regional, national and local television and digital media purposes. Certain licensing agreements currently in place have allowed Newsmax Broadcasting’s partners to provide cable television and digital news under the Newsmax brand to viewers in several European countries, including Republic of Serbia, Republic of Croatia, Bosnia and Herzegovina, Montenegro, North Macedonia, Slovenia, Albania, Hungary, Poland, Bulgaria, Slovakia, Romania, and the Czech Republic. Newsmax Inc. operates several business lines through its subsidiaries and divisions, creating a synergistic effect on audience growth, revenues and customer acquisition. These business lines are grouped into two separate reportable segments which consist of Broadcasting and Digital: Broadcasting - The broadcast segment of our business produces and licenses news, business news and lifestyle content for distribution primarily through multichannel video programming distributors (“MVPDs”) including cable television systems, direct broadcast satellite operators and telecommunication companies, primarily in the United States, generating revenue through (1) placement of advertisements on our broadcast content, (2) subscriptions to our broadcast content, and (3) affiliate fees from the MVPDs. The components of Broadcasting are as follows: 42 • Newsmax Broadcasting provides programming through three channels, Newsmax, Newsmax2, and World at War. Newsmax and World at War are linear cable channels available on pay TV services, and Newsmax2, is a free streaming channel. Both Newsmax and Newsmax2 offer 24/7 television news and informational programming channels which are distributed through both cable and digital streaming platforms. World at War offers 24/7 historical documentaries and movies that have a primary focus on the wars of the past 150 years and the people who fought them. • Newsmax Radio provides programming through a syndicated "Rob Carson Show" as well as widely-available podcasts. These podcasts include “The Newsmax Daily with Tony Marino,” a talk show with radio personality Gerry Callahan and “Greg Kelly Reports” with its TV host Greg Kelly. Digital - The digital segment generates revenues through (1) online advertising, including online display, email advertising, other online placements and print advertisements, (2) subscriptions, including our collection of specialized health and financial newsletters, Newsmax Magazine and four online membership programs, and (3) e-commerce, primarily through our subsidiaries that sell nutraceuticals and nonfiction books on political, financial and health-related topics. The components of Digital are as follows: • Humanix Publishing is a print and e-book publishing house that publishes books in the areas of politics, health, personal finance, history, religion and current affairs. Under Newsmax ownership, Humanix Publishing has published approximately 100 titles, including seven New York Times bestsellers. We use our published books as free premiums when offering subscriptions to their publications, including Newsmax Magazine and our health and financial newsletters. • Medix Select offers and sells 22 nutraceutical products. Medix Select ’s products are aimed at Newsmax Media’s core demographic of consumers and cross-sold through Newsmax Media’s health newsletters. These supplements have been certified as compliant with current Good Manufacturing Practices by The Natural Products Association and are typically formulated by medical doctors who also write and edit Newsmax Media’s health newsletters. Newsmax Media retains all intellectual property rights to the supplement formulations created for Medix Select . The natural supplements seek to help customers alleviate pain, reduce blood glucose, prevent heart disease, improve energy and mental acuity, and, in general, improve overall wellness. All Medix Select supplements are manufactured at third-party manufacturing facilities that are FDA registered and meet current Good Manufacturing Practices standards. All Medix Select supplements are offered online and are usually purchased as part of a recurring subscription program. • Newsmax Media Digital Advertising handles advertising and marketing offers and sales to third party companies and agencies associated with our digital segment. Newsmax Digital Advertising sells placements for display and native website ads, email sponsorships in Newsmax News Alerts, sponsorships for SMS/text and push notification, print ads for our Newsmax Magazine, inserts for our newsletters, and podcast offerings. • Newsmax Publications publishes and manages Newsmax Media’s paid subscription business with over 300,000 subscribers. This division currently publishes Newsmax Magazine, five health newsletters including Health Radar, Dr. Crandall’s Heart & Health; The Blaylock Wellness Report; financial newsletters including The Dividend Machine, High Income Factor and Financial Intelligence Report, and Newsmax Platinum, our online publication. • ROI Media Strategies provides media buying and strategy services to third party companies and agencies, helping companies to market their offerings across all channels of marketing, including email, broadcast, podcasts, digital, and print. • Crown Atlantic Insurance is an insurance agency licensed in 50 states of the U.S. and the District of Columbia with an emphasis on life insurance and retirement solutions. Newsmax Media’s subsidiaries use Crown Atlantic Insurance for the purposes of marketing annuities, life insurance and other insurance offerings across their platforms. The Company is not currently marketing such products but expects to in the near future. 