RUM Group Inc. 10-K

Item 8. Financial Statements and Supplementary Data Reports of Independent Registered Public Accounting Firm (Moss Adams LLP, Seattle, Washington, PCAOB ID: 659) F-2 Consolidated Statements of Operations F-3 Consolidated Balance Sheets F-4 Consolidated Statements of Shareholders’ (Deficit) Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 1. Overview and Basis of Presentation F-7 2. Summary of Significant Accounting Policies F-8 3. Acquisitions F-19 4. Revenue from Contracts with Customers F-23 5. Cash, Cash Equivalents, and Marketable Securities F-23 6. Property and Equipment F-24 7. Right-of-Use Assets and Lease Liabilities F-24 8. Intangible Assets F-25 9. Goodwill F-26 10. Income Taxes F-26 11. Derivative Liability F-28 12. Other Liability F-29 13. Shareholders’ (Deficit) Equity F-29 14. Share-Based Compensation Expense F-32 15. Loss per Share F-36 16. Commitments and Contingencies F-36 17. Fair Value Measurements F-37 18. Credit and Concentration Risks F-38 19. Related Party Transactions F-38 20. Segment Information F-39 21. Subsequent Events F-40 53 Rumble Inc. Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 Rumble Inc. Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 Contents Report of Independent Registered Public Accounting Firm (Moss Adams LLP, PCAOB ID: 659 ) F-2 Consolidated Statements of Operations F- 3 Consolidated Balance Sheets F-4 Consolidated Statements of Shareholders’ (Deficit) Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to the Consolidated Financial Statements F-7 -F- 40 F- 1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Rumble Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Rumble Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, shareholders’ (deficit) equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Moss Adams LLP Seattle, Washington March 25, 2025 We have served as the Company’s auditor since 2023. F- 2 Rumble Inc. Consolidated Statements of Operations (Expressed in U.S. Dollars) For the year ended December 31, 2024 2023 Revenues $ 95,488,190 $ 80,963,451 Expenses Cost of services (content, hosting and other) $ 138,472,266 $ 146,156,734 General and administrative 36,646,307 37,125,296 Research and development 18,923,319 15,721,663 Sales and marketing 17,330,925 13,427,021 Acquisition-related transaction costs - 1,151,318 Amortization and depreciation 13,614,587 4,850,812 Changes in fair value of contingent consideration 1,354,357 ( 1,922,381 ) Total expenses 226,341,761 216,510,463 Loss from operations ( 130,853,571 ) ( 135,547,012 ) Interest income 8,083,903 13,594,463 Other expense ( 207,431 ) ( 125,511 ) Changes in fair value of warrant liability ( 32,694,697 ) 2,365,895 Changes in fair value of derivative ( 184,699,998 ) - Loss before income taxes ( 340,371,794 ) ( 119,712,165 ) Income tax benefit 2,009,015 3,291,703 Net loss $ ( 338,362,779 ) $ ( 116,420,462 ) Loss per share – basic and diluted $ ( 1.66 ) $ ( 0.58 ) Weighted-average number of common shares used in computing net loss per share - basic and diluted 204,100,835 201,442,321 Share-based compensation expense included in expenses: Cost of services (content, hosting, and other) $ 9,030,594 $ 3,994,180 General and administrative 11,788,130 10,686,099 Research and development 2,014,168 1,016,627 Sales and marketing 981,871 437,808 Total share-based compensation expense 23,814,763 16,134,714 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Rumble Inc. Consolidated Balance Sheets (Expressed in U.S. Dollars) December 31, 2024 2023 Assets Current assets Cash and cash equivalents $ 114,018,900 $ 218,338,658 Marketable securities - 1,135,200 Accounts receivable, net 9,778,941 5,440,447 Prepaid expenses and other 12,329,789 13,090,072 136,127,630 238,004,377 Other non-current assets 402,475 1,626,802 Property and equipment, net 17,068,076 19,689,987 Right-of-use assets, net 1,753,100 2,473,903 Intangible assets, net 29,306,135 23,262,428 Goodwill 10,655,391 10,655,391 $ 195,312,807 $ 295,712,888 Liabilities and Shareholders' (Deficit) Equity Current liabilities Accounts payable and accrued liabilities $ 18,223,372 $ 24,713,203 Deferred revenue 12,812,984 7,003,891 Lease liabilities 1,000,643 975,844 Contingent consideration - 863,643 Derivative liability 184,699,998 - 216,736,997 33,556,581 Lease liabilities, net of current portion 799,910 1,630,837 Contingent consideration, net of current portion - 705,717 Warrant liability 40,391,302 7,696,605 Other liability 500,000 500,000 258,428,209 44,089,740 Commitments and contingencies (Note 16) Shareholders' (deficit) equity Preferred shares ($ 0.0001 par value per share, 20,000,000 shares authorized, no shares issued or outstanding) - - Common shares ($ 0.0001 par value per share, 700,000,000 Class A shares authorized, 118,808,857 and 114,926,700 shares issued and outstanding, as of December 31, 2024 and 2023, respectively; 170,000,000 Class C (and corresponding ExchangeCo Share) authorized, 165,153,621 and 165,353,621 shares issued and outstanding, as of December 31, 2024 and 2023, respectively; 110,000,000 Class D authorized, 105,782,403 and 105,782,403 shares issued and outstanding, as of December 31, 2024 and 2023, respectively) 768,892 768,523 Accumulated deficit ( 483,565,942 ) ( 145,203,163 ) Additional paid-in capital 419,681,648 396,057,788 ( 63,115,402 ) 251,623,148 $ 195,312,807 $ 295,712,888 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Rumble Inc. Consolidated Statements of Shareholders' (Deficit) Equity (Expressed in U.S. Dollars) For the year ended December 31, 2024 Number of Common Stock Class A Class C (and corresponding ExchangeCo Share) Class D Class A Class C Class D Additional Paid-in Capital Accumulated Deficit Total Balance December 31, 2023 114,926,700 165,353,621 105,782,403 $ 741,410 $ 16,535 $ 10,578 $ 396,057,788 $ ( 145,203,163 ) $ 251,623,148 Issuance of Class A Common Stock in exchange for Class C Common Stock (and corresponding ExchangeCo Share) 200,000 ( 200,000 ) - 20 ( 20 ) - - - - Issuance of Class A Common Stock in connection with Callin acquisition 836,292 - - 84 - - 2,656,429 - 2,656,513 Issuance of Class A Common Stock upon exercise of stock options and warrants as well as vesting of restricted stock units 2,845,865 - - 285 - - 662,918 - 663,203 Net share settlement on restricted stock units - - - - - - ( 1,963,132 ) - ( 1,963,132 ) Share-based compensation - - - - - - 22,267,645 - 22,267,645 Loss for the year - - - - - - - ( 338,362,779 ) ( 338,362,779 ) Balance December 31, 2024 118,808,857 165,153,621 105,782,403 $ 741,799 $ 16,515 $ 10,578 $ 419,681,648 $ ( 483,565,942 ) $ ( 63,115,402 ) For the year ended December 31, 2023 Number of Common Stock Class A Class C (and corresponding ExchangeCo Share) Class D Class A Class C Class D Additional Paid-in Capital Accumulated Deficit Total Balance December 31, 2022 111,467,763 167,662,214 105,782,403 $ 741,013 $ 16,766 $ 10,578 $ 367,649,123 $ ( 28,782,701 ) $ 339,634,779 Issuance of Class A Common Stock in connection with Callin acquisition 981,243 - - 149 - - 14,664,682 - 14,664,831 Issuance costs in connection with Callin acquisition - - - - - - ( 40,478 ) - ( 40,478 ) Holdback of Class A Common Stock for the repayment of domain name loan in connection with the acquisition of Locals Technology Inc. ( 26,731 ) - - ( 3 ) - - ( 391,232 ) - ( 391,235 ) Issuance of Class A Common Stock upon vesting of restricted stock units 551,522 - - 55 - - - - 55 Issuance of Class A Common Stock in exchange for Class C Common Stock (and corresponding ExchangeCo Share) 2,308,593 ( 2,308,593 ) - 231 ( 231 ) - - - - Net share settlement on restricted stock units ( 355,690 ) - - ( 35 ) - - ( 2,107,536 ) - ( 2,107,571 ) Share-based compensation - - - - - - 16,283,229 - 16,283,229 Loss for the year - - - - - - - ( 116,420,462 ) ( 116,420,462 ) Balance December 31, 2023 114,926,700 165,353,621 105,782,403 $ 741,410 $ 16,535 $ 10,578 $ 396,057,788 $ ( 145,203,163 ) $ 251,623,148 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Rumble Inc. Consolidated Statements of Cash Flows (Expressed in U.S. Dollars) For the year ended December 31, 2024 2023 Cash flows provided by (used in) Operating activities Net loss for the year $ ( 338,362,779 ) $ ( 116,420,462 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation 13,614,587 4,850,812 Share-based compensation 21,530,677 16,283,229 Non-cash interest expense - 58,815 Net trade and barter revenue and expense 118,873 - Non-cash lease expense 997,541 788,799 Change in fair value of warrants 32,694,697 ( 2,365,895 ) Change in fair value of contingent consideration 1,354,357 ( 1,922,381 ) Change in fair value of derivative 184,699,998 - Changes in operating assets and liabilities: Accounts receivable ( 4,338,494 ) ( 674,981 ) Prepaid expenses and other 2,321,553 ( 4,990,778 ) Accounts payable and accrued liabilities ( 4,268,101 ) 9,612,728 Deferred revenue 5,690,220 5,963,272 Deferred tax liability ( 2,009,015 ) ( 3,323,744 ) Operating lease liabilities ( 1,054,589 ) ( 770,727 ) Net cash used in operating activities ( 87,010,475 ) ( 92,911,313 ) Investing activities Purchase of property and equipment ( 2,674,114 ) ( 14,572,933 ) Purchase of intangible assets ( 4,493,422 ) ( 2,915,085 ) Purchase of marketable securities - ( 1,135,200 ) Sale and maturities of marketable securities 1,135,200 1,100,000 Cash acquired in connection with Callin acquisition - 1,000,989 Cash paid to non-accredited investors in connection with Callin acquisition ( 2,488,931 ) - Cash paid in connection with North River acquisition ( 7,122,868 ) ( 7,249,085 ) Net cash used in investing activities ( 15,644,135 ) ( 23,771,314 ) Financing activities Taxes paid from net share settlement for share-based compensation ( 1,963,132 ) ( 2,107,516 ) Proceeds from exercise of stock options 663,204 - Share issuance costs ( 365,220 ) ( 40,478 ) Net cash used in financing activities ( 1,665,148 ) ( 2,147,994 ) Decrease in cash and cash equivalents during the period ( 104,319,758 ) ( 118,830,621 ) Cash and cash equivalents, beginning of year 218,338,658 337,169,279 Cash and cash equivalents, end of year $ 114,018,900 $ 218,338,658 Supplemental cash flow information: Cash paid for income taxes $ 71,864 $ 31,974 Cash paid for interest 288 4,212 Cash paid for lease liabilities 1,242,376 770,727 Non-cash investing and financing activities: Non-cash consideration related to the acquisition of Callin (Note 3) - 18,226,572 Class A Common Stock issued to settle contingent consideration liability 1,404,753 - Deferred issuance costs included in accounts payable and accrued liabilities 880,000 - Property and equipment in accounts payable and accrued liabilities 46,210 123,946 Recognition of operating right-of-use assets in exchange of operating lease liabilities, net of derecognition of terminated leases 276,738 1,906,248 Settlement of loan receivable in exchange for Class A Common Stock - 391,235 Share-based compensation capitalized related to intangible assets 736,966 - The accompanying notes are an integral part of these consolidated financial statements. F- 6 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 1. Overview and Basis of Presentation Nature of Operations Rumble Inc. ("Rumble” or the "Company”) is a high growth, video sharing platform and cloud services provider designed to help content creators manage, distribute, and monetize their content by connecting them with brands, publishers, and directly to their subscribers and followers. The Company’s registered office is located at 444 Gulf of Mexico Drive, Longboat Key, Florida, 34228. The Company’s shares of Class A common stock and warrants are traded on The Nasdaq Global Market ("Nasdaq”) under the symbol "RUM” and "RUMBW”, respectively. Basis of Presentation The accompanying consolidated financial