Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with RUM Group Inc's ("RUM" or the "Company") unaudited condensed consolidated interim financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled "1A. Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" included elsewhere in this Quarterly Report and those discussed in our other filings with the SEC. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period. Amounts are presented in U.S. dollars.

Overview

RUM Group Inc. ("RUM" or the "Company") is a holding company that operates an online video platform and a cloud and AI infrastructure business. The Company's video platform enables creators to manage, distribute, and monetize their content by connecting them with brands, publishers, and directly to their subscribers and followers. The Company's cloud and AI infrastructure business provides compute, data center capacity, and related blockchain infrastructure services. Our registered office is 444 Gulf of Mexico Drive, Longboat Key, Florida, 34228. Our shares of Class A common stock and warrants are traded on The Nasdaq Global Market ("Nasdaq") under the symbols "RUM" and "RUMBW", respectively.

Significant Events and Transactions

On February 7, 2025, Tether, the largest company in the digital assets industry and the most widely used dollar stablecoin across the world, purchased 103,333,333 shares of the Company's Class A Common Stock at a price per share of $7.50, totaling $775 million in gross proceeds to the Company. As part of the closing of this transaction, the Company completed a tender offer to purchase 70,000,000 shares of its Class A Common Stock at a price of $7.50 per share for a total of $525 million, excluding fees and expenses related to the tender offer.

On November 10, 2025, the Company announced a $100 million advertising commitment from Tether, representing $50 million advertising commitment per year over a two-year period beginning in the first quarter of 2026.

On June 4, 2026, the Company announced that it had entered into a multi-year agreement under which Together AI will purchase dedicated GPU cloud capacity powered by NVIDIA HGX B300 systems.

On June 17, 2026, the Company announced the closing of the acquisition of Northern Data, a leading provider of AI and high-performance computing (HPC) infrastructure. Following the closing of this acquisition, the Company acquired approximately 85% of Northern Data's outstanding shares. Refer to Note 3, Business Combinations, to our condensed consolidated interim financial statements included elsewhere in this Quarterly Report.

Given favorable market conditions and Northern Data's reported near capacity GPU utilization, the Company and Tether mutually agreed not to enter into the customer agreement originally contemplated by the Tether transaction support agreement, dated November 10, 2025, by and between the Company and Tether, which would have provided for the purchase by Tether of GPU services in an amount up to $75 million per year over a two-year initial term at a fixed price per GPU hour, which price would have represented a significant discount to current prevailing GPU rates.

Revenues

We generate revenues from Audience Monetization and Other Initiatives.

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. Advertising fees are generated by delivering digital video and display advertisements as well as cost-per-message-read advertisements.

Other Initiatives includes digital advertisements that are placed on the Company's network of third-party publisher websites or mobile applications; and cloud. Cloud includes cloud computing and infrastructure services, including colocation services, together with professional services and license agreements related to Rumble Player.

Refer to Note 2, Summary of Significant Accounting Policies, to the Company's condensed consolidated interim financial statements included in the Quarterly Report and annual consolidated financial statements for the year ended December 31, 2025 (the "Annual Financial Statements").

Expenses

Expenses primarily include cost of services, general and administrative, research and development, sales and marketing, acquisition-related transaction costs, amortization and depreciation, and change in fair value of digital assets. The most significant components of our expenses on an ongoing basis are programming and content, service provider costs, and staffing-related costs.

We expect to continue to invest substantial resources to support our growth and anticipate that each of the following categories of expenses will increase in absolute dollar amounts for the foreseeable future.

Cost of Services (Exclusive of Amortization and Depreciation)

Cost of services consists of costs related to obtaining, supporting and hosting the Company's product offerings. These costs primarily include:

●

Programming and content costs related to compensation, including share-based compensation, from whom video and other content are licensed. These costs are paid to these providers based on revenues generated or in fixed amounts. In certain circumstances, we incur additional costs related to incentivizing top content creators to promote and join our platform; and

●

Other cost of services, such as third-party service provider costs, including data center, power, networking and support service costs, as well as payment processing fees and costs paid to publishers.

General and Administrative Expenses

General and administrative expenses consist primarily of payroll and related expenses, which include bonuses and share-based compensation for our executives and certain other employees. General and administrative expenses also include legal and professional fees, business insurance costs, operating lease costs and other costs. As a public company, we expect to continue to incur material costs related to compliance with applicable laws and regulations, including audit and accounting fees, legal, insurance, investor relations and other costs.

Research and Development Expenses

Research and development expenses consist primarily of payroll and related expenses, which include bonuses and share-based compensation for our employees on our engineering and development teams. Research and development expenses also include consultant fees related to our development activities to originate, develop and enhance our platforms.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of payroll and related expenses, which include bonuses and share-based compensation for our employees associated with our sales and marketing functions. Sales and marketing expenses also include consultant fees and direct marketing costs related to the promotion of our platforms and solutions. We expect our sales and marketing expenses to increase over time as we promote our platform and brand, increase marketing activities, and grow domestic and international operations.

