PAAI 10-K & 10-Q changes, risk factors and insider trading
Paradium.AI, Inc. · NYSE · Cable & Other Pay Television Services · CIK 894871 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We cannot guarantee that we will repurchase shares of our common stock pursuant to our share repurchase program or that our share repurchase program will enhance long-term shareholder value. Repurchases of shares of our common stock could also increase the volatility of the price of our common stock and could diminish our cash reserves.”
Removed heading “Our license agreement to operate the Sports Illustrated media business was terminated by the licensor, which may materially harm our business, operating results and financial condition.”
Removed heading “Our financial condition raises substantial doubt about our ability to continue as a “going concern” through one year from the date of the issuance of the financial statements contained herein due to the recurrence of net losses.”
Removed heading “We are currently out of compliance with the continued listing standards of the NYSE American. Our failure to regain compliance with the continued listing standards may result in the delisting of our common stock.”
Largest changes
“Our financial condition raises substantial doubt about our ability to continue as a “going concern” through one year from the date of the issuance of the financial statements contained herein due to the recurrence of net losses.”see in full comparison
“We are currently out of compliance with the continued listing standards of the NYSE American. Our failure to regain compliance with the continued listing standards may result in the delisting of our common stock.”see in full comparison
“If NYSE American delists our common stock from trading on its exchange due to our failure to meet the NYSE American’s continued listing standards, we and our security holders could face significant material adverse consequences, including, but not limited to, a lack of trading market for our common stock, reduced liquidity, decreased analyst coverage of our common stock and an inability for us to obtain additional financing to fund our operations.”see in full comparison
“Our future liquidity and capital requirements will depend upon numerous factors, including the success of the Platform, our offerings, competing technological developments, and general economic and market conditions, which have presented substantial uncertainty in recent months. We may need to raise funds through public or private financings, strategic relationships, or other arrangements. There can be no assurance that such funding will be available on terms acceptable to us, or at all. …”see in full comparison
“The loss of the rights to operate the Sports Illustrated media business, in addition to the alleged and disputed termination payments that are due following termination of the Licensing Agreement, could harm our competitiveness in our industry, damage any goodwill we may have generated, and otherwise have a material adverse effect on our business, operating results and financial condition. …”see in full comparison
“We cannot guarantee that we will repurchase shares of our common stock pursuant to our share repurchase program or that our share repurchase program will enhance long-term shareholder value. Repurchases of shares of our common stock could also increase the volatility of the price of our common stock and could diminish our cash reserves.”see in full comparison
Full comparison: every changed paragraph (79)
Investing
in our common stock involves a high degree of risk. Listed below is a summary of the principal risks that could adversely affect our
business, operations and financial results. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. There are numerous factors that affect our business, operations and financial results, many
of which are beyond our control. The risks described below are not the only risks we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our business operations. If any of the following risks actually occur,
our business, financial condition, results of operations, cash flows, or our ability to pay our debts and other liabilities could suffer.
As a result, the trading price and liquidity of our securities could decline, perhaps significantly, and you could lose all or part of
your investment. The risks discussed below also include forward-looking statements and our actual results may differ substantially from
those discussed in these forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.Information.”
All dollar figures are presented in thousands unless otherwise stated.
•our users increasingly engage with competing platforms instead of the Platform;
•we fail to introduce new and exciting products and services, or such products and services do not achieve a high level of market acceptance;
•we fail to accurately anticipate user needs, or we fail to innovate and develop new software and products that meet these needs;
•we fail to price our products competitively;
•we do not provide a compelling user experience because of the decisions we make regarding the type and frequency of advertisements that we display;
•we are unable to combat spam, bugs, malwares, viruses, hacking, or other hostile or inappropriate usage of our products or the Platform (as defined below);
•there are changes in user sentiment about the quality or usefulness of our existing products in the short-term, long-term, or both;
•there are increased user concerns related to privacy and information sharing, safety, or security on the Platform;
•there are adverse changes in our products or services that are mandated by legislation, regulatory authorities, or legal proceedings;
•technical or other problems frustrate the user experience, particularly if those problems prevent us from delivering our products in a fast and reliable manner;
•we, our Publisher Partners, or other companies in our industry are the subject of adverse media reports or other negative publicity, some of which may be inaccurate or include confidential information that we are unable to correct or retract; or
•we fail to maintain our brand image or our reputation is damaged.
Our
license agreement to operate the Sports Illustrated media business was terminated by the licensor, which may materially harm our business,
operating results and financial condition.
As
described in Note 25, Commitments and Contingencies, to our accompanying consolidated financial statements under Item 8 of
this Annual Report, ABG-SI, LLC (“ABG”) has alleged that we failed to make a quarterly payment due to ABG pursuant to
the Licensing Agreement, dated June 14, 2019, with ABG (“Licensing Agreement”) of approximately $3.8 million, and on
January 18, 2024, ABG notified us of the termination of the Licensing Agreement, effective immediately, in accordance with its
rights under the Licensing Agreement. As stated in the notice of termination, ABG believes that a fee of $45.0 million became
immediately due and payable by us to ABG pursuant to the terms and conditions of the Licensing Agreement. In addition, upon
termination of the Licensing Agreement, all outstanding and unvested warrants to purchase shares of Arena common stock issued to ABG
in connection with the Licensing Agreement became immediately vested and exercisable.