statements (the “financial statements”) are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the results of the Company and its wholly-owned subsidiaries. Any reference in these notes to applicable guidance is meant to refer to the authoritative guidance found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”). All intercompany balances and transactions have been eliminated upon consolidation. These financial statements are presented in U.S. dollars, which is the functional currency of the Company. Basis of Consolidation These consolidated financial statements include the accounts of the Company and all subsidiaries. Subsidiaries are entities in which the Company has a controlling voting interest or is the primary beneficiary of a variable interest entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating intercompany balances and transactions. Use of Estimates The preparation of these financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates the estimates used, which include but are not limited to the: allowance for credit losses; valuation of share-based compensation awards; estimates in the determination of the fair value of assets acquired and liabilities assumed in connection with acquisitions; fair value of financial instruments including warrant liability, contingent consideration, and derivative; discount rate in determining lease liabilities; valuation of long-lived assets and their associated useful lives, valuation of goodwill; and the realization of tax assets, estimates of tax liabilities, and valuation of deferred taxes; and estimates in the determination of the fair value of non-cash consideration earned in trade and barter transactions. These estimates, judgments, and assumptions are reviewed periodically and the impact of any revisions are reflected in the financial statements in the period in which such revisions are made. Actual results could differ materially from those estimates, judgments, or assumptions, and such differences could be material to the Company’s consolidated financial position and results of operations. F- 7 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2. Summary of Significant Accounting Policies Foreign Currency The functional currencies of the Company and its foreign subsidiaries are the U.S. dollar. Transactions denominated in currencies other than the U.S. dollar are remeasured using end-of-period exchange rates or exchange rates prevailing at the date of the transaction, and the resulting gains or losses are recognized as a component of other income (expense). Fair Value Measurements The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 - Inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date; Level 2 - Inputs to the valuation methodology other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 - Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity of the asset and liability and the reporting entity makes estimates and assumptions relating to the pricing of the asset or liability, including assumptions regarding risk. This includes certain cash flow pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company may measure eligible assets and liabilities at fair value, with changes in value recognized in profit and loss. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company evaluates the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant impact on the estimated fair value amounts. Our financial instruments include cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued liabilities, lease liabilities, warrant liability, contingent consideration, derivative liability, and other liabilities, approximate fair value. Concentration Risk A meaningful portion of the Company’s revenue (and a substantial portion of the Company’s net cash from operations that it can freely access) is attributable to service agreements with several customers. See Note 18 for further details. F- 8 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2. Summary of Significant Accounting Policies (Continued) Revenue Recognition The Company derives revenues primarily from: ● Audience Monetization; and ● Other Initiatives Revenues are recognized when the control of promised services is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Sales tax and other similar taxes are excluded from revenues. In order to recognize revenue, the Company applies the following five (5) steps: 1. Identify the contract with a customer 2. Identify the performance obligation(s) 3. Determine the transaction price 4. Allocate the transaction price to the performance obligation(s) 5. Recognize revenue when/as performance obligation(s) are satisfied Audience Monetization Audience Monetization includes advertising fees on the Rumble platform; subscription fees earned primarily from consumer product offerings such as Rumble Premium, Locals and badges; revenues generated from content that is licensed by third-parties; pay-per-view; and fees from tipping and platform hosting fees. The Company generates advertising fees by delivering digital video and display advertisements as well as cost-per-message-read advertisements. Digital video and display advertisements are placed on Rumble websites and its associated mobile or connected TV applications. Customers pay for advertisements either directly or through their relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions such as clicks or purchases taken, by our users. For cost-per-message-read advertising, customers pay to have their products or services promoted by a content creator. The Company recognizes revenue from video and display advertisements when a user engages with the advertisement, such as an impression, click, or purchase. For cost-per-message-read advertising, advertising revenue is recognized when the performance obligation is fulfilled, usually when the message is read or when a user makes a purchase. In general, advertising fees are reported on a gross basis because the Company controls the advertising inventory before it is transferred to the customer. Control is evidenced by the Company’s sole ability to monetize the advertising inventory before it is transferred to the customer. Revenue from subscription services related to consumer product offerings, including Rumble Premium, Locals, and badges, is recognized over the contract duration on a straight-line basis. F- 9 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2. Summary of Significant Accounting Policies (Continued) Revenue Recognition (Continued) Under bulk license agreements, the Company’s obligations include hosting the content libraries for access and searching by the customer, updating the libraries with new content provided by the content owner, and making videos selected by the customer available for download, throughout the term of the contract. These services are billed based on the access to the content regardless of the number of videos downloaded. All of these services are highly interdependent as the customer’s ability to derive its intended benefit from the contract depends on the entity transferring both the access to the content library over time and making the videos available as and when required by the customer for download. These services, therefore, constitute a single performance obligation comprised of a series of distinct services transferred to the customer in a similar manner throughout the contract term. The predominant item in the single performance obligation is a license providing a right to access the content library throughout the license period. For these arrangements, the Company recognizes the total fixed fees under the contract as revenue ratably over the term of the contract as the performance obligation is satisfied, as this best depicts the pattern of control transfer. For license agreements related to the Rumble Player, the Company’s obligations include providing access to the current version the Rumble Player throughout the term of the contract. As part of this arrangement, the customer is required to use the most current version of the player and therefore, the utility of the player to the customer is significantly affected by Rumble’s ongoing activities to maintain and support the player. Revenue is therefore recognized ratably over the term of the contract. The Company generates revenue through the licensing of content to third-party platforms. The consideration received is variable in nature as it is dependent on the level of traffic and number of impressions generated on the third-party platforms. For these arrangements, revenue is recognized when the performance obligation is satisfied over the period the license is provided to the third-party provider. The usage-based royalty exemption has been taken by the Company for these arrangements. Fees from tipping features are recognized at a point in time when a user tips on the platform. Revenues related to platform hosting are recognized over time as the Company provides access to the platform and varies based on the subscription fees generated by the content creator. The Company allocates variable fees earned from these arrangements to those distinct performance obligations where pricing practices are consistent with the allocation objective. Other Initiatives Other Initiatives includes digital advertisements that are placed on Rumble’s network of third-party publisher websites or mobile applications and cloud. Cloud includes consumption-based fees, subscriptions for infrastructure and professional services. The Company facilitates the placement of the customer’s digital video and display advertisements on third-party publisher websites or mobile applications. Customers pay for advertisements either directly or through relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions such as clicks or purchases taken, by our users. The Company recognizes revenue when a user engages with the advertisement, such as an impression, click, or purchase. Cloud services are generally provided on either a consumption or subscription basis. Revenues related to cloud services provided on a consumption basis are recognized when the customer utilizes the services, based on the quantity of services consumed at the amount for which we have the right to invoice for services performed. Revenues related to cloud services provided on a subscription basis are recognized ratably over the contract term as the customer receives and consumes the benefits of the cloud services. F- 10 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2. Summary of Significant Accounting Policies (Continued) Revenue Recognition (Continued) Principal vs Agent In our arrangements, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). The Company controls the advertising inventory (including for digital advertisements that are placed with third-party publishers) before it is transferred to the customer and therefore is the principal in the transaction. Control is evidenced by the Company’s ability to monetize the advertising inventory before it is transferred to the customer. The Company is also acting as the principal in licensing and subscription transactions, as it has control over both the content that is monetized as well as the platform over which the content is displayed. Further, the Company manages the monetization of content and is the only party to the contract with its customers. As it relates to revenues earned from platform hosting, we present revenue on a net basis as the Company is acting as the agent providing a platform for content creators to post content and interact with end users. Practical Expedients and Exemptions The Company does not disclose the transaction price allocated to unsatisfied performance obligations for contracts with an original expected length of one year or less and for contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed. Trade and Barter Transactions The Company engages in trade and barter transactions whereby the Company and its counterparty exchange media campaigns or other promotional services. The Company reviews each transaction to ensure the advertising it receives has economic substance and records revenue in an amount equal to the fair value of the products and services received unless this is not reasonable to estimate, in which case the consideration is measured based on the standalone selling price of the advertising inventory promised or delivered to the customer. Trade and barter revenue is recognized when the performance obligation is fulfilled and follows the same pattern of recognition as the Company’s normal advertising revenue. Trade and barter expense is recorded when goods or services are consumed. Trade and barter revenue was $ 2,881,398 and $ nil for the years ended December 31, 2024 and 2023, respectively. Trade and barter expenses were $ 3,000,000 and $ nil for the years ended December 31, 2024 and 2023, respectively. The trade and barter expense is recorded in sales and marketing expense in the consolidated statement of operations. F- 11 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2. Summary of Significant Accounting Policies (Continued) Deferred Revenue The Company records amounts that have been invoiced to its clients in either deferred revenue or revenue depending on whether the revenue recognition criteria described above have been met. Deferred revenue includes payments received in advance of performance under the contract. Costs of Services (Exclusive of Amortization and Depreciation) Costs of services primarily consist of costs related to obtaining, supporting and hosting the Company’s product offerings. These costs primarily include: ● Programming and content costs related to payments to content providers from whom videos and other content are licensed. These costs are typically paid to these providers based on revenues generated. In certain circumstances we incur additional costs related to incentivizing top content creators to promote and join our platform. Where that is the case, the Company recognizes the associated cost on a straight-line basis over the contractual term to which it relates. ● Other costs of services include third-party service provider costs such as data center and networking, staffing costs directly related to professional services fees, and costs paid to publishers. Advertising Expenses Advertising costs are expensed as incurred and are included in sales and marketing expense on the consolidated statements of operations. The Company incurred advertising expenses of $ 5,311,094 and $ 4,550,742 during the years ended December 31, 2024 and 2023, respectively. Share-Based Compensation The Company issues equity awards such as stock options and restricted stock units to certain of its employees, advisory board members, directors, officers and consultants. For awards with a market condition, the market condition is taken into consideration in the fair value-based measure, whereas service and performance conditions are taken into consideration in determining the share-based compensation expense. For equity awards granted to employees that have only a service condition, the Company recognizes the share-based compensation expense on a straight-line basis over the requisite service period. The vesting period for the equity awards granted is determined by the board of directors of the company and the typical vesting period for equity awards with service conditions is three to four years. The requisite service period for Rumble’s equity awards subject only to service conditions is coterminous with the vesting period specific to those equity awards. For equity awards with either a market condition or a performance condition, the Company determines the fair value of each tranche of the award, and then recognizes the share-based compensation expense associated with each tranche of the award over the requisite service period for that tranche. For equity awards with a performance condition, the Company assesses the likelihood of the performance condition underlying an award being met and recognizes a share-based compensation expense associated with that award only if it is probable that the performance condition will be met. Forfeitures are accounted for when they occur. F- 12 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2 . Summary of Significant Accounting Policies (Continued) Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined on the basis of the difference between the tax bases of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. A valuation allowance is established for deferred tax assets for which realization is uncertain. Uncertain tax positions are accounted for using a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that the company has taken or expects to take on a tax return. This applies to income taxes and is not intended to be applied by analogy to other taxes, such as sales taxes, value-add taxes, or property taxes. The Company reviews its nexus in various tax jurisdictions and the Company’s tax positions related to all open tax years for events that could change the status of its tax liability, if any, or require an additional liability to be recorded. Such events may be the resolution of issues raised by a taxing authority, expiration of the statute of limitations for a prior open tax year or new transactions for which a tax position may be deemed to be uncertain. Those positions, for which management’s assessment is that there is more than a 50 percent probability of sustaining the position upon challenge by a taxing authority based upon its technical merits, are subjected to the measurement criteria. The Company records the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. Any liabilities for which the Company expects to make cash payments within the next twelve months are classified as “short term”. Loss per Share The Company calculates basic and diluted net loss per common share by dividing the net loss by the number of weighted average common shares outstanding during the period. The Company has excluded other potentially dilutive shares, which include warrants to purchase common shares and outstanding stock options, from the number of common shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses incurred. Cash, Cash Equivalents, and Marketable Securities Cash and cash equivalents primarily consist of cash on deposit with banks and amounts held in treasury bills and money market funds. Cash equivalents are carried at amortized cost, which approximates their fair market value. The Company considers all marketable securities with original maturities of three months or less from the date of purchase to be cash equivalents and those with original maturities of greater than three months as marketable securities on our consolidated balance sheets. Management determines the appropriate classification of investments at the time of purchase. Marketable securities are being accounted for as held-to-maturity investments and are carried at amortized cost with any gains and losses being recognized in interest income on the consolidated statements of operations. As of December 31, 2023, the marketable securities have maturity dates of twelve months or less and their amortized cost approximates fair value. F- 13 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2 . Summary of Significant Accounting Policies (Continued) Accounts Receivable and Allowance for Current Expected Credit Losses Accounts receivable includes current outstanding invoices billed to customers due under customary trade terms. The term between invoicing and when payment is due is not significant. The accounts receivable balance as of January 1, 2023 was $ 4,748,189 . The Company maintains an allowance for current expected credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes are classified in general and administrative expense in the consolidated statements of operations. Collectability is assessed by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when specific customers are identified with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, customer-specific information, market conditions, and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. Volatility in market conditions and evolving credit trends are difficult to predict and may cause variability and volatility that may have a material impact on the allowance for credit losses in future periods. The allowance for credit losses was $ 117,069 and $ nil as of December 31, 2024 and 2023, respectively. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which is generally as follows: Useful Lives Computer hardware 3 - 5 years Furniture and fixtures 3 - 5 years Leasehold improvements Lesser of useful life or term of lease Expenditures for maintenance and repairs are expensed as incurred. Right-of-Use Assets and Lease Liabilities Right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Most of our leases contain lease and non-lease components. Non-lease components include fixed payments for maintenance, utilities, and real estate taxes. The Company combines fixed lease and non-lease components and account for them as a single lease component. Our lease agreements may contain variable costs such as contingent rent escalations, common area maintenance, insurance, real estate taxes, or other costs. Such variable lease costs are expensed as incurred on the consolidated statements of operations. Right-of-use assets and lease liabilities are recognized on the consolidated balance sheets at the commencement date based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. When determining the probability of exercising such options, we consider contract-based, asset-based, and market-based factors. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. F- 14 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2 . Summary of Significant Accounting Policies (Continued) Right-of-Use Assets and Lease Liabilities (Continued) As most of our leases do not provide an implicit rate, the incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments. The Company determines the incremental borrowing rate as the interest rate the Company would pay to borrow over a similar term the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Operating lease costs are recognized on a straight-line basis over the lease terms. The Company has elected the practical expedient to not recognize right-of-use assets and lease liabilities for short-term leases, which are those leases with a term of twelve months or less at the commencement date. Intangible Assets Intangible assets with finite lives consist of intellectual property, internal-use software, technology, brand, domain names, and an assembled workforce. Intangible assets acquired through business combination are recorded at their respective estimated fair values upon acquisition close. Other intangible assets acquired through asset acquisition are measured following a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the net assets acquired. Intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from two to fifteen years . Internal Use Software and Website Development Costs The Company capitalizes certain costs incurred in developing software programs or websites to be used solely to meet internal needs and cloud-based applications used to deliver our services. The Company capitalizes these costs once the preliminary project stage is complete, and it is probable that the project will be completed and the software will be used to perform the intended function. Capitalized internal use software costs are included in intangible