Acquisition-related Transaction Costs

Acquisition-related transaction costs consist of professional fees and other expenses incurred in connection with acquisition-related initiatives.

Amortization and Depreciation

Amortization and depreciation represent the recognition of costs of assets used in operations, including property and equipment and intangible assets, over their estimated service lives.

Change in Fair Value of Digital Assets

Changes in fair value of digital assets reflect gains or losses arising from the remeasurement of our bitcoin investment.

Non-Operating Income and Other Items

Interest Income (Expense)

Interest income consists of interest earned on our cash and cash equivalents, which we invest in highly liquid instruments such as money market funds, treasury bills and term deposits, together with interest from other investment arrangements. Interest expense primarily relates to our note payable and other borrowing arrangements.

Other Income (Expense)

Other income (expense) consists of miscellaneous income earned and expenses incurred outside of the normal course of business as well as foreign exchange gains and losses on transactions denominated in currencies other than the respective entities' functional currencies.

Change in Fair Value of Contingent Consideration

Change in fair value of contingent consideration reflects gains or losses arising from the periodic remeasurement of the contingent consideration receivable recognized in connection with the acquisition of Northern Data.

Change in Fair Value of Warrant Liability

We account for our outstanding warrants in accordance with ASC 815-40, under which the warrants issued in connection with the Business Combination do not meet the criteria for equity classification, and must be recorded as liabilities. As these warrants meet the definition of a liability under ASC 815, they are measured at fair value at inception and at each reporting date in accordance with the guidance in ASC 820, with any subsequent changes in fair value recognized in the consolidated statement of operations in the applicable period of change.

Change in Fair Value of Derivative

The forward purchase contracts, as well as the embedded derivatives in both the notes payable and the funding arrangement, do not meet the criteria for equity classification and must be recorded as liabilities in accordance with guidance contained in ASC 815-40, Derivatives and Hedging Contracts in Entity's Own Equity ("ASC 815-40"). Because these derivatives meets the definition of a liability under ASC 815, Derivatives and Hedging ("ASC 815"), they are measured at fair value at inception and at each reporting date in accordance with the guidance in ASC 820, Fair Value Measurement ("ASC 820"), with any subsequent changes in fair value recognized in the consolidated statement of operations in the applicable period of change.

Income Tax (Expense) Benefit

Income tax (expense) benefit consists of the estimated federal, state, and foreign income taxes incurred in the U.S. and other jurisdictions in which we operate.

Deferred Tax (Expense) Benefit

Deferred tax (expense) benefit represents the net change in our deferred tax assets and liabilities. It arises from temporary differences between the financial reporting bases and tax bases of assets and liabilities, as well as from net operating loss carryforwards and other tax attributes.

Key Business Metrics

To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we have historically used the key business metrics described below. See "Transition of Key Business Metrics" below for further information relating to our reporting of these metrics in future periods.

Monthly Active Users ("MAUs")

We use MAUs as a measure of audience engagement to help us understand the volume of users engaged with our content on a monthly basis. MAUs represent the total web, mobile app, and connected TV users of Rumble for each month, which allows us to measure our total user base calculated from data provided by Google, a third-party analytics provider. Google defines "active users" as the "[n]umber of distinct users who visited your website or application." We have used the Google analytics systems since we first began publicly reporting MAU statistics, and the resulting data have not been independently verified.

As of July 1, 2023, Universal Analytics ("UA"), Google's analytics platform on which we historically relied for calculating MAUs using company-set parameters, was phased out by Google and ceased processing data. At that time, Google Analytics 4 ("GA4") succeeded UA as Google's next-generation analytics platform, which has been used to determine MAUs since the third quarter of 2023. Although Google has disclosed certain information regarding the transition to GA4, Google does not currently make available sufficient information relating to its new GA4 algorithm for us to determine the full effect of the switch from UA to GA4 on our reported MAUs. Because Google has publicly stated that metrics in UA "may be more or less similar" to metrics in GA4, and that "[i]t is not unusual for there to be apparent discrepancies" between the two systems, we are unable to determine whether the transition from UA to GA4 has had a positive or negative effect, or the magnitude of such effect, if any, on our reported MAUs. It is therefore possible that MAUs that we reported based on the UA methodology ("MAUs (UA)") for periods prior to July 1, 2023, cannot be meaningfully compared to MAUs based on the GA4 methodology ("MAUs (GA4)") in subsequent periods.