On March 18, 2024, ABG announced it had
reached an agreement in principle with a third party to become the new operator of the Sports Illustrated media business. On April 1,
2024, ABG Group filed an action against us and Manoj Bhargava, the former interim CEO of the Company and a principal stockholder, alleging,
among other things, breach of contract in the United States District Court of the Southern District of New York seeking damages in the
amount of $48.8 million ($3.8 million royalty fee liability and $45.0 million termination fee liability as reflected in current liabilities
from discontinued operations). See Item 3 of this Annual Report and Note 25, Commitments and Contingencies, to our accompanying
consolidated financial statements under Item 8 of this Annual Report for additional information.
The
loss of the rights to operate the Sports Illustrated media business, in addition to the alleged and disputed termination payments that
are due following termination of the Licensing Agreement, could harm our competitiveness in our industry, damage any goodwill we may
have generated, and otherwise have a material adverse effect on our business, operating results and financial condition. Any subsequent
rebranding efforts we may undertake may require significant resources and expenses and may affect our ability to attract and retain customers,
all of which may have a material adverse effect on our business, contracts, financial condition, operating results, liquidity and prospects.
The
third amended and restated note purchase agreement (the “Third A&R NPA”) is, and any future indebtedness may be, secured
by all or a portion of our assets in which the lenders may have a security interest. Any security interests that we grant will be set
forth in a security agreement and evidenced by the filing of financing statements by the agent for the lenders. Any restrictive provision
or negative covenant in the agreements governing our indebtedness, including the Third A&R NPA, our other current debt agreements
or any of our future indebtednessindebtedness, limits or may limit our operating discretion, which could have a material adverse effect on our financial
condition, results of operations and cash flows. A failure to comply with the restrictive provisions or negative covenants in the Third
A&R NPA, our other current debt agreements, or any of our future indebtedness may result in an event of default and/or restrict our
ability to control the disposition of our assets and our utilization of any indebtedness. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” for more.
Our search engine optimization capability in connection with audience acquisition efforts substantially depends on various internet search engines, such as Google, to direct a significant amount of traffic to the content published on the Platform. Algorithms are used by these search engines to determine search result listings and the order of such listings displayed in response to specific searches. Search engines frequently revise their algorithms in an attempt to optimize their search result listings. We believe that recent algorithm changes adversely affected traffic and revenue performance during the year ended December 31, 2025 and similar changes could impact future periods. Future algorithm changes by Google or any other search engines could cause content published on the Platform to receive less favorable placements, which could reduce the number of readers who view this content and impact our ability to effectively serve digital advertisements to our audience. If we are unable to respond effectively to changes made by search engine providers to their algorithms and other processes, this could have a material adverse effect on our revenues and operating results.
We
rely on content contributedcreated by thirdExpert party providersContributors to attract users that drive advertising and subscription revenue. The loss of the
services of any of such key contributors could have a material adverse effect on our business, operating results, and financial condition.
Competition for such contributors is intense, and there can be no assurance that we will be able to successfully attract, assimilate,
or retain them which could have a material adverse effect on our business, financial condition, or results of operations.
Changes in regulations, government funding, trade policies and tariffs imposed by the U.S. and other governments
could have an impact on advertisers and the advertising market. If advertisers’ operating costs increase due to the changes in policy,
and they are unsuccessful in passing these increases along to consumers, then the advertisers will likely seek to reduce costs in other
ways, including the amount of their advertising. Additionally, changes in regulations, government funding, trade policies and tariffs
could also have the impact of preventing advertisers from deploying new goods and services and reducing the related advertising dollars.
The recently announced tariffs by the U.S. government on product imports from certain countries may result in an outsize impact on certain
industries that are key advertising categories for us, including automotive and consumer goods. The uncertainty regarding the ultimate
impact of any changes in regulations, government funding, trade policies or tariffs could also impact advertisers as they continue to
determine changes needed to their businesses. Such changes in trade policy or the imposition of tariffs could have a material adverse
effect on our customers’ advertising spend, which could have a material adverse effect on our business, results of operations, and
financial condition.
We
and our third party service providers experience attempted cyber-attacks of varying degrees on a regular basis, one of which infiltrated
our systems and accessed a limited amount of our non-financial and encrypted data.basis. We expect to incur significant, increasing costs in
ongoing efforts to detect and prevent cybersecurity-related incidents. We cannot ensure that our efforts to prevent cyber security incidents
will succeed. While we purchase liability coverage for certain of these types of matters, a significant cybersecurity incident could
subject us to reputational harm, loss of revenue, financial liability and other damage that may exceed our insurance coverage and preclude
us from obtaining adequate insurance levels in the future.