assets, net on the consolidated balance sheets. The estimated useful life of costs capitalized is evaluated for each specific project and is up to five years . Amortization of internal software development costs is included in amortization and depreciation expenses in the consolidated statement of operations. Costs related to the preliminary project stage, post-implementation, training and maintenance are expensed as incurred. Impairment of Long-Lived Assets and Finite Lived Intangible Assets The Company reviews long-lived assets and finite lived intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (“Asset Group”). When indicators of potential impairment are present, the Company prepares a projected undiscounted cash flow analysis for the respective asset or asset group. If the sum of the undiscounted cash flow is less than the carrying value of the asset or Asset Group, an impairment loss is recognized equal to the excess of the carrying value over the fair value, if any. The Company did not identify any indicators of impairment during the periods presented. F- 15 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2 . Summary of Significant Accounting Policies (Continued) Goodwill Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and identifiable intangible assets acquired. The carrying amount of goodwill is reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For its annual goodwill impairment test in all periods to date, the Company has determined it has one reporting unit and the fair value of its reporting unit has been determined by the Company’s enterprise value. The Company performs its annual goodwill impairment test during the fourth fiscal quarter. For its annual impairment test performed on October 1, 2024, the Company completed an assessment and determined that there was no impairment of goodwill. Derivative Liability The Company evaluates financial instruments, including forward purchase or sale contracts over its own equity (“forward purchase contracts”), to determine the appropriate classification as financial liabilities, derivatives, or equity. Forward purchase contracts that meet the definition of mandatorily redeemable financial instruments or that obligate the Company to repurchase its own shares at a fixed or determinable price are classified as liabilities. Forward purchase contracts classified as liabilities are initially recognized at fair value on the consolidated balance sheet, and subsequently remeasured at fair value each reporting period, with changes in fair value recognized in interest income (expense) on the consolidated statements of operations. Forward purchase contracts that do not meet the criteria to be classified as liabilities or equity are accounted for as derivatives. Derivatives are recognized initially and subsequently at fair value, with changes recognized in changes in fair value of derivative on the consolidated statements of operations. Warrant Liability The Company accounts for warrants by first assessing whether the warrants meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own shares of common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the warrants and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are required to be as a liability initially at their fair value on the date of issuance, and subsequently remeasured to fair value on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized on the consolidated statements of operations in the period of change. The Company accounts for all its warrants as a liability as the warrants do not meet the criteria for equity classification. F- 16 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2 . Summary of Significant Accounting Policies (Continued) Business Combinations The Company evaluates whether acquired net assets should be accounted for as a business combination or an asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, the Company applies its judgement to determine whether the acquired net assets meets the definition of a business by considering if the set includes an acquired input, process, and the ability to create outputs. The Company accounts for business combinations using the acquisition method when it has obtained control. The Company measures goodwill as the fair value of the consideration transferred including the fair value of any non-controlling interest recognized, less the net recognized amount of the identifiable assets acquired and liabilities assumed, all measured at their fair value as of the acquisition date. Transaction costs, other than those associated with the issuance of debt or equity securities, that the Company incurs in connection with a business combination are expensed as incurred. Any contingent consideration is measured at fair value at the acquisition date. Contingent consideration that does not meet all the criteria for equity classification is initially recorded at its fair value at the acquisition date, and subsequently remeasured to fair value on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified contingent consideration are recognized in the consolidated statements of operations in the period of change. When the initial accounting for a business combination has not been finalized by the end of the reporting period in which the transaction occurs, the Company reports provisional amounts. Provisional amounts are adjusted during the measurement period, which does not exceed one year from the acquisition date. These adjustments, or recognition of additional assets or liabilities, reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date . Asset Acquisitions The Company accounts for asset acquisitions by allocating the consideration to the acquired assets and liabilities on a relative fair value basis. Working capital items are recognized at their stated amounts. The Company has elected an accounting policy to recognize any contingent consideration obligation in an asset acquisition when the contingency is resolved, and the consideration becomes payable. The contingent consideration will be included in the cost allocated to the acquired assets if and when the contingency is resolved. F- 17 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 2 . Summary of Significant Accounting Policies (Continued) New Standards or Amendments Adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The purpose of this ASU is to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The new standard requires an enhanced disclosure of significant segment expenses on an annual and interim basis. Upon adoption, the guidance was applied retroactively to all prior periods presented in the financial statements. See Note 20 for further details. New Standards or Amendments Not Yet Effective The following amendments to existing standards have been issued up to and including the date of issuance of these financial statements, however are not yet effective for the Company: ● Accounting Standards Update 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in this update require in-scope crypto assets (including the Company's Bitcoin holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income for each reporting period. The update also requires certain interim and annual disclosures for crypto assets within the scope of the standard. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. ● Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. ● Accounting Standards Update 2024-03, Income statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense. The amendments in this update requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. Public business entities are required to apply the guidance prospectively and may elect to apply it retrospectively. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is still evaluating the impact of implementing the above improvements to its consolidated financial statements. F- 18 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 3. Acquisitions Acquisition of Callin Corp. On May 15, 2023 (the "Acquisition Date”), the Company acquired 100 % of the outstanding equity of Callin Corp. ("Callin”), a podcasting and live streaming platform. Callin creates a seamless experience for its users to create, discover, and consume live and recorded content. The Company has determined that Callin meets the definition of a business and has accounted for the acquisition as a business combination. The fair value of the assets acquired and the liabilities assumed by the Company in connection with the acquisition is as follows: Total consideration $ 18,226,572 Net assets acquired: Cash $ 1,000,989 Accounts receivable 10,939 Prepaid expenses 200,651 Property and equipment 37,841 Software and technology 9,352,000 Accounts payable, accruals, and other liabilities ( 1,137,814 ) Deferred tax liability ( 1,230,526 ) Total net assets acquired $ 8,234,080 Goodwill $ 9,992,492 The fair value of the consideration consists of the following: Fair Value Shares issued $ 6,055,409 Shares to be issued 3,747,209 Replacement awards 15,578 Contingent consideration (liability) – retention payments 3,491,741 Contingent consideration (equity) – milestone 1 2,490,152 Contingent consideration (equity) – milestone 2 2,356,483 Contingent consideration payable 70,000 Total consideration $ 18,226,572 F- 19 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 3. Acquisitions (Continued) Acquisition of Callin Corp. (Continued) Under the terms of the acquisition agreement, the Company is required to issue upfront share consideration of 981,243 shares of Class A Common Stock to the preferred shareholders and SAFE note holders of Callin. The fair value of the Company’s Class A Common Stock on the Acquisition Date was $ 9.99 per share. In addition, the Company issued rights to four payments each consisting of 375,000 contingently issuable shares of Class A Common Stock to the common shareholders, series FF preferred shareholders, option holders and continuing employees of Callin contingent on the following conditions being met: ● Retention payment 1: Services are provided by a selling shareholder for 12 months; ● Retention payment 2: Services are provided by a selling shareholder for 24 months; ● Milestone payment 1: Within 12 months, certain feature development and technical performance criteria are achieved, and the acquired technology is integrated into the Company’s existing software and ● Milestone payment 2: Within 24 months, certain feature development and technical performance criteria are achieved. In assessing what is part of the business combination, the Company has determined that because the two retention payments are contingent on a selling shareholder providing services post-combination, the portion of those tranches earned by the party providing services should be reflected in the Company’s financial statements as post-combination expense. In addition, where future services are required by employees in order to earn rights to the contingent consideration, such rights are being accounted for either entirely as post-combination expense or as replacement awards where the rights replace unvested options or restricted series FF preferred shares that were originally granted by Callin. Rights to contingent consideration held by non-accredited investors will be settled in cash at $ 8.92 per share. For the remainder, the four tranches of contingently issuable shares have been accounted for as contingent consideration. The following table shows the breakdown of the contingently issuable shares: Number of Shares Contingent consideration 903,689 Share-based compensation (Note 14) 596,311 Total contingently issuable shares 1,500,000 During the year ended December 31, 2024, certain of the contingently issuable shares were issued. Refer to Note 14 for the share-based compensation and