MAUs (GA4) represent the total web, mobile app, and connected TV users of Rumble for each month, which allows us to measure our total user base calculated from data provided by Google. Connected TV users were not counted within MAUs within MAUs (UA) for periods prior to July 1, 2023, and we believe the number of such users was immaterial in those prior periods. We also believe that fewer than 1 million MAUs in the current period are from connected TV, making them similarly immaterial. Google's parameters for measuring "active users" appear to exclude many, but not all, users who access content on Rumble through "embedded" videos on domains other than rumble.com, and we are unable to determine the exact number of users who access "embedded" content within our total number of MAUs. In addition, MAUs (GA4) may rely on statistical sampling and may be based on estimates of data that Google is missing "due to factors such as cookie consent."

As with our earlier MAU reporting, there is a potential for minor overlap in the resulting data due to users who access Rumble's content through the web, our mobile apps, and connected TVs in a given measurement period; however, given that we believe this minor overlap to be immaterial, we do not separately track or report "unique users" as distinct from MAUs. Our reported MAUs have not historically included users of Locals. However, starting in mid-May 2024, Locals users began using Rumble's single sign-on technology to access their accounts, which we expected would reduce the number of Locals users not included in our MAU reporting. We also do not separately report the number of users who register for accounts in any given period, which is different from MAUs.

Like many other major online platforms, we rely on significant paid advertising in order to attract users to our platform; however, we cannot be certain that all or substantially all activity that results from such advertising is genuine. Spam activity, including inauthentic and fraudulent user activity, if undetected, may contribute to some amount of overstatement of our performance indicators, including reporting of MAUs by Google. We continually seek to improve our ability to estimate the total number of spam-generated users, and we eliminate material activity that is substantially likely to be spam from the calculation of our MAUs. We will not, however, succeed in identifying and removing all spam.

On June 11, 2026, we implemented a consent management platform for users to decline tracking technologies and cookies, including for analytics purposes, in accordance with applicable privacy laws. As a result, the number of viewers we can directly measure in Google Analytics has been reduced. However, we enabled Google Consent Mode, which uses statistical modeling to estimate the activity of non-consenting users based on the observed behavior of consenting users and other signals, without the use of tracking cookies. Because our reported MAUs consist of directly measured users and modeled estimates as of that date, MAU figures for the three months ended June 30, 2026 and future periods may not be directly comparable to previously reported figures. The modeled component of our MAUs is inherently an estimate and is subject to limitations (e.g., we have limited visibility into, and do not independently verify, the methodology of Google Consent Mode's behavioral modeling).

Our MAUs (GA4) were 57 million on average in the second quarter of 2026, an increase of 2% from the first quarter of 2026. We believe that the increase is driven by marketing investment in Rumble Shorts and international expansion.

Average Revenue Per User ("ARPU")

We use ARPU as a measure of our ability to monetize our user base. Quarterly ARPU is calculated as quarterly Audience Monetization revenue divided by MAUs for the relevant quarter (as reported by Google Analytics). ARPU does not include Other Initiatives revenue.

ARPU was $0.48 in the second quarter of 2026, an increase of 20% from the first quarter of 2026. The increase from the first quarter of 2026 is attributable to higher advertising revenue.

We regularly review, have adjusted in the past, and may in the future adjust our processes for calculating our key business metrics to improve their accuracy, including through the application of new data or technologies or product changes that may allow us to identify previously undetected spam activity. As a result of such adjustments, our key business metrics may not be comparable period-over-period.

Transition of Key Business Metrics

Historically, we have reported MAUs and ARPU as key operating metrics for our video business. We use MAUs as a measure of audience engagement to understand the volume of users engaged with our content on a monthly basis. MAUs represent the total web, mobile app, and connected TV users of Rumble for each month, calculated from data provided by Google, a third-party analytics provider. We use ARPU as a measure of our ability to monetize our user base. Quarterly ARPU is calculated as quarterly Audience Monetization revenue divided by MAUs for the relevant quarter (as reported by Google Analytics) and does not include Other Initiatives revenue.

With the completion of our acquisition of Northern Data AG on June 17, 2026, the Company has taken a major step toward becoming a significant participant in the AI infrastructure business, and now operates two distinct businesses: our video platform ("Rumble") and our AI and cloud infrastructure business ("Quake AI"). While both businesses are core to the Company's strategy, their economics and capital profiles are materially different, including different revenue models and capital requirements. As a result, the manner in which management evaluates the Company's business has changed, and management has determined that consolidated audience-based metrics such as MAUs and ARPU are no longer meaningful measures of the Company's overall performance.