As
discussed in Item 9A of this Annual Report on Form 10-K, in the course of preparing our financial statements, we identified thea following
material weaknessesweakness in our internal control over financial reporting (i) our finance and accounting policies, including those governing
revenue recognition, expense recognition, and balance sheet valuation principles and methodologies, have not been fully documented; and
(ii): we did not design and maintain effective controls over the completeness and accuracy of information received from a sufficientthird-party systemprogrammatic ofadvertising internalservices controlsprovider toused validatein data provided byrecording certain thirdadvertising partyrevenues. service providers.
As a result of the identified material weaknesses,weakness, our management concluded that our internal control over financial reporting was not
effective as of December 31, 2024.2025. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will
not be prevented or detected on a timely basis. The material weaknessesweakness identified in Item 9A of this Annual Report on Form 10-K did
not result in any misstatement of our financial statements. OurAlthough our management is currently undertaking remedial actions to address the material
weaknesses weakness identified as of December 31, 2024. However,2025, we may in the future discover material
weaknesses in other areas of our internal control over financial reporting that require remediation.
We
cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the
control deficienciesdeficiency that led to the material weaknessesweakness in our internal control over financial reporting or that they will prevent or
avoid potential future material weaknesses.
If we fail to timely meet our reporting obligations under the Exchange Act, Sarbanes -Oxley and other applicable securities rules and regulations in their entirety, we could be subject to penalties under federal securities laws and regulations of the NYSE American and face lawsuits, and our ability to access financing on favorable terms could be restricted severely. We will also not be able to obtain independent accountant certifications required for public companies under Sarbanes-Oxley. In addition, pursuant to Section 404 of Sarbanes-Oxley, we are required to evaluate and provide a report of management on our internal control over financial reporting which has, and will continue to, require increased costs, expenses and management resources. In addition, we are required to engage independent auditors to express an opinion on internal control over financial reporting. During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.
Our future liquidity and capital requirements will depend upon numerous factors, including the success of our business, our offerings, competing technological developments, and general economic and market conditions, which have presented substantial uncertainty in recent months. We may need to raise funds through public or private financings, strategic relationships, or other arrangements. There can be no assurance that such funding will be available on terms acceptable to us, or at all.
Debt financing, if available, may involve restrictive covenants that may limit our operating flexibility with respect to certain business matters. Strategic arrangements may require us to relinquish our rights or grant licenses to some or substantial parts of our intellectual property.
In addition, our previously effective shelf registration statement on Form S-3 expired in December 2025. As a result, we currently do not have an effective general purpose shelf registration statement on file with the Securities and Exchange Commission, which may further limit our ability to raise capital through public offerings in a timely manner. While we may seek to file a new registration statement, there can be no assurance as to when it will become effective or whether market conditions will be favorable for future offerings. Furthermore, any equity financing could be dilutive to existing stockholders. If funds are raised through the issuance of equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution in net book value per share, and such equity securities may have rights, preferences, or privileges senior to those of the holders of our existing capital stock.
If adequate funds are not available on acceptable terms, we may not be able to continue operating, develop or enhance products, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results, and financial condition.
Our
future liquidity and capital requirements will depend upon numerous factors, including the success of the Platform, our offerings, competing
technological developments, and general economic and market conditions, which have presented substantial uncertainty in recent months.
We may need to raise funds through public or private financings, strategic relationships, or other arrangements. There can be no assurance
that such funding will be available on terms acceptable to us, or at all. Furthermore, any equity financing will be dilutive to existing
stockholders, and debt financing, if available, may involve restrictive covenants that may limit our operating flexibility with respect
to certain business matters. Strategic arrangements may require us to relinquish our rights or grant licenses to some or substantial
parts of our intellectual property. If funds are raised through the issuance of equity securities, the percentage ownership of our stockholders
will be reduced, stockholders may experience additional dilution in net book value per share, and such equity securities may have rights,
preferences, or privileges senior to those of the holders of our existing capital stock. If adequate funds are not available on acceptable
terms, we may not be able to continue operating, develop or enhance products, take advantage of future opportunities or respond to competitive
pressures, any of which could have a material adverse effect on our business, operating results, and financial condition.
Although we achieved income from continuing operations of $28.6 million in 2025, our accumulated deficit as of December 31, 2025 remains substantial at $354.5 million, reflecting our historical losses. If we are unable to sustain revenue growth or further reduce costs, we may return to operating losses, which could require us to seek additional capital. There is no assurance that such capital will be available on favorable terms, or at all, which could adversely affect our ability to execute our business strategy and maintain operations.
In
the year ended December 31, 2024,
we had net loss of approximately $100.7 million compared to approximately $55.6 million for the year ended December 31, 2023. Our accumulated
deficit as of December 31, 2024 was approximately $479.4 million compared to approximately $378.7 million as of December 31, 2023. We
may continue to incur losses in the future if we do not achieve sufficient revenue or adequately reduce costs to achieve and maintain
profitability. There is no assurance that our operations will generate sufficient cash flows to support our continued operations in the
future without needing to seek additional capital funding or borrowings. We can provide no assurance that if we need to seek such additional
outside capital that it will be available on favorable terms or at all. Any failure to achieve and maintain profitability could have
a materially adverse effect on our ability to implement our business plan, our results and operations, and our financial condition.