below for the impact on contingent consideration. The fair value of the contingent consideration has been estimated as follows: Retention payments 1 and 2 At the Acquisition Date, the Company determined that retention payments 1 and 2 are one unit of account requiring the Company to issue a variable number of shares that is not indexed to the Company’s stock. As a result, the consideration that is contingent on one of the selling shareholder’s providing services has been classified as a liability. The contingent consideration is classified Level 3 in the fair value hierarchy. The key inputs into the fair value determination are the probability of achieving the milestones, which impacts the expected number of shares to be issued, and the share price on the Acquisition Date. At the Acquisition Date, management estimated the number of shares to be issued is 349,523 . On May 15, 2024, retention payment 1 was met resulting in the issuance of 192,885 shares of Class A Common Stock and a cash payment of $ 137,997 . Retention payment 2 was reclassified to equity because the number of shares to be issued if the contingency is met is now fixed. As a result, the Company recognized $ 1,334,516 in equity. As of December 31, 2024, it was determined that retention payment 2 was not met, resulting in forfeitures of the rights to contingent consideration. F- 20 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 3. Acquisitions (Continued) Acquisition of Callin Corp. (Continued) The Company has recognized a change in fair value for the retention payment 1 and 2 contingent consideration of $ 1,354,357 and $ 1,922,381 due to the change in the Company’s stock price and the probability of each contingency being met for the years ended December 31, 2024 and 2023, respectively. Milestone payments 1 and 2 The Company has determined that milestone payments 1 and 2 are separate units of account because a fixed number of shares will be issued if each contingency is met, and meeting one contingency is not dependent on the other. The key inputs into the fair value determination are the probability of each contingency being met, and the share price on the Acquisition Date. As of December 31, 2024, milestone payments 1 and 2 were met resulting in the issuance of 507,636 shares of Class A Common Stock and a cash payment of $ 149,605 . During the year ended December 31, 2023, the Company adjusted certain provisional amounts recognized at the acquisition date related to the finalization of the valuation report and the income tax provision in the fourth quarter of 2023. An adjustment was made to increase upfront share consideration by $ 143,716 as well as an increase to intangible assets and deferred tax liability of $ 1,594,000 and $ 398,654 , respectively. The corresponding adjustment was reflected in goodwill. The acquired goodwill relates to Callin’s workforce and synergies that are expected to be realized upon the integration of Callin’s technology with the Rumble platform. Such synergies will include the ability to leverage the creator relationships that Rumble has secured to date and will allow for a greater ability to establish brand recognition and monetization of the Callin platform in the future. The goodwill is not expected to be deductible for tax purposes. Acquisition-related transaction costs incurred by the Company for the year ended December 31, 2023 were $ 835,035 . The acquired business contributed revenues of $ nil and net loss of $ 1,269,185 post acquisition for the period ended December 31, 2023. F- 21 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 3. Acquisitions (Continued) Acquisition of North River Project Inc. On October 3, 2023, the Company acquired 100 % of the outstanding equity of North River Project Inc. ("North River”), for $ 10,000,000 Canadian Dollars ($ 7,293,000 US Dollars) in cash upfront and future contingent cash payments of up to $ 10,000,000 Canadian Dollars. The Company has determined that North River does not meet the definition of a business and has accounted for the acquisition as an asset acquisition. The contingent consideration contains two payments, each consisting of $ 5,000,000 Canadian Dollars upon the completion of feature development and integration of the acquired technology into the Company’s existing software within a 5-year period. The Company has elected to account for the contingent consideration at the point in time in which the payments have been met. During the year ended December 31, 2024, the contingent milestones were achieved and consequently the Company made a total cash payment of $ 10,000,000 Canadian Dollars ($ 7,122,868 US Dollars) to the former North River equity holders. The Company acquired North River for the purpose of acquiring certain developed software, developed technology, and an assembled workforce. The Company allocated the upfront consideration to the acquired assets based on their relative fair value on the date of acquisition as follows: Fair Value Software and technology $ 9,000,740 Assembled workforce 366,188 Net working capital ( 14,808 ) Deferred tax liability ( 2,059,120 ) Total consideration $ 7,293,000 The Company allocated both contingent payments to the acquired assets based on their relative fair value on the date the milestone was met as follows: Fair Value Software and technology $ 8,771,849 Assembled workforce 360,034 Deferred tax liability ( 2,009,015 ) Total consideration $ 7,122,868 The additions were allocated to the cost basis of the acquired assets and the Company recognized a cumulative catch up on the amortization expense in the amount of $ 1,921,750 during the year ended December 31, 2024. The acquired software and technology was assigned a useful life of 5 years and the assembled workforce was assigned a useful life of 2 years. The assets are recorded in intangible assets, net on the Company’s consolidated balance sheets. F- 22 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 4. Revenue from Contracts with Customers The following table presents revenues disaggregated by type: For the year ended December 31, 2024 2023 Audience Monetization $ 83,458,309 $ 73,138,933 Other Initiatives 12,029,881 7,824,518 Total revenues $ 95,488,190 $ 80,963,451 The Company recognizes revenue either at a point in time or over time, depending upon the characteristics of the contract. For the year ended December 31, 2024 2023 Point in time $ 36,318,995 $ 21,741,274 Over time 59,169,195 59,222,177 Total revenues $ 95,488,190 $ 80,963,451 Deferred Revenue Deferred revenue recorded at December 31, 2024 is expected to be fully recognized by December 31, 2025. The deferred revenue balance as of December 31, 2024 was $ 12,812,984 . The deferred revenue balance as of December 31, 2023 was $ 7,003,891 , of which $ 6,716,383 was recognized as revenues for the year ended December 31, 2024. The deferred revenue balance as of January 1, 2023 was $ 1,040,619 , of which $ 881,596 was recognized as revenues for the year ended December 31, 2023. 5 . Cash, Cash Equivalents, and Marketable Securities Cash and cash equivalents consist of the following: As of December 31, Contracted 2024 2023 Maturity Balance Balance Cash Demand $ 7,344,275 $ 11,632,839 Treasury bills, money market funds, and term deposits Demand 106,674,625 206,705,819 $ 114,018,900 $ 218,338,658 Marketable securities consist of term deposits of $ nil and $ 1,135,200 as of December 31, 2024 and 2023, respectively. The Company did not have any long-term investments as of December 31, 2024 or 2023. As of December 31, 2024 and 2023, the Company entered into a guarantee/ standby letter of credit in the amount of $ 1,362,500 which will be used towards the issuance of credit for running the day-to-day business operations. F- 23 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 6. Property and Equipment As of December 31, 2024 2023 Computer hardware $ 24,577,345 $ 21,969,345 Furniture and fixtures 123,417 121,077 Leasehold improvements 1,942,799 1,911,901 26,643,561 24,002,323 Accumulated depreciation ( 9,575,485 ) ( 4,312,336 ) Net carrying value $ 17,068,076 $ 19,689,987 Depreciation expense on property and equipment for the years ended December 31, 2024 and 2023 was $ 5,296,024 and $ 3,267,920 , respectively. 7. Right-of-Use Assets and Lease Liabilities The Company leases several facilities and data centers under non-cancelable operating leases. These leases have original lease periods expiring between 2025 and 2027. The lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2024 2023 Accumulated Accumulated Cost Amortization Cost Amortization Right-of-use assets $ 4,109,922 $ ( 2,356,822 ) $ 3,833,184 $ ( 1,359,281 ) Net carrying value $ 1,753,100 $ 2,473,903 Operating lease costs for the years ended December 31, 2024 and 2023 were $ 1,175,186 and $ 848,849 , respectively. These costs are included in general and administrative expenses in the consolidated statements of operations. Supplemental balance sheet information related to the operating lease liabilities is as follows: As of December 31, 2024 2023 Weighted-average remaining lease term 1.85 years 2.65 years Weighted-average incremental borrowing rate 7.26 % 7.52 % The following shows the future minimum lease payments for the remaining years under the lease arrangement as of December 31, 2024: 2025 $ 1,053,920 2026 745,342 2027 62,456 1,861,718 Less: imputed interest* ( 61,165 ) 1,800,553 Current portion $ 1,000,643 Long-term portion $ 799,910 * Imputed interest represents the difference between undiscounted cash flows and cash flows F- 24 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 8. Intangible Assets As of December 31, 2024 Weighted- Average Remaining Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intellectual property 4.17 $ 461,663 $ ( 179,563 ) $ 282,100 Domain name 11.42 500,448 ( 120,089 ) 380,359 Brand 6.83 1,284,000 ( 408,769 ) 875,231 Software and technology 3.72 30,314,958 ( 8,063,413 ) 22,251,545 Internal software development 3.50 6,586,351 ( 1,341,784 ) 5,244,567 Assembled workforce 0.75 726,222 ( 453,889 ) 272,333 $ 39,873,642 $ ( 10,567,507 ) $ 29,306,135 As of December 31, 2023 Weighted- Average Remaining Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intellectual property 4.74 $ 461,663 $ ( 101,023 ) $ 360,640 Domain name 12.42 500,448 ( 86,019 ) 414,429 Brand 7.83 1,284,000 ( 280,369 ) 1,003,631 Software and technology 4.68 20,894,389 ( 1,618,906 ) 19,275,483 Internal software development 4.18 2,004,684 ( 116,854 ) 1,887,830 Assembled workforce 1.75 366,188 ( 45,773 ) 320,415 $ 25,511,372 $ ( 2,248,944 ) $ 23,262,428 Amortization expense related to intangible assets for the years ended December 31, 2024 and 2023 was $ 8,318,563 and $ 1,582,889 . For intangible assets held as of December 31, 2024, future amortization expense is as follows: 2025 $ 8,276,864 2026 7,714,467 2027 7,082,342 2028 5,414,354 2029 371,335 Thereafter 446,773 $ 29,306,135 F- 25 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 9. Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired in business combinations. There were no changes in the carrying amount of goodwill. Goodwill was $ 10,655,391 as of December 31, 2024 and 2023. There was no impairment of goodwill for the years ended December 31, 2024 and 2023. 