Accordingly, the Company will report MAUs and ARPU as key business metrics for the last time for the quarterly period ended June 30, 2026. Beginning with our third fiscal quarter of 2026, the Company intends to present its results of operations for each of its two businesses, Rumble and Quake AI, on a revenue and operating-income basis. Management believes this presentation will align the Company's external reporting with the manner in which management now operates the business, and reflects the management team's focus on profitable growth across the two business units. As the AI infrastructure business scales, the Company will evaluate and introduce additional operating metrics as appropriate.

Results of Operations

The following table sets forth our results of operations data for the periods presented:

Comparisons for three months ended June 30, 2026 and 2025:

The following table sets forth our unaudited condensed consolidated interim statements of operations for the three months ended June 30, 2026 and 2025 and the dollar and percentage change between the two periods:

For the three months ended June 30,		2026				2025				Variance ($)				Variance (%)
Revenues		$	40,366,736			$	25,084,631			$	15,282,105				61	%
Expenses
Cost of services (content, hosting and other)		$	30,607,067			$	26,542,307			$	4,064,760				15	%
General and administrative			16,327,551				11,666,331				4,661,220				40	%
Research and development			6,795,275				4,825,884				1,969,391				41	%
Sales and marketing			10,379,335				7,891,526				2,487,809				32	%
Acquisition-related transaction costs			28,314,638				2,388,105				25,926,533				1,086	%
Amortization and depreciation			16,289,896				3,602,160				12,687,736				352	%
Changes in fair value of digital assets			2,435,937				(5,192,441	)			7,628,378				(147	)%
Total expenses			111,149,699				51,723,872				59,425,827				115	%
Loss from operations			(70,782,963	)			(26,639,241	)			(44,143,722	)			166	%
Interest income			742,622				2,898,945				(2,156,323	)			(74	)%
Other expense			(4,831,299	)			(22,773	)			(4,808,526	)			21,115	%
Change in fair value of contingent consideration			(486,931	)			-				(486,931	)			*NM
Change in fair value of warrant liability			(5,672,458	)			(6,461,861	)			789,403				(12	)%
Change in fair value of derivative			283,991				-				283,991				*NM
Loss before income taxes			(80,747,038	)			(30,224,930	)			(50,522,108	)			167	%
Income tax expense			(184,149	)			-				(184,149	)			*NM
Deferred tax expense			(3,998	)			-				(3,998	)			*NM
Net loss		$	(80,935,185	)		$	(30,224,930	)		$	(50,710,255	)			168	%

*

NM - Percentage change not meaningful.

Revenues

Revenues increased by $15.3 million to $40.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, of which $5.6 million was attributable to an increase in Audience Monetization revenues and $9.7 million attributed to higher Other Initiatives revenues. The increase in Audience Monetization revenues was driven by $5.9 million in advertising revenue and $0.2 million from licensing and platform hosting fees, offset by a $0.5 million decrease in subscription revenue. The increase in Other Initiatives revenue was due to the acquisition of Northern Data, which from the date of acquisition contributed $10.1 million from cloud computing and colocation services. Excluding Northern Data, Other Initiatives revenue decreased by $0.4 million, reflecting reduced advertising inventory being monetized by our publisher network and a decline in cloud services revenue.

Cost of Services

Cost of services increased by $4.1 million to $30.6 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was driven by $2.1 million of higher programming and content costs and $2.5 million of incremental data center-related expenses associated with the acquisition of Northern Data, partially offset by a $0.5 million decrease in other cost of services.

General and Administrative Expenses

General and administrative expenses increased by $4.7 million to $16.3 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was driven by the acquisition of Northern Data, which contributed $5.0 million of payroll and related expenses and other administrative costs. Excluding Northern Data, the remaining variance reflects a $0.9 million increase in payroll and related expenses and a $0.4 million increase in other administrative costs, partially offset by a $1.6 million decrease in professional fees.

Research and Development Expenses

Research and development expenses increased by $2.0 million to $6.8 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was due to an increase in payroll and related expenses of $1.1 million and higher costs associated with computer software, hardware, and other expenditures used in research and development-related activities of $0.9 million.

Sales and Marketing Expenses

Sales and marketing expenses increased by $2.5 million to $10.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was attributable to higher marketing and public relations spend of $1.2 million, increased payroll and related expenses of $1.1 million, and other sales and marketing-related expenditures of $0.2 million.

Acquisition-related Transaction Costs

Acquisition-related transaction costs increased by $ 25.9 million to $28.3 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is driven by professional fees and other expenses incurred in connection with acquisition-related initiatives.

Amortization and Depreciation

Amortization and depreciation increased by $12.7million to $14.9 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is driven by $12.1 million of additional depreciation and amortization directly related to the Northern Data acquisition, as well as $0.4 million from depreciation on our property and equipment as we continue to build out our infrastructure and $0.2 million increase in amortization from intangible assets.