Our
financial condition raises substantial doubt about our ability to continue as a “going concern” through one year from the
date of the issuance of the financial statements contained herein due to the recurrence of net losses.
For
the year ended December 31, 2024, we incurred a net loss from continuing operations of approximately $7.7 million, and as of December
31, 2024, had cash on hand of approximately $4.4 million. Management has evaluated our current and historical net losses from continuing
operations to determine if the significance of those conditions or events would limit our ability to meet our obligations when due, including
under the Loan Documents and Simplify Loan. In its evaluation, management determined that substantial doubt exists about our ability
to continue as a going concern for a one-year period following the financial statement issuance date due to the net loss from continued
operations and working capital deficit.
There
can be no assurance that we will be able to execute plans to rectify the recurrence of net losses. If we are unable to execute these
plans, it could lead to selling assets and further reducing costs and cash requirements.
We
operate in an evolving industry, and as a result, our business has evolved over time such that our operating history makes it difficult
to evaluate our business and future prospects. Our results of operations have fluctuated in the past, and future results of operations
are likely to fluctuate as well. We may not be able to sustain current growth rates, current revenue levels, or achievesustain profitability.
In addition, because our business is evolving, our historical results of operations may be of limited utility in assessing our future
prospects. We expect to face challenges, risks, and difficulties frequently experienced by growing companies in rapidly developing industries,
including those relating to:
•changes in demand and pricing for our products, services and the Platform;
•developing, maintaining, and expanding relationships with Expert Contributors, Publisher Partners and advertisers;
•innovating and developing new solutions that are adopted by and meet the needs of Publisher Partners and advertisers;
•competing against companies with a larger user and customer base or greater financial or technical resources;
•changes in the pricing policies of Publisher Partners, advertisers and competitors;
•changes in our access to valuable user data;
•costs to develop and upgrade the Platform to incorporate new technologies;
•costs related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs;
•seasonality in our business;
•the length and complexity of our sales cycles;
•the timing of stock-based compensation expense;
•potential costs to attract, onboard, retain and motivate qualified personnel;
•responding to evolving industry standards and government regulations that impact our business, particularly in the areas of data protection and consumer privacy;
•changes in demand as a result of changes in the macroeconomic environment, as a result of inflation, changes in interest rates or foreign exchange rates, or otherwise; and
•further expanding our business in other markets.
•We indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.
•We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.
•We are required to advance expenses, as incurred, to our directors and officers in connection with defending a legal proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.
•The rights conferred in our Certificate of Incorporation are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons.
•We may not retroactively amend our Certificate of Incorporation or indemnification agreement, if any, to reduce our indemnification obligations to directors, officers, employees, and agents.
•price and volume fluctuations in the overall stock market from time to time;
•announcements of new products, solutions or technologies, commercial relationships, acquisitions, or other events by us or our competitors;
•the public’s reaction to our press releases, other public announcements, and filings with the SEC;
•fluctuations in the trading volume of our shares or the size of our public float, including in connection with an acquisition;
Management's Discussion & Analysis (MD&A)
Removed heading “Off-Balance Sheet Arrangements”
Largest changes
“In the year ended December 31, 2024, we disclosed that substantial doubt existed regarding our ability to continue as a going concern due to recurring losses, a working capital deficit, and limited liquidity. The previously disclosed working capital deficit existed due to the classification of our outstanding debt as a current liability and the accrual of several liabilities from discontinued operations (see Note 3 to the consolidated financial statements). …”see in full comparison
“For the year ended December 31, 2024, we incurred a net loss from continuing operations of $7,667, and as of December 31, 2024, had cash on hand of $4,362. Management has evaluated our current and historical net losses from continuing operations to determine if the significance of those conditions or events would limit our ability to meet our obligations when due, including under the Loan Documents and Simplify Loan (see Notes 17 and 18). …”see in full comparison
“As a result of these developments, which primarily reflect improvements achieved during 2024 and 2025, management has concluded that the conditions that previously raised substantial doubt about our ability to continue as a going concern no longer exist. Accordingly, management has determined that there is no longer substantial doubt about our ability to continue as a going concern for at least one year from the date the financial statements are issued.”see in full comparison
“(5)Liquidated damages (or interest expense related to accrued liquidated damages) represents amounts we owe to certain of our investors in private placements offerings conducted in fiscal years 2018 through 2020, pursuant to which we agreed to certain covenants in the respective securities purchase agreements and registration rights agreements, including the filing of resale registration statements and becoming current in our reporting obligations, which we were not able to timely meet.”see in full comparison