43 Growth Strategies and Outlook Maintain and enhance leading position in news and other content production. Newsmax Media has been a leader in digital news and with the continued growth of its television service, plans to continue to invest in online content and offerings. Additionally, Newsmax Broadcastings plans additional talent acquisition and programming efforts that we expect will raise the profile and visibility of the Newsmax brand and its affiliates to a broader audience. With expanded content offerings, Newsmax Media plans to expand its reach and value to audiences through traditional platform and direct-to-consumer services. Increase revenue growth through the continued delivery of premium content. Newsmax Media will continue to focus on creating high-quality content delivered through diversified publishing platforms that offers value to its audience, advertisers and distribution partners. As a live linear content on cable, the Newsmax channel continues to offer a unique perspective and voice that resonates with audiences across those platforms and further develop a dedicated and loyal audience. Expand television and digital distribution offerings, increasing complementary sources of revenues. Newsmax Broadcasting’s key goals are to maximize its subscriber penetration on traditional cable platforms, growing its subscription base for Newsmax+, while increasing audiences for its news channels, Newsmax, Newsmax2 and World at War, develop its footprint in international markets - all while creating additional revenue opportunities through advertising sales. Newsmax Media and Newsmax Broadcasting will also further develop its delivery strategies on emerging content and social platforms to increase interaction with its audience. Newsmax, as a relatively new network, has potential for additional distribution growth, and growth of its advertising and affiliate fee revenue, which was a new revenue stream that began in 2024. Linear Pay-TV is primarily driven by live sports, news and events, and as media companies continue to focus on expanding their streaming service offerings, news consumption has risen in importance. Trends and Other Factors Impacting Our Performance Our broadcast segment derives the majority of its revenues from advertising. For the year ended December 31, 2025, we generated revenues of approximately $189.3 million, of which 63.6% was generated from advertising in the broadcast and digital segments, 16.2% was generated from affiliate fee revenue, 14.5% was generated from subscriptions for publications including Newsmax+ and 5.7% was generated from other lines of business which are primarily e-commerce sales of nutraceuticals, books and licensing fees. For the year ended December 31, 2024, we generated revenues of $171.0 million, of which 63.8% was generated from advertising in the broadcast and digital segments, 15.6% was generated from affiliate fee revenue, 15.7% was generated from subscriptions for publications including Newsmax+ and 4.9% was generated from other lines of business which are primarily e-commerce sales of nutraceuticals, books and licensing fees. The cable network programming and television industries continue to evolve rapidly, with changes in technology leading to alternative methods for the delivery and storage of digital content. These technological advancements have driven changes in consumer behavior as consumers now have more control over when, where and how they consume content. Consumer preferences have evolved toward lower cost alternatives, including direct-to-consumer offerings. These changes in technologies and consumer behavior have contributed to declines in the number of subscribers to MVPD services, and these declines are expected to continue and possibly accelerate in the future. Still, Newsmax sees its valuable live news content as a key driver in the Pay-TV ecosystem, which we expect will remain profitable for the foreseeable future. At the same time, technological changes have increased advertisers’ options for reaching their target audiences. There has been a substantial increase in the availability of content with reduced advertising or without advertising at all. As consumers switch to digital consumption of video content, there is still to be developed a consistent, broadly accepted measure of multiplatform audiences across the industry. Furthermore, the pricing and volume of advertising may be affected by shifts in spending from more traditional media and toward digital and mobile offerings, which can deliver targeted advertising more promptly, or toward newer ways of purchasing advertising. 