Change in Fair Value of Digital Assets

Change in fair value of digital assets expense increased by $7.6 million to $2.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The change in fair value of digital assets reflects the remeasurement of our bitcoin investment to its fair value at each reporting period.

Interest Income

Interest income decreased by $2.2 million to $0.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was due to a $1.2 million reduction in interest income from the Company's investments in money market funds, treasury bills, and term deposits, with the remaining variance attributable to interest expense on notes payable, partially offset by additional interest income generated in connection with the acquisition of Northern Data.

Other Expense

Other expense increased by $4.8 million to $4.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was driven by foreign currency fluctuations arising from the remeasurement of monetary balances denominated in currencies other than the respective entities' functional currencies.

Change in Fair Value of Contingent Consideration

Change in fair value of contingent consideration expense decreased by $0.5 million to $0.5 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The change in fair value of contingent consideration reflects the remeasurement of contingent consideration receivable recognized in connection with the Northern Data acquisition at each reporting period.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability decreased by $0.8 million, resulting in a loss of $5.7 million for the three months ended June 30, 2026. The warrant liability arose in connection with the warrants offered as part of the Business Combination. As these warrants meet the classification of a financial liability in accordance with ASC 815-40, the related warrant liability was measured at its fair value, determined in accordance with ASC 820, at each reporting period. The fair value of this warrant liability was measured using the fair value of the Company's warrants listed on the Nasdaq. The decrease in the change in fair value of warrant liability was directly attributable to changes in the trading price of the Company's warrants.

Change in Fair Value of Derivative

Change in fair value of derivative increased by $0.3 million, resulting in a gain of $0.3 million for the three months ended June 30, 2026. The derivative arose in connection with the embedded derivatives in both the notes payable and the funding arrangement. As the embedded derivatives meet the classification of a financial liability in accordance with ASC 815-40, the related derivatives were measured at its fair value, determined in accordance with ASC 820, at each reporting period. The increase in the change in fair value of the derivative reflects the remeasurement of these derivatives during the period.

Comparisons for six months ended June 30, 2026 and 2025:

The following table sets forth our unaudited condensed consolidated interim statements of operations for the six months ended June 30, 2026 and 2025 and the dollar and percentage change between the two periods:

For the six months ended June 30,		2026				2025				Variance ($)				Variance (%)
Revenues		$	65,826,532			$	48,791,421			$	17,035,111				35	%
Expenses
Cost of services (content, hosting and other)		$	57,604,250			$	56,578,481			$	1,025,769				2	%
General and administrative			26,724,111				28,300,054				(1,575,943	)			(6	)%
Research and development			12,535,189				9,614,995				2,920,194				30	%
Sales and marketing			18,911,816				11,530,452				7,381,364				64	%
Acquisition-related transaction costs			33,161,645				2,388,105				30,773,540				1,289	%
Amortization and depreciation			20,267,766				6,894,869				13,372,897				194	%
Changes in fair value of digital assets			6,501,540				(3,493,025	)			9,994,565				(286	)%
Total expenses			175,706,317				111,813,931				63,892,386				57	%
Loss from operations			(109,879,785	)			(63,022,510	)			(46,857,275	)			74	%
Interest income			2,628,065				5,083,231				(2,455,166	)			(48	)%
Other expense			(4,867,685	)			(47,377	)			(4,820,308	)			10,174	%
Change in fair value of contingent consideration			(486,931	)			-				(486,931	)			*NM
Change in fair value of warrant liability			1,327,928				15,442,843				(14,114,915	)			(91	)%
Change in fair value of derivative			283,991				9,700,000				(9,416,009	)			(97	)%
Loss before income taxes			(110,994,417	)			(32,843,813	)			(78,150,604	)			238	%
Income tax expense			(207,140	)			(31,310	)			(175,830	)			562	%
Deferred tax expense			(3,998	)			-				(3,998	)			*NM
Net loss		$	(111,205,555	)		$	(32,875,123	)		$	(78,330,432	)			238	%

*

NM - Percentage change not meaningful.

Revenues

Revenues increased by $17.0 million to $ 65.8 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, of which $8.1 million was attributable to an increase in Audience Monetization revenues and $8.9 million attributed to higher Other Initiatives revenues. The increase in Audience Monetization revenues was driven by $7.0 million in advertising revenue, $0.8 million higher subscription revenue, and $0.3 million from licensing and platform hosting fees. The increase in Other Initiatives revenue was due to the acquisition of Northern Data, which from the date of acquisition contributed $10.1 million from cloud computing and colocation services. Excluding Northern Data, Other Initiatives revenue decreased by $1.2 million related to the reduction in advertising inventory being monetized by our publisher network.

Cost of Services

Cost of services increased by $1.0 million to $57.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was attributable to $2.5 million of incremental data center-related expenses associated with the acquisition of Northern Data, partially offset by a $1.5 million decrease in programming, content, and other cost of services.