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets of businesses acquired in a business combination. Goodwill is not amortized but rather is tested for impairment at least annually on October 31, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. Recoverability of goodwill is determined by comparing the fair value of our reporting units to the carrying value of the underlying net assets in the reporting units. If the fair value of a reporting unit is determined to be less than the carrying value of its net assets, goodwill is deemed impaired, and an impairment loss is recognized to the extent that thesee in full comparisoncarrying value of goodwill exceeds the difference betweenamount thefaircarrying value of the reporting unitandexceeds its fair value, not to exceed thefair valueamount ofitsgoodwillotherallocatedassetstoandtheliabilities.reporting unit. We determined our operating segments are our reportable units for goodwill impairment testing, See Note 11 Goodwill in our accompanying consolidated financial statements. We determine the fair value of our reporting units by utilizing the discounted cash flow method of an income approach and the value indicated by the market approach, comparing transaction prices or stock prices of comparable guideline companies to our market value. The income approach utilized a discounted cash flow analysis, incorporating management’s projections of revenue growth, operating margins, and discount rates that reflect the risk-adjusted cost of capital. The market approach considered valuation multiples derived from comparable publicly traded companies. The income and the market approach are equally weighted when determining fair value of the reportable unit. These analyses require significant assumptions and judgments. These assumptions and judgments include estimation of future cash flows, projections of revenue growth and operating margins, which is dependent on internal forecasts, estimation of the long-term rates of growth for our business, estimation of the useful life over which cash flows will occur, determination of a discount rate and the selection of comparable companies and the interpretation of theirdata.dataAsas well as a control premium determined by utilizing publicly available data from studies for similar transactions of public companies. No impairment charges were recorded during the year ended December 31,2024.2025.
Full comparison: every changed paragraph (86)
•Revenue per page view (“RPM”) – represents the advertising revenue earned per 1,000 pageviews. It is calculated as our advertising revenue during a period divided by our total page views during that period and multiplied by $1,000; and
•Monthly average pageviews – represents the total number of pageviews in a given month or the average of each month’s pageviews in a fiscal quarter or year, which is calculated as the total number of page views recorded in a quarter or year divided by three months or 12 months, respectively.
We
monitor and review our key operating metrics as we believe that these metrics are relevant for our industry and specifically to us and
to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition.
Our key operating metrics focus primarily on our digital advertising revenue, which is our most significant revenue stream. As indicated
in the Results of Operations section below for the year ended December 31, 2024, digital advertising revenue decreased by approximately
13%, as compared to the same period in fiscal 2023. Management monitors and reviews these metrics because such metrics are readily measurable
in real time and can provide valuable insight into the performance of and trends related to our digital advertising revenue and our overall
business. We consider only those key operating metrics described here to be material to our financial condition, results of operations
and future prospects.
For the years ended December 31, 2025 and 2024, our RPM was $23.84 and $23.31, respectively. The 2% increase in RPM reflects favorable pricing in the digital display advertising market compared to the prior year.
For the years ended December 31, 2025 and 2024, our monthly average pageviews were 304,387,756 and 332,913,662, respectively. The 9% decline in monthly average pageviews was driven by the cessation of FanNation operations in March 2024. Excluding impact from changes with FanNation sites, organic pageviews remained relatively stable compared to the prior year.
For
the years ended December 31, 2024 and 2023, our RPM was $23.31 and $21.35, respectively. The 9% increase in RPM reflects an increase in
video advertising as a percentage of total digital advertising as digital video advertising is sold at a significantly higher price than
digital display advertising. For the years ended December 31, 2024 and 2023, our monthly average pageviews were 332,913,662 and 394,441,158,
respectively. The 16% decrease in monthly average pageviews is primarily driven by the cessation of publishing of FanNation
sites in early 2024.
All
dollar figures presented below are in thousands unless otherwise stated.
Uncertainty
in the global economy presents significant risks to our business. Increases in inflation, instability in the global banking system,
geopolitical factors, including the ongoing conflicts in Ukraine and Israelin the Middle East and the responses thereto impact,thereto, and the impact of
tariffs on print production costs and the overall market for advertising may have an adverse effect on our business. While we are
closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the
impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of
these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are
subject to continuing risks and uncertainties. For more information regarding these risks and uncertainties, see the section titled
“Risk Factors” in Part 1, Item 1A of this Annual Report on Form 10-K.
Liquidity and Going Concern
In the year ended December 31, 2024, we disclosed that substantial doubt existed regarding our ability to continue as a going concern due to recurring losses, a working capital deficit, and limited liquidity. The previously disclosed working capital deficit existed due to the classification of our outstanding debt as a current liability and the accrual of several liabilities from discontinued operations (see Note 3 to the consolidated financial statements). We continue to improve our financial performance through revenue growth and reduction of costs and monthly cash requirements, and to maintain compliance with the terms of all outstanding debt agreements, and have taken actions to resolve current and potential future liabilities, such as resolving pending litigation. We reported consecutive profitable results in the third and fourth quarters of 2024 and throughout 2025.
As a result of these developments, which primarily reflect improvements achieved during 2024 and 2025, management has concluded that the conditions that previously raised substantial doubt about our ability to continue as a going concern no longer exist. Accordingly, management has determined that there is no longer substantial doubt about our ability to continue as a going concern for at least one year from the date the financial statements are issued.