10. Income Taxes The Company is subject to income tax in the U.S., and Canada through its wholly owned subsidiary, Rumble Canada Inc. Rumble Inc.'s federal statutory tax rate is 21.00 % for the years ended December 31, 2024 and 2023. The difference between the tax calculated on income before income tax according to the statutory tax rate and the amount of the income tax included in the income tax expense was reconciled as follows: For the year ended December 31, 2024 2023 Loss before income taxes $ ( 340,371,794 ) $ ( 119,712,165 ) Statutory income tax rate 21 % 21 % Income tax recovery at statutory income tax rate ( 71,478,077 ) ( 25,139,555 ) Non-deductible expenses and permanent adjustments ( 1,333,920 ) 420,174 Share-based compensation 1,988,839 - Change in the fair value of warrant liability 8,137,724 ( 943,421 ) Change in the fair value of derivatives 44,143,300 Difference in jurisdictional tax rates ( 11,087,797 ) ( 4,891,708 ) Tax rate differences and tax rate changes ( 1,244,376 ) - Other 852,706 194,426 Change in valuation allowance 28,012,586 27,068,381 $ ( 2,009,015 ) $ ( 3,291,703 ) Income tax benefit consists of the following: For the year ended December 31, 2024 2023 Income tax benefit: Domestic – U.S. $ ( 2,009,015 ) $ ( 3,291,703 ) Foreign - Canada - - $ ( 2,009,015 ) $ ( 3,291,703 ) F- 26 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 10. Income Taxes (Continued) Deferred Tax Assets (Liabilities) As of December 31, 2024 2023 Deferred income tax assets: Loss carryforwards $ 65,814,397 $ 45,792,765 Intangible assets 2,777,120 - Share-based compensation 5,646,180 3,627,277 R&D and other cost pool carryforwards - 2,229,569 Other 81,932 129,636 Gross deferred income tax assets 74,319,629 51,779,247 Valuation allowance ( 71,361,750 ) ( 45,273,417 ) Total deferred income tax assets, net of valuation allowance 2,957,879 6,505,830 Deferred income tax liabilities: Tangible assets ( 2,957,879 ) ( 3,208,381 ) Intangible assets - ( 3,297,449 ) Total deferred income tax liabilities ( 2,957,879 ) ( 6,505,830 ) Net deferred income tax assets and liabilities $ - $ - The Company has assessed the realizability of the net deferred tax assets by considering the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, the Company considered all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent results of operations. A significant piece of objective negative evidence evaluated was the cumulative tax loss incurred by the Company over the three-year period ended December 31, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. After consideration of all these factors, the Company has recorded a full valuation allowance against the net deferred tax assets. Deferred income taxes have not been recorded on the basis differences for investments in consolidated subsidiaries as these basis differences are indefinitely reinvested or will reverse in a non-taxable manner. Quantification of the deferred income tax liability, if any, associated with indefinitely reinvested basis differences is not practicable. As of December 31, 2024 and 2023, the Company has U.S. federal and state net loss carryforwards of $ 104,527,154 and $ 78,563,194 , respectively, as well as Canadian federal and provincial non-capital loss carryforwards of $ 154,084,556 and $ 107,580,614 , respectively. The U.S. federal losses can be carried forward indefinitely, generally, the state losses can be carried forward 20 years. The Canadian non-capital loss carryforwards expire between 2039 and 2044. 2039 $ 78,821 2041 4,223,836 2042 19,313,785 2043 77,202,600 2044 53,265,514 Indefinite 104,527,154 F- 27 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 10. Income Taxes (Continued) Utilization of net operating loss carryforwards may be subject to limitations in the event of a change in ownership as defined under U.S. IRC Section 382, and similar state provisions. An "ownership change" is generally defined as a cumulative change in the ownership interest of significant stockholders of more than 50 percentage points over a three-year period. The Company experienced ownership change during 2021. Such ownership change could result in a limitation of the Company's ability to reduce future income by net operating loss carryforwards. A formal Section 382 study has not been prepared, so the exact effects of the ownership change are not known at this time. The Company operates in a number of tax jurisdictions and is subject to examination of its income tax returns by tax authorities in those jurisdictions who may challenge any item on these returns. Because the tax matters challenged by tax authorities are typically complex, the ultimate outcome of these challenges is uncertain. The Company recognizes the effects of uncertain tax positions in the consolidated financial statements after determining that it is more-likely-than-not the uncertain tax positions will be sustained. As of December 31, 2024, the Company has not recorded any uncertain tax positions, as well as any accrued interest and penalties on the consolidated balance sheet. During the year ended December 31, 2024, the Company did not record any interest and penalties in the consolidated statement of operations. 11. Derivative Liability On December 20, 2024, the Company announced that it had entered into a definitive agreement (the “Transaction Agreement”) for a strategic investment of $ 775 million (the “Transaction”) from Tether Investments Limited (n/k/a Tether Investments S.A. de C.V.) (“Tether”) in exchange for 103,333,333 shares of Class A Common Stock. The Class A Common Stock has a par value of $ 0.0001 per share. The purchase price of the Class A Common Stock in the Transaction was $ 7.50 per share. The Transaction Agreement requires the Company to commence a tender offer to purchase up to 70,000,000 shares of the Company’s Class A Common Stock using proceeds from the Transaction, which the Company did subsequent to year end. See Note 21 for further details. As contemplated by the Transaction Agreement, the Company executed support agreements with certain members of key management to provide a backstop to the anticipated tender offer and ensure 70,000,000 shares would be tendered and available for repurchase when the Transaction closes. Under the Transaction Agreement, there is the possibility that the Company issues either 103,333,333 shares of Class A Common Stock in one or two closings, or issues 66,666,667 shares of Class A Common Stock in one closing if the tender offer is not successfully consummated by April 30, 2025. The Company is accounting for the Transaction and support agreement as one unit of account which meets the definition of a derivative. As a result, the Company initially recorded a gain upon recognition of a derivative asset of $ 9,200,000 and subsequently recorded the derivative at fair value resulting in a liability of $ 184,699,998 at December 31, 2024 and a change in fair value of the derivative of $ 184,699,998 during the year ended December 31, 2024. See Note 17 for further details. As of December 31, 2024, the Transaction had not been funded. The Transaction was completed on February 7, 2025. See Note 21 for further details. F- 28 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 12. Other Liability The Company has received certain amounts from a third party to assist with certain operating expenditures of the Company. These amounts are to be repaid upon settlement of those expenditures, are non-interest bearing, and have been treated as a long-term liability. An amount of $ 500,000 related to these expenses was recorded in other liability as of December 31, 2024 and 2023. 13. Shareholders’ (Deficit) Equity The Company is authorized to issue 1,000,000,000 shares, consisting of: (i) 700,000,000 shares of Class A Common Stock with a par value of $ 0.0001 per share; (ii) 170,000,000 shares of Class C Common Stock with a par value of $ 0.0001 per share; (iii) 110,000,000 shares of Class D Common Stock with a par value of $ 0.0001 per share; and (iv) 20,000,000 shares of preferred stock with a par value of $ 0.0001 per share. The following shares of common stock are issued and outstanding at: As of December 31, 2024 2023 Number Amount Number Amount Class A Common Stock 118,808,857 $ 741,799 114,926,700 $ 741,410 Class C Common Stock (and its corresponding ExchangeCo Share) 165,153,621 16,515 165,353,621 16,535 Class D Common Stock 105,782,403 10,578 105,782,403 10,578 Balance 389,744,881 $ 768,892 386,062,724 $ 768,523 Class A Common Stock Authorized The Company is authorized to issue 700,000,000 shares with a par value of $ 0.0001 per share. Issued and outstanding The holders of shares of Class A Common Stock are entitled to one vote for each share of Class A Common Stock held at any meeting of shareholders of the Company. The holders of Class A Common Stock are entitled to receive dividends and other distributions declared or paid by the Company. The holders of Class A Common Stock are entitled to receive the remaining property of the Company upon liquidation, dissolution, or winding-up, whether voluntary or involuntary, and any other distribution of assets of the Company among its shareholders for the purpose of winding-up of its affairs subject to the rights of the preferred shares. F- 29 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 13. Shareholders’ (Deficit) Equity (Continued) Class A Common Stock (Continued) Number of Class A Common Stock Balance December 31, 2023 114,926,700 Issuance of Class A Common Stock in connection with Callin acquisition 836,292 Issuance of Class A Common Stock upon exercise of stock options and warrants, as well as vesting of restricted stock units, net of share settlement 2,845,865 Issuance of Class A Common Stock in exchange for Class C Common Shares (and corresponding ExchangeCo Share) 200,000 Balance December 31, 2024 118,808,857 Former holders of the Legacy Rumble’s common shares are eligible to receive up to an aggregate of 105,000,000 additional shares of the Company’s Class A Common Stock, of which 76,412,604 shares are currently held in escrow and 28,587,396 shares will become issuable under options when the contingency is met. Similarly, the Sponsor’s common shares are eligible to receive up to an aggregate of 1,963,750 additional shares of the Company’s Class A Common Stock and will be issued when the contingency is met. The holders are eligible to the shares if the closing price of the Company’s Class A Common Stock is greater than or equal to $ 15.00 and $ 17.50 , respectively (with 50 % released at each target, or if the latter target is reached first, 100 %) for a period of 20 trading days during any 30 trading-day period. The term will expire September 16, 2027 . If there is a change in control prior to September 16, 2027 resulting in a per share price equal to or in excess of the $ 15.00 and $ 17.50 share price milestones not previously met, then the Company shall issue the earnout shares to the holders. Number of Class A Common Stock Balance December 31, 2022 111,467,763 Issuance of Class A Common Stock in connection with Callin acquisition 981,243 Issuance of Class A Common Stock upon vesting of stock awards, net of share settlement 195,832 Issuance of Class A Common Stock in exchange for Class C Common Shares (and corresponding ExchangeCo Share) 2,308,593 Holdback of Class A Common Stock for the repayment of domain name loan in connection with the acquisition of Locals Technology Inc. ( 26,731 ) Balance December 31, 2023 114,926,700 Class C Common Stock (and corresponding ExchangeCo Share) Authorized The Company is authorized to issue 170,000,000 shares with a par value of $ 0.0001 per share. Issued and outstanding The holders of shares of Class C Common Stock are entitled to one vote for each share of Class C Common Stock held at any meeting of shareholders of the Company. The holders of Class C Common Stock are not entitled to receive dividends and other distributions declared or paid by the Company. The holders of shares of Class C Common Stock are not entitled to receive the remaining property of Company upon liquidation, dissolution, or winding-up, whether voluntary or involuntary, and any other distribution of assets of the Company among its shareholders for the purpose of winding-up of its affairs subject to the rights