44 We operate in a highly competitive industry and its performance is dependent, to a large extent, on the impact of changes in consumer behavior as a result of new technologies, the sale of advertising, the maintenance, renewal and terms of its carriage, affiliation and content agreements and programming rights, the popularity of its content, general economic conditions (including financial market conditions), our ability to manage our businesses effectively, and its relative strength and leverage in the industry. For more information, see “Risk Factors.” Components of our Results of Operations Advertising Revenue Advertising revenue is derived from the sale of advertising on our cable television, email database, in our magazine and related publications, or on our website. Revenue related to the sale of advertising in the broadcasting segment is recognized at the time of broadcast. Revenue related to our digital segment is recognized when display or other digital advertisement records are placed on various digital media. Revenue related to our magazine and related publications is recognized when the ad is displayed in the printed document. Each advertisement is determined to be a distinct performance obligation that is satisfied at the point in time when such advertisements are published/aired. We record revenue from contracts that are entered into between us and our customers, primarily advertising agencies and direct advertisers, at the amount charged for the services. Advertising contracts, which are generally short-term, are billed monthly for the services provided during the month, with payments due shortly thereafter. Cash payments received prior to services rendered result in deferred revenue, which is then recognized as revenue when the advertising time or space is actually provided. We also enter into agreements with over-the-top distribution platforms to distribute our news channel. Pursuant to our distribution agreements, advertising revenues are earned based on an allocation of the fee determined by the number of impressions received. These contracts represent a single performance obligation recognized over time under the series guidance. Revenue is recognized upon delivery of the content over the course of an over-the-top distribution agreement term based on time elapsed, as this best depicts the simultaneous consumption and delivery of the services. We bill OTT customers monthly over the life of the contract. We have an unconditional right to receive payment of the amount billed generally within 30 days from the invoice date. Affiliate Fee Revenue We generate affiliate fee revenue from agreements with MVPDs for cable network. Affiliate fee revenue is recognized as we continuously make the programming available to the customer over the term of the agreement. For contracts with affiliate fees based on the number of the affiliate’s subscribers, revenues are recognized based on the contractual rate multiplied by the number of subscribers each period. Affiliate contracts are generally multi-year contracts billed monthly. Subscription Revenue We sell magazines to consumers through subscriptions. Each subscription is determined to be a distinct performance obligation that is satisfied over the term of the subscription, normally one (1) to five (5) years. Payments for subscriptions received in advance of the publication are recorded as deferred revenue and recognized as revenue over the contract term, as this best represents the transfer of control of the services to the consumer. We record taxes collected from customers and remits to governmental authorities on a net basis. Newsmax+ is a subscription service that provides our broadcast content directly to consumers either on a monthly or annual basis. Monthly subscriptions are recognized as revenue in the month it was earned. Annual subscriptions are initially recorded as deferred revenue when payment is received and recognized as revenue ratably on a monthly basis over the term of the contract. Product Sales Product sales are derived from the sales of books, audio and video, dietary supplements, television production and distribution, and other items advertised on our website. Supplement, books, media and other product sales are recognized at the point in time control transfers to the customer, which is when the product is shipped. An estimate for allowances is determined for returns and refunds at the point in time when revenue is recognized. We record taxes collected from customers and remits to governmental authorities on a net basis. 