For
the year ended December 31, 2024, we incurred a net loss from continuing operations of $7,667, and as of December 31, 2024, had cash
on hand of $4,362. Management has evaluated our current and historical net losses from continuing operations to determine if the
significance of those conditions or events would limit our ability to meet our obligations when due, including under the Loan
Documents and Simplify Loan (see Notes 17 and 18). In its evaluation, management determined that substantial doubt exists about our
ability to continue as a going concern for a one-year period following the financial statement issuance date due to the net loss
from continued operations and working capital deficit.
There
can be no assurance that we will be able to execute plans to rectify the recurrence of net losses. If we are unable to execute these
plans, it could lead to selling assets and further reducing costs and cash requirements.
Debt Activity
Debt
Activity – During the year ended December 31, 2024, we took steps to extend our debt maturities. Our debt activity during
the year ended December 31, 2024 was as follows:
•On December 31, 2025, the Company entered into Amendment No. 2 to Loan Documents with Simplify, which reduced the maximum principal amount available under the Simplify Loan to $25,000 and extended the maturity date to December 1, 2027. All other material terms and conditions of the Simplify Loan, as previously disclosed, remain unchanged. As of December 31, 2025, nothing was outstanding on the Simplify Loan.
•During the year ended December 31, 2025, we repaid $10,651 under our line of credit.
•During the year ended December 31, 2025, we extended the maturities for our Term Debt (as defined in the notes to consolidated financial statements) to December 31, 2027 and made a $13,000 curtailment payment.
Our debt activity during the year ended December 31, 2024 was as follows:
•On August 19, 2024, in connection with the March 13, 2024 amendment to the Simplify Loan facility, which bears interest at 10% per annum of the amount advanced, we entered into an Amended Promissory Note and a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Simplify, whereby during the year ended December 31, 2024 we borrowed $25,651 under the Simplify Loan, of which $15,000 was exchanged for shares of our common stock in August 2024. As of December 31, 2024, the balance outstanding on the Simplify Loan was $10,651.
Future
Debt Obligations – As of December 31, 2024,2025, our future contractual debt obligations were $121,342, with $10,651 maturing on
December 1, 2026 and $110,691$97,578 maturing on December 31, 2026.2027.
Off-Balance
Sheet Arrangements
During
2022, we assumed a lease for office space in Carlsbad, California, that expired in March 2025. As of December 31, 2024 we remained
responsible for $360 for the remaining lease term. We entered into two subleases that will pay us an aggregate of $36, net of security deposits, through March 2025.
Working Capital Surplus (Deficit)
We
have financed our working capital requirements since inception through issuances of equity securities and various debt financings. Our
working capital surplus (deficit) as of December 31, 20242025 and 20232024 was as follows:
As of December 31, 2025, we had a working capital surplus of $18,627 (consisting of $35,630 in total current assets and $17,003 in total current liabilities), as compared to a working capital deficit of $82,022 as of December 31, 2024. As of December 31, 2024, our working capital deficit consisted of $40,234 in total current assets and $122,256 in total current liabilities.
As
of December 31, 2024, we had a working capital deficit of $82,022, as compared to $145,622 as of December 31, 2023, consisting of $40,234
in total current assets and $122,256 in total current liabilities. As of December 31, 2023, our working capital deficit consisted of
$90,399 in total current assets and $236,021 in total current liabilities.
For the year ended December 31, 2025, net cash provided by operating activities was $39,246, consisting primarily of $89,496 of cash paid to employees, Publisher Partners, Expert Contributors, suppliers, and vendors, and for revenue share arrangements, professional services, and $11,551 of cash paid for interest, offset by $140,293 of cash received from customers. For the year ended December 31, 2024, net cash used in operating activities was $16,076, consisting primarily of $147,507 of cash paid to employees, Publisher Partners, Expert Contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees, and professional services, and $17,837 of cash paid for interest, offset by $149,268 of cash received from customers.
For the year ended December 31, 2025, net cash used in investing activities was $9,590, consisting of (i) $2,550 for purchase of intangible assets and (ii) $7,040 for capitalized costs for our Platform. For the year ended December 31, 2024, net cash used in investing activities was $5,175, consisting of $5,121 for capitalized costs for our Platform and $54 for purchase of property and equipment.
For
the year ended December 31, 2024, net cash used in operating activities was $16,076, consisting primarily of $147,507 of cash paid to
employees, Publisher Partners, Expert Contributors, suppliers, and vendors, and for revenue share arrangements, professional services,
and $17,837 of cash paid for interest, offset by $149,268 of cash received from customers. For the year ended December 31, 2023, net
cash used in operating activities was $24,772, consisting primarily of $239,737 of cash paid to employees, Publisher Partners, Expert Contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees and professional services, and $12,101
of cash paid for interest, offset by $227,066 of cash received from customers.