of the preferred shares and Class A Common Stock. F- 30 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 13. Shareholders’ (Deficit) Equity (Continued) Class C Common Stock (and corresponding ExchangeCo Share) (Continued) The Company’s indirect, wholly owned Canadian subsidiary 1000045728 Ontario Inc. ("ExchangeCo”) has 165,153,621 exchangeable shares ("ExchangeCo Shares”) outstanding at December 31, 2024 that are exchangeable at any time by the holder on a one-to-one basis into Class A Common Stock. The ExchangeCo Shares are entitled to any dividends that are declared on Class A Common Stock and participate in liquidation on the same basis as the holders of Class A Common Stock. Each ExchangeCo Share is issued "in tandem” with one share of Class C Common Stock. At the time an ExchangeCo Share is exchanged by the holder, the Company will issue one share of Class A Common Stock and the ExchangeCo Share and corresponding Class C Common Stock are cancelled. The ExchangeCo Share and the related share of Class C Common Stock cannot be separated. The Company views each ExchangeCo Share and its corresponding share of Class C Common Stock as one unit of account that is economically similar to a share of Class A Common Stock. Number of Class C Common Stock (and corresponding ExchangeCo Share) Balance December 31, 2023 165,353,621 Issuance of Class A Common Stock in exchange for Class C Common Stock (and corresponding ExchangeCo Share) ( 200,000 ) Balance December 31, 2024 165,153,621 Number of Class C Common Stock (and corresponding ExchangeCo Share) Balance December 31, 2022 167,662,214 Issuance of Class A Common Stock in exchange for Class C Common Stock (and corresponding ExchangeCo Share) ( 2,308,593 ) Balance December 31, 2023 165,353,621 Class D Common Stock Authorized The Company is authorized to issue 110,000,000 shares with a par value of $ 0.0001 per share. Issued and outstanding The holders of shares of Class D Common Stock are entitled to 11.2663 votes for each share of Class D Common Stock held at any meeting of shareholders of the Company. The holders of shares of Class D Common Stock are not entitled to receive dividends and other distributions declared or paid by the Company. The holders of shares of Class D Common Stock are not entitled to receive the remaining property of Company upon liquidation, dissolution, or winding-up, whether voluntary or involuntary, and any other distribution of assets of the Company among its shareholders for the purpose of winding-up of its affairs subject to the rights of the preferred shares and Class A Common Stock. The number of Class D Common Stock was 105,782,403 as of December 31, 2024 and 2023. There were no changes in Class D Common Stock during the years ended December 31, 2024 and 2023. F- 31 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 14. Share-Based Compensation Expense The Company’s stock award plans consist of: Rumble Inc. Amended and Restated Stock Option Plan The Company maintains a long-term incentive plan, the Rumble Inc. Amended and Restated Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan continues to govern the terms and conditions of the outstanding awards previously granted under the Stock Option Plan, and all options to purchase Rumble Class A common shares or Rumble Class B common shares which were converted into options to purchase shares of Class A Common Stock in connection with the Business Combination. As of December 31, 2024, there were 58,165,382 shares of Class A Common Stock reserved for future issuance under the Stock Option Plan Rumble Inc. 2022 Stock Incentive Plan The Rumble Inc. 2022 Stock Incentive Plan (the "Stock Incentive Plan”) was approved by the board of directors and the stockholders of the Company, and became effective on September 16, 2022. The Company initially reserved 27,121,733 shares of Common Stock for issuance under the Stock Incentive Plan, subject to a ten-year evergreen feature. As of December 31, 2024, there were 35,459,606 shares of Class A Common Stock reserved for future issuance under the Stock Incentive Plan. Rumble Inc. 2024 Employee Stock Purchase Plan The Rumble Inc. 2024 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan”) was approved by the board of directors and the stockholders of the Company, and became effective on March 26, 2024. The Company initially reserved 1,500,000 shares of Common Stock for issuance under the Employee Stock Purchase Plan. As of December 31, 2024, there were 1,500,000 shares of Class A Common Stock reserved for future issuance under the Employee Stock Purchase Plan. Share-based compensation expenses are summarized as follows: For the year ended December 31, 2024 2023 Restricted stock units $ 16,902,835 $ 8,463,373 Stock options 6,076,216 5,193,301 Rights to contingent consideration 835,712 2,478,040 $ 23,814,763 $ 16,134,714 Restricted Stock Units The fair value of the restricted stock units with market conditions was determined using a Monte Carlo simulation methodology that included simulating the stock price using a risk-neutral Geometric Brownian Motion-based pricing model. The following table reflects the assumptions made: F- 32 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 14. Share-Based Compensation Expense (Continued) Restricted Stock Units (Continued) For the year ended December 31, 2024 Share price $ 5.95 -$ 7.24 Risk-free interest rate 4.08 %- 5.03 % Volatility 65 % Expected life 1 - 2 years Dividend rate 0.00 % The following table reflects the continuity of unvested restricted stock units (“RSUs”) transactions: Service Conditions Number Weighted Average Grant Date Fair Value Outstanding, December 31, 2023 1,631,338 $ 10.55 Granted 2,217,930 7.03 Vested ( 1,482,328 ) 9.10 Forfeited/ Cancelled ( 140,165 ) 6.79 Outstanding, December 31, 2024 2,226,775 $ 8.24 Market Conditions Number Weighted Average Grant Date Fair Value Outstanding, December 31, 2023 - $ - Granted 676,243 2.48 Vested - - Forfeited/ Cancelled - - Outstanding, December 31, 2024 676,243 $ 2.48 As of December 31, 2024, the Company has RSUs outstanding that have market based vesting conditions if the closing price of the Company’s Class A Common Stock is greater than or equal to a specified price for a period of 20 trading days during any 30 trading-day period. The following table reflects additional information related to RSUs activity: As of December 31, 2024 Service Conditions Market Conditions Unrecognized compensation cost $ 10,761,780 $ 1,168,832 Weighted average service period for unrecognized compensation cost 1.20 years 1.00 years Grant date fair value of RSUs $ 18,351,768 $ 1,676,276 F- 33 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 14. Share-Based Compensation Expense (Continued) Stock Options The fair value of the stock options was determined using either a Black-Scholes option pricing model or a Monte Carlo simulation methodology that included simulating the stock price using a risk-neutral Geometric Brownian Motion-based pricing model. The following table reflects the assumptions made: For the year ended December 31, 2024 2023 Share price $ 5.61 -$ 7.13 $ 2.68 -$ 9.23 Exercise price $ 5.61 -$ 7.13 $ 4.63 -$ 10.36 Risk-free interest rate 3.81 %- 4.35 % 3.42 %- 4.94 % Volatility 62 %- 64 % 88 %- 97 % Expected life 5 - 6 years 4 - 10 years Dividend rate 0.00 % 0.00 % The following table reflects the continuity of stock option transactions: Service Conditions Number Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding, December 31, 2023 65,004,839 $ 0.58 Granted 4,546,270 6.39 Exercised ( 1,696,138 ) 0.36 Forfeited/ Cancelled ( 5,569,399 ) 5.07 Outstanding, December 31, 2024 62,285,572 $ 0.80 14.91 Vested and exercisable, December 31, 2024 57,475,446 $ 0.28 15.39 Performance Conditions Number Weighted Average Exercise Price Weighted Average Remaining Contract Term (in years) Outstanding, December 31, 2023 358,249 $ 9.42 Granted 580,139 7.13 Forfeited ( 358,249 ) 9.42 Outstanding, December 31, 2024 580,139 $ 7.13 9.91 Vested and exercisable, December 31, 2024 - $ - - The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s Class A Common Stock for those stock options that had exercise prices lower than the fair value of the Company’s Class A Common Stock. As of December 31, 2024, the aggregate intrinsic value of options outstanding was $ 763,899,856 and the aggregate intrinsic value of the options vested and exercisable was $ 731,532,991 . F- 34 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 14. Share-Based Compensation Expense (Continued) Stock Options (Continued) The following table reflects additional information related to options activity: As of December 31, 2024 Service Conditions Performance Conditions Unrecognized compensation cost $ 18,925,713 $ 2,453,988 Weighted average service period for unrecognized compensation cost 2.43 years - Grant date fair value of options $ 0.52 $ 4.23 As of December 31, 2024, the Company has determined that it is not probable that the conditions related to the performance-based stock options will be met, and therefore, the Company has not recognized the related expense in the consolidated statement of operations. Rights to Contingent Consideration In connection with the acquisition of Callin as described in Note 3, the Company was required to replace unvested options, unvested series FF preferred shares, and restricted common stock held by continuing employees of Callin with a right to receive contingent consideration. If the underlying contingencies are met, the obligation will be satisfied by the issuance of shares of Class A Common Stock. In addition, as described in Note 3, two of the contingent consideration tranches are dependent on one selling shareholder providing services to the Company. Where rights to receive contingent consideration were issued to replace unvested awards of the acquired company, the Company has allocated an amount to consideration based on the fair value of the original award at the acquisition date. The amount allocated is based on the period of time vested as of the acquisition date in relation to the greater of the vesting period of the original award and the total service requirement as per the below. The difference between the fair value of the new award on the acquisition date and the amount allocated to consideration is post-combination expense, as laid out below: Fair value Allocated to consideration $ 15,578 Allocated to post-combination services 5,941,563 Total fair value of rights $ 5,957,141 Share-based compensation expense related to the rights to contingent consideration of $ 835,712 and $ 2,478,040 was recognized in the consolidated statement of operations during the years ended December 31, 2024 and 2023, respectively. As discussed in Note 3, certain milestones were met during the year ended December 31, 2024. As a result, 145,049 shares of Class A Common Stock were issued and $ 2,284,085 of cash was paid to settle the rights to contingent consideration. Additionally, retention payment 2 was not met resulting in a reversal of $ 1,105,393 in share-based compensation expense. As of December 31, 2024, there were no unrecognized compensation cost related to rights with a service only condition. F- 35 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 15. Loss per Share As noted in Note 13, when taken together, an ExchangeCo Share and a share of Class C Common Stock are economically similar to a share of Class A Common Stock. As a result, the Company computed basic loss per share by dividing net loss attributable to the Company by the weighted-average number of Class A and ExchangeCo Shares issued and outstanding, excluding those held in escrow as these are contingently issuable shares and have been excluded from the calculation during the year ended December 31, 2024, and 2023. Shares of Class D Common Stock do not share in earnings and not participating securities (i.e., non-economic shares) and therefore, have been excluded from the calculation of weighted-average number of shares outstanding. Diluted loss per share is computed giving effect to all potentially dilutive shares. Diluted loss per share for all periods presented is the same as basic loss per share as the inclusion of potentially issuable shares would be antidilutive. 