45 As a practical expedient, we recognize any incremental costs of obtaining contracts as expense as the amortization period is considered to be a year or less. Also as a practical expedient, we account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and Handling Cost Amounts billed to third-party customers for shipping and handling are included as a component of revenue. Shipping and handling costs incurred are included as a component of cost of products sold. Cost of Revenues Cost of revenues consists primarily of compensation-related expenses and costs incurred for the publishing of editorial, promotional, and news content across all platforms, as well as amounts due to third party websites and platforms to fulfil customers’ advertising campaigns. Web hosting and advertising serving platform costs are also included in cost of services. Cost of product sold consists primarily of cost of inventory sold, fulfillment costs and compensation. General and Administrative expenses General and administrative expense consists of compensation-related expenses for corporate employees. Also, it consists of expenses for advertising, facilities, professional services fees, insurance costs, legal fees, other public company costs, corporate costs, other corporate matters consisting principally of litigation and settlements, and other general overhead costs. Litigation and Settlements From time to time, we are subject to lawsuits alleging defamation or disparagement. These include lawsuits filed by Smartmatic USA Corp. and certain of its affiliates (collectively, “Smartmatic”) and Dominion Voting Systems, Inc. and certain of its affiliates (collectively, “Dominion”) filed during 2023. These expenses are recorded as part of general and administrative expenses in our consolidated statement of operations. On September 26, 2024, we entered into a settlement agreement with Smartmatic pursuant to which the parties agreed to resolve the lawsuits among them. We agreed to pay a settlement of approximately $40.0 million payable over time and granted a five year warrant to purchase 2,000 shares of Series B preferred stock at an exercise price of $5,000 per share. Following the conversion of the underlying Series B preferred stock into Class B common stock in connection with our March 28, 2025 initial public offering, Digital Offering, LLC has a warrant to purchase 900 shares of Class B common stock at an exercise price of $5,000 per share. Refer to Note 15. Equity for details of the warrant. The settlement expense, inclusive of the warrant, was included in other corporate matters in the consolidated statements of operations and comprehensive (loss) for the year ended December 31, 2024. The $40.0 million payable over time was recorded within settlement liability on the consolidated balance sheet as of December 31, 2024. As of December 31, 2025 the outstanding balance was fully satisfied. On August 15, 2025, Newsmax Media, Inc. and Newsmax Broadcasting, LLC entered into a settlement agreement with Dominion Voting Systems, Inc. and certain of its affiliates (“Dominion”), pursuant to which such parties agreed to resolve the lawsuit among them for a total amount of $67.0 million to be paid in the current and next two fiscal years. The payments will be made in three installments: (1) $27.0 million was paid on August 15, 2025; (2) $20.0 million on or before January 15, 2026; and (3) $20.0 million on or before January 15, 2027. The settlement expense is included in other corporate matters in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2025. The $40.0 million payable over time is recorded within settlement liability on the consolidated balance sheet at December 31, 2025. As of March 26, 2026 the outstanding balance of the settlement is $20 million. 46 Results of Operations Year ended December 31, 2025 versus December 31, 2024 The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report. The following table sets forth our results of operations data for the year ended December 31, 2025, as compared to the year ended December 31, 2024: Year ended December 31, 2025 2024 $ Change % Change Revenues Service Revenues Advertising $ 120,285,447 $ 109,128,471 $ 11,156,976 10.2 % Affiliate fee 30,645,767 26,661,701 3,984,066 14.9 % Subscription 27,517,112 26,907,098 610,014 2.3 % Other 3,553,256 2,308,856 1,244,400 53.9 % Product Sales 7,253,340 6,010,328 1,243,012 20.7 % Total revenues 189,254,922 171,016,454 18,238,467 10.7 % Cost of revenues 114,832,548 93,021,281 21,811,267 23.4 % Gross profit 74,422,374 77,995,173 (3,572,800) (4.6) % General & administrative 174,276,942 147,803,414 26,473,528 17.9 % Other (expense) income, net 359,450 (2,363,688) 2,723,138 115.2 % Loss before income tax expense (99,495,119) (72,171,929) (27,323,189) (37.9) % Income tax expense — — — — % Net loss $ (99,495,119) $ (72,171,929) $ (27,323,189) (37.9) % Revenues Revenues increased by approximately $18.2 million, or 10.7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. Advertising revenue increased by approximately $11.2 million as a result of higher linear cable and satellite advertising from higher Nielsen ratings in key dayparts offset by reductions in digital advertising driven by coming out of a political voting year. Affiliate fee revenues increased by approximately $4.0 million due to new