For
the year ended December 31, 2024, net cash used in investing activities was $5,175, consisting of (i) $54 for purchase of property and
equipment and (ii) $5,121 for capitalized costs for our Platform. For the year ended December 31, 2023, net cash used in investing activities
was $3,212, consisting of $3,773 for capitalized costs for our Platform and $500 for the acquisition of a business, offset by $1,061
from the sale of assets.
For
the year ended December 31, 2025, net cash used in financing activities was $23,680, primarily consisting of (i) $13,000 curtailment payment of our term debt, (ii) $10,651 repayment of the Simplify Loan, (iii) $29 for tax payments relating to the withholding of shares of common stock for certain employees. For the year ended December 31, 2024, net cash provided by financing activities was $16,329, primarily consisting of (i) $561 for the
payment of the contingent consideration, (ii) $20,027 from repayment of our line of credit with SLR Digital Finance LLC
(“SLR”) (iii) $534 for tax payments relating to the withholding of shares of common stock for certain employees and (iv)
$200 payment of deferred cash payments for an acquisition, less (v) $12,000 in net proceeds from the common stock private placement,
and (vi) $25,651 in net proceeds from our working capital loan with Simplify. For the year ended December 31, 2023, net cash
provided by financing activities was $22,895, consisting primarily of $11,333 (excluding accrued offering costs of $167) in net
proceeds from the public offering of common stock, $5,517 from borrowings under our Arena Credit Agreement, $7,543 (excluding debt
issuance costs of $457) in net proceeds from issuance of our bridge notes; offset by $1,423 tax payments relating to the withholding
of shares of common stock for certain employees, and $75 payment of deferred cash payments for an acquisition.
For
the year ended December 31, 2024,2025, the net lossincome from continuing operations improved $29,548$36,275 to $7,667,$28,608, as compared to our prior
period net loss of $37,215.$7,667. This improvement was primarily due to a $24,884$20,291 decrease in operating expenses asand an $8,921 increase in revenue. These changes reflect the impact of adopting the entrepreneurial publishing model, whereby Expert Contributors are compensated based on a resultvariable of
headcountRPM share, throughout the portfolio and cost-savings initiatives including reductions in headcount, consulting spend reductions.and other operating costs.
The increase in gross profit was driven by an increase in publisher revenue due to expansion of our publisher revenue network and an increase in brand participation in our publisher revenue model, and an increase in performance marketing revenue due to growth of our affiliate partner network and expansion of the performance marketing model across the portfolio. In addition, the increase in gross profit percentage is attributable to the ability to scale costs under the variable cost structure associated with the entrepreneurial publishing model along with reductions in fixed cost, particularly internal cost of content. The combination of these factors resulted in improved efficiency and margin expansion.
The
increase in gross profit percentage was driven by a higher mix of revenue from video advertising as a percentage of total digital advertising,
as digital video advertising is sold at a significantly higher price than digital display advertising in combination with headcount and consulting spend reductions.
For
the year ended December 31, 2024,2025, total revenue decreasedincreased $17,723,$8,921, or a 12.3%7.1% decrease,increase, to $125,907$134,828 from $143,630$125,907 for the year ended
December 31, 2023.2024. This reflected a decrease in print revenue of $8,434$52 due primarily to the shutdown of Athlon Outdoor print operations
and a 6.9%7.2% decreaseincrease in digital revenue from $134,123 for the year ended December 31, 2023 to $124,834 for the year ended December 31,
2024 drivento primarily$133,807 byfor the cessationyear ofended publishingDecember of31, the FanNation sites in early 2024.2025.
Performance marketing revenue increased by $8,712 reflecting the strategic expansion of our affiliate partner network and higher affiliate content output across a broader and more diverse brand portfolio. Publisher revenue also rose by $11,578 due to our focus on monetizing premium content through syndication partnerships. These increases were partially offset by a $6,064 decrease in our digital advertising revenue driven by the cessation of publishing FanNation sites in early 2024, and a decrease in other digital revenue of $3,301 due to the impact of a licensing agreement that was recognized in the year ended December 31, 2024.
The
primary drivers of the decrease include a $13,274 decrease in our digital advertising revenue driven primarily by the cessation of
publishing of FanNation sites in early 2024, a decrease in our digital subscriptions of $4,156 due to a decline in
subscribers. These decreases were partially offset by an increase in performance marketing revenue that
increased by $7,478 due to growth of our affiliate partner network and expansion of the performance marketing model across our
portfolio and an increase in other digital revenue of $3,690.
For the year ended December 31, 2025, we recognized cost of revenue of $66,479, as compared to $70,189 for the year ended December 31, 2024, representing a decrease of $3,710. Cost of revenue for the year ended December 31, 2025 was impacted by an increase in external cost of content of $2,572 reflecting the variable nature of these expenses which fluctuate proportionally to digital advertising revenues, a $2,505 reduction in internal content costs due to efficiencies gained from a smaller internal editorial team enabled by our entrepreneurial publishing model, a $2,421 decrease in technology cost resulting from cost rationalization and reduced outside spend, a $997 decrease in printing, distribution and fulfillment costs due to the shutdown of Athlon Outdoor print operations, and other cost reductions of $359.