General and Administrative Expenses

General and administrative expenses decreased by $1.6 million to $26.7 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease was primarily driven by a $5.8 million reduction in payroll and related expenses and a $2.0 million reduction in professional fees, partially offset by a $1.2 million increase in other administrative expenses. The decrease in payroll and related expense was attributable to the absence of prior-year one-time items, including a one-time $4.8 million increase in compensation costs related to the departures of an executive and a director; a one-time $2.3 million increase in payroll taxes associated with stock options exercised related to the tender offer in the first quarter of 2025 stemming from the strategic investment from Tether; offset by a $1.7 million decrease in share-based compensation in the first quarter of 2025 related to contingent shares issued in connection with the Callin acquisition. The remaining variance was attributable to lower payroll and related expenses. Additionally, the decrease in general and administrative expenses was partially offset by the acquisition of Northern Data, which contributed $4.5 million of payroll and related expenses and other administrative costs.

Research and Development Expenses

Research and development expenses increased by $2.9 million to $12.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was due to an increase in payroll and related expenses of $1.7 million and higher costs associated with computer software, hardware, and other expenditures used in research and development-related activities of $1.2 million.

Sales and Marketing Expenses

Sales and marketing expenses increased by $7.4 million to $19.0 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was attributable to higher marketing and public relations spend of $5.0 million as well as an increase in payroll and related expenses of $2.4 million.

Acquisition-related Transaction Costs

Acquisition-related transaction costs increased by $30.8 million to $33.2 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was driven by professional fees and other expenses incurred in connection with acquisition-related initiatives.

Amortization and Depreciation

Amortization and depreciation increased by $13.4 million to $20.3 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was driven by $12.1 million of additional depreciation and amortization directly related to the Northern Data acquisition, as well as $1.0 million from depreciation on our property and equipment as we continue to build out our infrastructure and $0.3 million increase in amortization from intangible assets.

Change in Fair Value of Digital Assets

Change in fair value of digital assets increased by $10.0 million to $6.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change in fair value of digital assets reflects the remeasurement of our Bitcoin investment to its fair value at each reporting period.

Interest Income

Interest income decreased by $2.5 million to $2.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease was due to a $1.5 million reduction in interest income from the Company's investments in money market funds, treasury bills, and term deposits, with the remaining variance attributable to interest expense on notes payable, partially offset by additional interest income generated in connection with the acquisition of Northern Data.

Other Expense

Other expense increased by $4.8 million to $4.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was driven by foreign currency fluctuations arising from the remeasurement of monetary balances denominated in currencies other than the respective entities' functional currencies.

Change in Fair Value of Contingent Consideration

Change in fair value of contingent consideration expense decreased by $0.5 million to $0.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change in fair value of contingent consideration reflects the remeasurement of contingent consideration receivable recognized in connection with the Northern Data acquisition at each reporting period.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability decreased by $14.1 million, resulting in a gain of $1.3 million for the six months ended June 30, 2026. The warrant liability arose in connection with the warrants offered as part of the Business Combination. As these warrants meet the classification of a financial liability in accordance with ASC 815-40, the related warrant liability was measured at its fair value, determined in accordance with ASC 820, at each reporting period. The fair value of this warrant liability was measured using the fair value of the Company's warrants listed on the Nasdaq. The decrease in the change in fair value of warrant liability was directly attributable to changes in the trading price of the Company's warrants.

Change in Fair Value of Derivative

Change in fair value of derivative decreased by $9.4 million, resulting in a gain of $1.6 million for the six months ended June 30, 2026, compared to a gain of $9.7 million for the six months ended June 30, 2025. The decrease reflects a gain in the current period on the remeasurement the embedded derivatives in both the notes payable and the funding arrangement, compared to a gain in the prior-year period on the remeasurement of derivatives associated with forward purchase contracts entered into in connection with the Tether transaction, each classified as a financial liability under ASC 815-40 and measured at fair value in accordance with ASC 820.

Liquidity and Capital Resources

Our principal sources of liquidity are cash on hand and funds previously raised. The primary short-term requirements for liquidity and capital are to fund general working capital and capital expenditures.

As of June 30, 2026, our cash and cash equivalents balance was $203.3 million. Cash and cash equivalents consist of cash on deposit with banks and amounts held in money market funds, treasury bills, and term deposits.

Our corporate treasury diversification strategy, under which we allocate a portion of excess cash reserves to bitcoin, reflects management's view of bitcoin as a strategic asset and supports the Company's broader expansion into cryptocurrency-related activities. From a liquidity and capital resources standpoint, we consider our bitcoin holdings to be part of our pool of liquid assets that can be deployed, together with cash and cash equivalents, to fund operations and strategic initiatives as needed. As of June 30, 2026, our bitcoin holdings were valued at $17.2 million and consisted of 293.14 bitcoin. Other digital assets held by the Company are generally not intended to be used as near-term sources of liquidity and are therefore excluded from this liquidity analysis.