contractual relationships as well as rate increases for renewals. Subscription revenue increased by approximately $0.6 million with increases to Newsmax+ offset by reductions in publication subscriptions due to decreased new customer acquisition. Other revenue increased by approximately $1.2 million primarily driven by new international license deals. Product Sales increased by approximately $1.2 million as compared to prior year primarily driven by several books including Pagan Threat and Be Smart Pay Zero Taxes. Cost of Revenues Cost of revenues increased by approximately $21.8 million, or 23.4%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. Payroll and production-related expenses increased by $13.5 million, primarily reflecting strategic investments in headcount, programming and production capabilities to support the ongoing expansion and enhancement of our content offering. Other activity includes stock-based compensation expense of $7.0 million, transmission expense of $1.5 million and remote shoots of $1.0 million offset by a decrease in distribution costs of $1.2 million. Gross Profit Gross profit decreased by approximately $3.6 million, or 4.6%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. Gross profit as a percent of revenues decreased to 39.3% for the year ended December 31, 2025 from 45.6% for the year ended December 31, 2024. Gross profit decreased mainly due to an increase in cost of sales related to production head count and stock-based compensation. 47 General and Administrative Expense General and administrative expense increased by approximately $26.5 million or 17.9%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was driven by increases in legal settlement expense along with increased marketing costs, travel expense related to news coverage, stock-based compensation, and professional and legal services around becoming a public company. Other (Expense) Income, Net Other (expense) income net decreased by approximately $2.7 million, or 115.2%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to increases in income items interest and dividend income as well as increases in unrealized gains on marketable securities offset by non-cash mark to market adjustments for the derivative and warrant liabilities. Segment Analysis The following tables set forth our Revenues and Segment Adjusted EBITDA for the year ended December 31, 2025, as compared to the year ended December 31, 2024: 2025 2024 $ Change % Change Revenues Broadcasting $ 153,338,799 $ 130,708,404 $ 22,630,395 17.3 % Digital 35,916,122 40,308,050 (4,391,928) (10.9) % Total revenues $ 189,254,921 $ 171,016,454 $ 18,238,466 10.7 % 2025 2024 $ Change % Change Segment Adjusted EBITDA Broadcasting $ 10,739,437 $ 19,726,103 $ (8,986,666) (45.6) % Digital (17,235,837) (9,478,015) (7,757,822) (81.9) % Adjusted EBITDA $ (6,496,400) $ 10,248,088 $ (16,744,487) (163.4) % 48 Broadcasting 2025 2024 $ Change % Change Revenues Advertising $ 104,279,886 $ 89,379,946 $ 14,899,940 16.7 % Affiliate fee 30,645,767 26,661,701 3,984,066 14.9 % Subscription 14,860,104 12,358,641 2,501,463 20.2 % Other 3,553,042 2,308,116 1,244,926 53.9 % Total revenues 153,338,799 130,708,404 22,630,395 17.3 % Cost of revenues 86,467,319 71,000,230 15,467,089 21.8 % Gross profit 66,871,480 59,708,174 7,163,306 12.0 % General & administrative 56,132,043 39,982,071 16,149,972 40.4 % Segment Adjusted EBITDA $ 10,739,437 $ 19,726,103 $ (8,986,666) (45.6) % Broadcast Revenues, from our key segment for the Company, increased by $22.6 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to an increase in advertising revenue of approximately $14.9 million due to higher ratings in key dayparts and pricing and expanded reach from new affiliate agreements, affiliate fee revenue of approximately $4.0 million which is attributed to new contractual relationships starting later in 2024 as well as rate increases for 2025 and due to subscription revenue of approximately $2.5 million from Newsmax+. Broadcast Segment Adjusted EBITDA decreased for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to a increases cost of revenues and G&A expense related to increased headcount, programming and production costs on our main Newsmax TV channel as well as continued investment into Newsmax 2 for OTT to build out the programming to better monetize Newsmax 2 of FAST channels. Additional increases consisted of marketing for TV, audit, consulting and legal fees associated with becoming a public company and costs associated with coverage of the funeral for Pope Francis and the papal conclave for the election of Pope Leo XIV and the death of Charlie Kirk. These expense increases were offset by reductions in distribution and carriage costs, fulfillment costs and bank fees. Digital 2025 2024 $ Change % Change Revenues Advertising $ 16,005,560 $ 19,748,525 $ (3,742,965) (19.0) % Subscription 12,657,008 14,548,457 (1,891,449) (13.0) % Product sales 7,253,340 6,010,329 1,243,011 20.7 % Other 214 739 (525) (71.0) % Total revenues 35,916,122 40,308,050 (4,391,928) (10.9) % Cost of revenues 21,347,866 22,021,051 (673,185) (3.1) % Gross profit 14,568,256 18,286,999 (3,718,743) (20.3) % General & administrative 31,804,093 27,765,014 4,039,079 14.5 % Segment Adjusted EBITDA $ (17,235,837) $ (9,478,015) $ (7,757,822) (81.9) % Digital Revenues decreased by $4.4 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to decreases in advertising revenue of approximately $3.7 million and subscription revenue of approximately $1.9 million offset by increases in product sales of approximately $1.2 million. Such decreases are not unusual in the year after a U.S. presidential election. Digital Segment Adjusted EBITDA decreased for the year ended December 31, 2025, as compared to year ended December 31, 2024, due to additional headcount and increased audit expenses related to capital raise. 49 Year ended December 31, 2025 versus year ended December 31, 2024 The following table reconciles Net loss to Adjusted EBITDA for the year ended December 31, 2025, as compared to the year ended December 31, 2024: 2025 2024 Net loss $ (99,495,119) $ (72,171,929) Add Depreciation 2,789,875 3,115,635 Interest, net (7,015,564) (488,962) Unrealized (gain) loss on marketable securities (1,594,221) 290,081 Stock-based compensation 11,955,881 — Other corporate matters (1) 78,612,413 76,940,693 Other, net (2) 8,250,335 2,562,569 Income tax expense — — Adjusted EBITDA $ (6,496,400) $ 10,248,087 Please see the section titled “Non-GAAP Financial Measures” for a reconciliation of Net loss to Adjusted EBITDA and an explanation of why we consider Adjusted EBITDA to be a helpful measure for investors. (1) For the years ended December 31, 2025 and 2024, primarily relates to the settlement of two lawsuits. See Footnote 12 - Legal in the notes to the consolidated financial statements for additional background on these legal matters. (2) For the year ended December 31, 2025, Other, net primarily consisted of the final fair market adjustments of the warrant liability and derivative liability totaling $1.8 million and $6.1 million, respectively. Liquidity and Capital Resources We had approximately $20.4 million of cash and cash equivalents and $110.9 million in investments as of December 31, 2025. Our primary sources of liquidity during the year ended December 31, 2025 include cash on hand and cash generated from financing activities mainly due to receiving proceeds from issuance of convertible preferred stock and issuance of common stock during our March 2025 IPO. On September 26, 2024, we entered into a settlement agreement with Smartmatic pursuant to which the parties agreed to resolve the lawsuits among them. We agreed to pay a settlement of approximately $40 million payable over time and granted a five year warrant to purchase 2,000 of Series B preferred stock at an exercise price of $5,000 per share. Following the conversion of the underlying Series B preferred stock into Class B common stock in connection with our March 28, 2025 initial public offering, Smartmatic has a five year warrant to purchase 1,333,333 shares of Class B common stock at an exercise price of $7.50 per share. Refer to Note 12. Legal for details of the settlement. As of the date hereof, we have made all payments required under the settlement agreement. On August, 15, 2025, Newsmax Media, Inc. and Newsmax Broadcasting, LLC entered into a settlement agreement with Dominion Voting Systems, Inc. and certain of its affiliates (“Dominion”), pursuant to which such parties agreed to resolve the lawsuit among them for a total amount of $67.0 million to be paid in the current and next two fiscal years. The payments will be made in three installments: (1) $27.0 million was paid on August 15, 2025; (2) $20.0 million on or before January 15, 2026; and (3) $20.0 million on or before January 15, 2027. In 2023, the Company entered into a settlement agreement with a commercial counterparty for $41.3 million. As of December 31, 2025, and pursuant to the payment schedule associated with this settlement agreement, the Company has a total of approximately $29.6 million remaining to be paid over time until 2029. In addition to settlement-related obligations, the Company has material operating and finance lease commitments for office and studio space in Florida, New York and Washington, D.C. As of December 31, 2025, the Company’s total undiscounted future minimum lease payments were approximately $10.4 million, including $4.5 million due in 2026, $1.8 million due in 2027, $1.5 million due in 2028, $1.3 million due in 2029 and $1.2 million due in 2030, as further described in Note 6 – Leases to the Consolidated Financial Statements. The Company expects to fund these lease obligations through cash on hand and cash generated from operations. 