16. Commitments and Contingencies Commitments The Company has non-cancelable contractual commitments of approximately $ 37 million as of December 31, 2024, which are primarily related to programming and content, leases, and other service arrangements. The majority of commitments will be paid over two years commencing in 2025. Legal Proceedings In the normal course of business, to facilitate transactions in services and products, the Company indemnifies certain parties. The Company has agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and its bylaws contain similar indemnification obligations to its agents. Furthermore, many of the Company’s agreements with its customers and partners require the Company to indemnify them for certain intellectual property infringement claims against them, which would increase costs as a result of defending such claims, and may require that we pay significant damages if there were an adverse ruling in any such claims. Customers and partners may discontinue the use of the Company’s services and technologies as a result of injunctions or otherwise, which could result in loss of revenues and adversely impact the business. It is not possible to make a reasonable estimate of the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. As of December 31, 2024 and 2023, there were no material indemnification claims that were probable or reasonably possible. As of December 31, 2024, Rumble was defending a lawsuit against the Company and one of its shareholders seeking a variety of relief including rescission of a share redemption sale agreement with the Company or damages alleged to be worth $ 419.0 million. The Company is defending the claims and considers that the likelihood that it will be required to make a payment to plaintiffs to be remote. F- 36 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 17. Fair Value Measurements The following table summarizes the liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Level 3 Warrant Liability Marketable Securities Derivative Liability Contingent Consideration December 31, 2023 $ 7,696,605 $ 1,135,200 $ - $ 1,569,360 Settlement by issuance of shares - - - ( 1,404,753 ) Reclassification to equity - - - ( 1,334,516 ) Reclassification to accounts payable and accrued liabilities - - - ( 184,448 ) Sales and maturities of marketable securities - ( 1,135,200 ) - - Recognition of a derivative asset - - ( 9,200,000 ) - Change in fair value 32,694,697 - 193,899,998 1,354,357 December 31, 2024 $ 40,391,302 $ - $ 184,699,998 $ - Level 1 Level 2 Level 3 Warrant Liability Marketable Securities Contingent Consideration December 31, 2022 $ 10,062,500 $ 1,100,000 $ - Recognized in the Callin acquisition - - 3,491,741 Change in fair value ( 2,365,895 ) 35,200 ( 1,922,381 ) December 31, 2023 $ 7,696,605 $ 1,135,200 $ 1,569,360 Warrant liability Warrant liability consists of warrants issued by the Company in public offerings, private placements, and forward purchase contracts. As of December 31, 2024 and 2023, the number of warrants outstanding was 8,046,076 and 8,050,000 , respectively, with a weighted-average exercise price of $ 11.50 . The warrants are exercisable and will expire on September 16, 2027, or earlier upon redemption or liquidation. All warrants are publicly traded. Derivative liability The derivative liability relates to the net new shares from the Tether transaction. Refer to Note 11. The derivative has been valued using the Monte Carlo simulation methodology that included simulating the stock price using a risk-neutral Geometric Brownian Motion-based pricing model. The key inputs used in the model include: Valuation Date December 20, 2024 December 31, 2024 Number of shares 33,333,333 33,333,333 Expected term (months) 1.25 1.00 Risk-free interest rate 4.36 % 4.35 % Expected volatility 104 % 238 % Contingent consideration The contingent consideration liability arose in May 2023 from the Callin acquisition. Refer to Note 3. The increase in fair value during the year is attributable to changes in the Company’s stock price and the increased probability of each contingency being met. On May 15, 2024, the contingent consideration liability was derecognized. One of the contingent payments was settled through the issuance of shares and the remaining contingent payment was reclassified to equity and accounts payable. F- 37 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 18. Credit and Concentration Risks Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company is exposed to credit risk resulting from the possibility that a customer or counterparty to a financial instrument defaults on their financial obligations or if there is a concentration of transactions carried out with the same counterparty. Financial instruments that potentially subject the Company to concentrations of credit risk include cash, cash equivalents, marketable securities and accounts receivable. The Company’s cash, cash equivalents, and marketable securities are held in reputable banks in its country of domicile and management believes the risk of loss to be remote. We maintain cash balances that exceed the insured limits by the Federal Deposit Insurance Corporation and the Canada Deposit Insurance Corporation. The Company is exposed to credit risk in the event of default by its customers. Accounts receivables are recorded at the invoiced amount, do not bear interest, and do not require collateral. For the years ended December 31, 2024 and 2023, one customer accounted for $ 14,927,000 and $ 36,973,000 or 16 % and 46 % of revenue, respectively. As of December 31, 2024, no single customer represented 10% or more of total accounts receivable. As of December 31, 2023, one customer accounted for 35 % of accounts receivable. 19. Related Party Transactions The Company’s related parties include directors, shareholders and key management. Compensation to related parties totaled $ 14,063,586 and $ 13,008,425 for the years ended December 31, 2024 and 2023, respectively. Of the total compensation, the Company paid share-based compensation to key management amounting to $ 9,837,559 and $ 8,046,363 for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, accounts receivable from key management personnel were $ 727,903 and $ nil , respectively. The Company has a vendor relationship with Cosmic Inc. and Kosmik Development Skopje doo (“Cosmic”) to provide content moderation and software development services. Cosmic is controlled by Mr. Pavlovski and Mr. Milnes, each of whom holds a significant number of Rumble shares. The Company incurred related party expenses for these services of $ 3,382,267 and $ 2,849,600 during the year ended December 31, 2024 and 2023, respectively. Accounts payable and accrued liabilities for personnel services was $ 249,545 and $ 276,018 as of December 31, 2024 and 2023, respectively. As discussed in Note 11, on December 20, 2024 the Company entered into support agreements with related parties to ensure that 70,000,000 shares of Class A Common Stock would be tendered and available for purchase if there were insufficient shares tendered by the public to satisfy the tender requirements in the Tether Agreement. There were no other related party transactions during these periods. F- 38 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 20. Segment and Geographic Information The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis to make decisions regarding how to allocate resources and assess performance. The CODM assesses performance and decides how to allocate resources based on net loss and is reported on the consolidated statements of operations as consolidated net loss. The CODM does not evaluate operating segments using asset information. The following presents selected financial information with respect to the Company’s single operating segment: For the year ended December 31, 2024 2023 Revenues $ 95,488,190 $ 80,963,451 Expenses Programming and content $ 120,071,966 $ 129,520,159 Other cost of services 18,400,300 16,636,575 General and administrative 36,646,307 37,125,296 Research and development 18,923,319 15,721,663 Sales and marketing 17,330,925 13,427,021 Acquisition-related transaction costs - 1,151,318 Amortization and depreciation 13,614,587 4,850,812 Changes in fair value of contingent consideration 1,354,357 ( 1,922,381 ) Total expenses 226,341,761 216,510,463 Loss from operations ( 130,853,571 ) ( 135,547,012 ) Interest income 8,083,903 13,594,463 Other expense ( 207,431 ) ( 125,511 ) Changes in fair value of warrant liability ( 32,694,697 ) 2,365,895 Changes in fair value of derivative ( 184,699,998 ) - Loss before income taxes ( 340,371,794 ) ( 119,712,165 ) Income tax benefit 2,009,015 3,291,703 Net loss $ ( 338,362,779 ) $ ( 116,420,462 ) F- 39 Rumble Inc. Notes to the Consolidated Financial Statements (Expressed in U.S. Dollars) For the years ended December 31, 2024 and 2023 20. Segment and Geographic Information (Continued) The following presents revenue by geographic region: For the year ended December 31, 2024 2023 United States $ 89,094,815 $ 74,439,470 Canada 1,928,280 1,042,983 Other 4,465,095 5,480,998 $ 95,488,190 $ 80,963,451 The Company tracks assets by physical location. Long-lived assets consists of property and equipment, net, and are shown below: As of December 31, 2024 2023 United States $ 16,837,694 $ 19,334,231 Canada 230,382 355,756 $ 17,068,076 $ 19,689,987 21. Subsequent Events As previously announced in November 2024, the Company’s Board of Directors has approved a corporate treasury diversification strategy of allocating a portion of the Company’s cash reserves to Bitcoin. This move emphasizes Rumble's belief in Bitcoin as a valuable tool for strategic planning and is designed to accelerate the Company's expansion into cryptocurrency. Rumble's Bitcoin allocation strategy will include purchases, at the discretion of the company, of up to $ 20 million. Subsequent to year end, the Company has purchased approximately $ 17 million in Bitcoin. On January 3, 2025, as required by the Tether Arrangement discussed in Note 11, the Company commenced a self-tender offer to purchase up to 70,000,000 of its issued and outstanding shares of Class A Common Stock. On February 7, 2025, the Company closed its strategic investment with from Tether by issuing 103,333,333 shares of Class A Common Stock at a price of $ 7.50 per share to Tether for $ 775 million in gross proceeds, and on the same date, repurchasing 70,000,000 shares of Class A Common Stock under the self-tender, totaling $ 525 million, excluding fees and expenses related to the tender, resulting in a net new issuance of 33,333,333 shares of Class A Common Stock. Of the 70,000,000 shares of Class A Common Stock repurchased, 69,938,983 were tendered by related parties with whom the Company had executed support agreements. To satisfy the conditions under the support agreements, 20,783,200 vested stock options were exercised for $ 1,395,932 and 41,463,151 shares of Class C Common Stock (and its corresponding ExchangeCo Share) were exchanged for Class A Common Stock. In accordance with ASC 855, the Company’s management reviewed all material events through March 25, 2025, and there were no material subsequent events other than those disclosed above. F- 40 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.