As we have consistently stated, we are using a substantial portion of funds to acquire content by providing economic incentives to a small number of content creators. As of June 30, 2026, we had entered into programming and content agreements with a minimum contractual cash commitment of approximately $32 million. A significant amount of these minimum contractual cash commitments will be paid over 12 to 24 months, commencing in 2026.

In addition, as our cloud infrastructure business continues to grow, we expect to undertake additional capital investments over time to support our operational and strategic objectives in this area.

The following table presents a summary of the unaudited condensed consolidated interim statements of cash flows for the six months ended June 30, 2026 and 2025.

		Six months ended June 30,
Net cash provided by (used in):		2026				2025				Variance ($)
Operating activities		$	(66,145,380	)		$	(30,376,137	)		$	(35,769,243	)
Investing activities			5,026,158				(20,752,005	)			25,778,163
Financing activities			26,066,401				220,919,580				(194,853,179	)

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2026 primarily consisted of net loss adjusted for certain non-cash items, including $20.3 million in amortization and depreciation, $12.4 million in share-based compensation, $6.5 million in losses from changes in the fair value of digital assets, $5.7 million in unrealized foreign exchange losses, $3.7 million in non-cash lease expense, $1.0 million in provision for credit losses and $0.5 million in losses from changes in the fair value of contingent consideration, partially offset by $0.3 million in gains from changes in the fair value of derivatives, $1.5 million in net trade and barter revenue and expense and $1.3 million in gains from changes in the fair value of warrants, as well as changes in operating assets and liabilities. The increase in net cash used in operating activities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due to changes in net loss adjusted for certain non-cash items, offset in part by changes in operating assets and liabilities, as well as the inclusion of Northern Data's operating results and working capital balances following the acquisition.

Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2026 consisted of $51.0 million in cash acquired in connection with the acquisition of Northern Data, offset by $43.2 million in purchases of capital assets and $2.8 million in purchases of intellectual property. The decrease in net cash provided by investing activities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due to cash acquired in connection with the acquisition of Northern Data, partially offset by an increase in purchases of capital assets and purchases of intellectual property.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 consisted of the issuance of $36.2 million in pre-funded warrants to purchase shares of Class A Common Stock, completed in connection with the acquisition of Northern Data. The transaction incurred $11.5 million in share issuance costs. Additionally, the net cash provided by financing activities includes $2.9 million from proceeds related to stock options exercised and employee stock purchase plan contributions, offset by $1.5 million in taxes paid from the net share settlement of share-based compensation. The decrease in net cash provided by financing activities compared to the six months ended June 30, 2025 was due to the proceeds from the strategic investment from Tether in the prior year period, partially offset by the proceeds from the issuance of pre-funded warrants in connection with the acquisition of Northern Data as well as the proceeds from stock options exercised and employee stock purchase plan contributions.

Summary of Quarterly Results

Information for the most recent quarters presented are as follows:

		June 30, 2026				Mar 31, 2026				Dec 31, 2025				Sep 30, 2025
Total revenue		$	40,366,736			$	25,459,796			$	27,068,454			$	24,762,445
Net loss		$	(80,935,185	)		$	(30,270,370	)		$	(32,693,477	)		$	(16,261,762	)

		Jun 30, 2025				Mar 31, 2025				Dec 31, 2024				Sep 30, 2024
Total revenue		$	25,084,631			$	23,706,790			$	30,228,287			$	25,056,904
Net loss		$	(30,224,930	)		$	(2,650,193	)		$	(236,752,626	)		$	(31,539,413	)

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use certain non-U.S. GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-U.S. GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. We use the non- U.S. GAAP financial measure of Adjusted EBITDA, which is defined as net income (loss) excluding interest income (expense), net, other income (expense), net, provision for income taxes, depreciation and amortization, share-based compensation expense, acquisition-related transaction costs, change in fair value of warrants, change in fair value of digital assets, and change in the fair value of derivative. The Company's management believes that it is important to consider Adjusted EBITDA, in addition to net income (loss), as it helps identify trends in our business that could otherwise be masked by the effect of the gains and losses that are included in net income (loss) but excluded from Adjusted EBITDA.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), the nearest U.S. GAAP equivalent. As a result of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other financial results presented in accordance with U.S. GAAP. The following table presents a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, to Adjusted EBITDA:

Reconciliation of Adjusted EBITDA

		Three months ended June 30,								Six months ended June 30,
		2026				2025				2026				2025
Net loss		$	(80,935,185	)		$	(30,224,930	)		$	(111,205,555	)		$	(32,875,123	)
Adjustments:
Amortization and depreciation			16,289,896				3,602,160				20,267,766				6,894,869
Share-based compensation expense			7,130,217				5,379,294				12,364,333				14,064,097
Interest income			(742,622	)			(2,898,945	)			(2,628,065	)			(5,083,231	)
Other expense			4,831,299				22,773				4,867,685				47,377
Income tax expense			184,149				-				207,140				31,310
Deferred tax expense			3,998				-				3,998				-
Change in fair value of warrants liability			5,672,458				6,461,861				(1,327,928	)			(15,442,843	)
Change in fair value of contingent consideration			486,931				-				486,931				-
Change in fair value of digital assets			2,435,937				(5,192,441	)			6,501,540				(3,493,025	)
Change in fair value of derivative			(283,991	)			-				(283,991	)			(9,700,000	)
Acquisition-related transaction costs			28,314,638				2,388,105				33,161,645				2,388,105
Adjusted EBITDA		$	(16,612,275	)		$	(20,462,123	)		$	(37,584,501	)		$	(43,168,464	)

Critical Accounting Policies and Estimates

We prepare our unaudited condensed consolidated interim financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of the unaudited condensed consolidated interim financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We evaluate our estimates on a continuous basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the following key accounting policies require significant judgments and estimates used in the preparation of our unaudited condensed consolidated interim financial statements. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Accordingly, we believe that these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

For further information on the summary of significant accounting policies and the effect on our unaudited condensed consolidated interim financial statements, see Note 2, Summary of Significant Accounting Policies, to the Annual Financial Statements.

Acquisitions (Business Combination vs Asset Acquisition)

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 would be accounted for as an asset acquisition. If not, the Company would apply its judgment to determine whether the acquired net assets meet the definition of a business by considering if the set includes an acquired input, process, and the ability to create outputs.

Property and Equipment and Intangible Assets

The Company acquired property and equipment as well as intangible assets in connection with the acquisition of Northern Data. A valuation was performed to determine the estimated fair value of these assets related to the acquisition. Judgment is required to estimate the fair value of these property and equipment and identifiable intangible assets. We may use quoted market prices, prices for similar assets, present value techniques, and other valuation techniques to prepare these estimates. We may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the degree of judgment involved in our estimation techniques, our estimate may result in significant differences in the estimation of fair value.

Contingent Consideration Receivable

In connection with the acquisition of Northern Data, the Company recognized a contingent consideration. A valuation was performed to determine the estimated fair value of the contingent consideration receivable using a scenario-weighted income approach that reflects four outcome scenarios and incorporates key unobservable inputs including scenario weightings, estimated selling dates, estimated selling prices, forecasted net profits, as well as changes in key market data such as foreign exchange rates, and weighted average cost of capital. Because these estimates require significant judgment in selecting and applying the underlying assumptions, the resulting fair value measurement may differ materially from the actual amounts ultimately realized.

Notes Payable and Derivative Liability

The Company issued a euro-denominated note payable to Tether that contains a conversion feature, which was assessed as an embedded derivative requiring bifurcation from the host contract. The fair values of both the note and the related derivative were estimated using a binomial lattice model based on a modified Cox-Ross-Rubinstein framework. Because these valuation techniques involve significant judgment in the selection of assumptions and inputs, the resulting estimates of fair value could differ materially from actual outcomes.

Share-based Compensation

The Company issues equity awards such as stock options and restricted stock units to certain of its employees, directors, officers and consultants. We account for equity awards by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the award.

For equity awards with a service condition, the fair value is estimated on the grant date using the Black-Scholes option pricing model, which takes into account the following inputs: stock price, expected term, volatility, and risk-free interest rate.

For equity awards with a market condition, the fair value is estimated on the grant date using a Monte Carlo simulation methodology that includes simulating the stock price using a risk-neutral Geometric Brownian Motion-based pricing model. Changes in the estimated inputs or using other option valuation methods may result in materially different option values and share-based compensation expense.

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 the performance condition will be met. Where the performance condition underlying an award is a change in control, the Company would consider the performance condition to be probable only when it occurs.

Income Taxes

The Company is subject to income taxes in the United States and other foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

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 income tax positions. 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.

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. The trade and barter expense is recorded in sales and marketing expenses in the unaudited condensed consolidated interim statements of operations.

New Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, to our Annual Financial Statements for the years ended December 31, 2025 and 2024.

JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to elect to adopt new or revised accounting standards under private company adoption timelines. Accordingly, the timing of our adoption of new or revised accounting standards will not be the same as other public companies that are not emerging growth companies or that have opted out of using such extended transition period and our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.