50 We completed the Private Placement on February 27, 2025, having sold 45,000 shares of our Series B Preferred Stock, resulting in total net proceeds to us of $206.6 million, consisting of $80.7 million and $125.8 million received during the years ended December 31, 2025 and 2024, respectively. We completed our Initial Public Offering on March 28, 2025 resulting in net proceeds of $66.4 million. The principal uses of cash that affect our liquidity position include the following: operational expenditures including production cost, marketing and promotional expenses, expenses related to broadcasting our programming, employee and facility costs, capital expenditures, and legal fees and settlements. We believe these sources of liquidity are sufficient to meet our business operating requirements and its capital expenditures for the next 12 months. Convertible Preferred Stock Prior to the March 28, 2025 initial public offering, we had outstanding Convertible and Redeemable Preferred Stock, which all converted in connection with the initial public offering. The conversion included accumulated dividends on the Redeemable Preferred Stock except for those shares held by two preferred stockholders who elected to receive their accumulated dividends in cash on the initial public offering date. As of December 31, 2025, we do not have Convertible and Redeemable Preferred Stock outstanding. Cash and Cash Equivalents As of December 31, 2025, cash and cash equivalents balance was approximately $20.4 million. Cash and cash equivalents consist of interest-bearing deposit accounts and money market accounts managed by third-party financial institutions, and highly liquid investments with maturities of three months or less. The existing cash and cash equivalents, along with projected cash flows, are sufficient to fund our liquidity needs for the next 12 months. At this time, we do not anticipate the need to raise additional capital. The following table shows cash flows from operating activities, investing activities and financing activities for: December 31, 2025 2024 Net cash provided by (used in): Operating activities $ (104,454,878) $ (48,687,432) Investing activities (53,123,819) (58,428,592) Financing activities 153,958,832 125,131,700 Operating Activities Net cash used in operating activities for the year ended December 31, 2025 was $104.5 million and was primarily driven by the $40.0 million funding of the of the settlement escrow, settlement-related payments and higher operating expenses, partially offset by favorable changes in working capital. Net cash used in operating activities for the year ended December 31, 2024 was $48.7 million and was primarily driven by higher operating expenses, partially offset by favorable changes in working capital. Investing Activities Net cash used in investing activities for the year ended December 31, 2025 was $53.1 million primarily due to an increase in the purchase of investments offset by proceeds from the sale and maturity of investments. Net cash used in investing activities for the year ended December 31, 2024 was $58.4 million primarily due to an increase in the purchase of investments. Financing Activities Net cash provided by financing activities for the year ended December 31, 2025 was $154.0 million primarily due to proceeds received from issuance of convertible stock and common stock in the initial public offering and the Reg D financing. 51 Net cash provided by financing activities for the year ended December 31, 2024 was $125.1 million primarily due to a proceeds received from issuance of convertible stock. Non-GAAP Financial Measures In addition to our results determined in accordance with accounting principles generally accepted in the United States, or GAAP, we believe the following non-GAAP financial measure is useful in evaluating our operating performance. Adjusted EBITDA is defined as revenues less cost of revenues and general and administrative expenses and does not include depreciation and amortization, interest expense, net, impairment charges, unrealized gains (losses) on marketable securities, other corporate matters (consisting primarily of certain litigation expenses, and related fees, for specific legal proceedings and settlements that we have determined are not representative of the Company's core operating performance), other, net, and income tax expense. Management believes that information about Adjusted EBITDA assists all users of our financial statements by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income, thus providing insight into both operations and the other factors that affect reported results. Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of our business and its enterprise value against historical data and competitors’ data, although historical results, including Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences). Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing our financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Critical Accounting Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience as well as various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is contained in the financial statements set forth in Item 15(a) under the caption “Consolidated Financial Statements” as part of this Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 52