For
the year ended December 31, 2024, we recognized cost of revenue of $70,189, as compared to $88,357 for the year ended December 31,
2023, representing an increase of $18,168. Cost of revenue for the year ended December 31, 2024 was impacted by decreases in
printing, distribution and fulfillment costs of $2,712 due to the shutdown of Athlon Outdoor print operations, a decrease in the
amortization of developed technology and platform development costs of $2,794, a decrease in technology costs of $4,675, internal
cost of content of $1,028, and external cost of content of $6,845 driven by the cessation of publishing of FanNation sites in early
2024, and a decrease in other costs of revenue of $114.
For
the year ended December 31, 2024,2025, we incurred selling and marketing costs of $12,548$7,033 as compared to $24,263$12,548 for the year ended December
31, 2023.2024. The decrease in selling and marketing costs of $11,715$5,515 is primarily related to decreases in payroll and employee benefits costs
of $6,976$3,446 due to a reduction in direct sales workforce. In addition, there were decreasesa decrease in professional marketing services of $2,139,
advertising costs of $887,$1,453, circulationa costsdecrease of $906, and stock-based compensation of $1,011; partially offset byin other selling and marketing
expenses of $204.$250, a decrease in circulation costs of $241, and a decrease in stock-based compensation of $138.
For
the year ended December 31, 2024,2025, we incurred general and administrative costs of $30,399$17,056 as compared to $43,783$30,399 for the year ended
December 31, 2023.2024. The $13,384$13,343 decrease in general and administrative expenses is primarily duedriven toby decreasesa $4,219 reduction in stock-based
compensation of $9,495, and payroll and related expenses of $2,987 as a result of headcount reductions, a $4,921 decline in professional services including accounting, legal and consultinginsurance, spenda reductions,$1,039 decrease in stock-based compensation, and a decreasereduction in other
general and administrative expenses of $851; partially offset by an increase in professional services, including accounting, legal
and insurance of $51.$3,164.
We report our segment results as Sports & Leisure,
Finance, Lifestyle, and Platform.Platform & Other. Additionally, certain expenses are not allocated to our segments because they represent Arena-level
activities. The brand Men's Journal is organized under the subject matter vertical of Sports & Leisure for the year ending December 31, 2025. Accordingly, segment‑level year‑over‑year comparisons reflect this reclassification, with prior periods recast to conform to the current‑period presentation.
Sports & Leisure – decrease of $3,510 was driven by a $6,064 decrease in digital advertising revenue due to the cessation of publishing FanNation sites in early 2024 partially offset by an increase in publisher revenue due to expansion of our publisher revenue network and an increase in performance marketing revenue due to growth of our affiliate partner network and expansion of the performance marketing model within the Sport & Leisure vertical.
Finance – increase of $10,516 was driven by the implementation of the entrepreneurial publishing model in Q2 2025. This transition led to a $7,265 increase in digital advertising revenue, an increase of $4,187 in performance marketing revenue, and an increase of $1,128 in publisher revenues. These increases were partially offset by a $1,927 decrease in digital subscription revenue as we transition our portfolio toward more efficient, ad-supported monetization channels.
Lifestyle – increase of $6,513 was primarily driven by the implementation of the entrepreneurial publishing model in Q2 2025. This transition led to growth of $3,543 in our publisher revenue, an increase of $2,276 in performance marketing revenue, and an increase of $341 in digital advertising revenue.
Platform & Other– decrease of $4,598 reflects a reduction in underperforming partner sites and a decrease in other digital revenue of $3,301 due to the impact of a licensing agreement that was recognized in the year ended December 31, 2024.
Sports
& Leisure– decrease of $23,535 is due to the cessation of publishing of FanNation sites in early 2024 and the shutdown
of Athlon Outdoor print operations partially offset by the growth of Athlon Sports.
Finance– decrease of $1,904 is primarily driven by a decrease in digital subscription revenues partially offset by an increase in performance
marketing revenues.
Lifestyle– increase of $3,029 is driven primarily by an increase in performance marketing revenues.
Platform– increase of $4,687 is driven by an increase in digital advertising and other revenues.
Sports & Leisure – increase of $4,877 or 20.0%, driven by growth in high-margin publisher and performance marketing revenue streams. These gains were partially offset by increased external content costs associated with the implementation of the competitive publishing model at Men’s Journal.
Finance – increase of $6,642 or 36.2%, driven by growth in digital advertising revenue following the implementation of the entrepreneurial publishing model, and growth in cost-efficient and high-margin publisher and performance marketing revenues. These gains were partially offset by higher external content costs reflecting the variable nature of these expenses which fluctuate proportionally to digital advertising revenues.
Sports
& Leisure– decrease of $13,237 is due to the cessation of publishing of FanNation sites in early 2024 and the shutdown
of Athlon Outdoor print operations partially offset by the growth of Athlon Sports.
Finance–
increase of $1,284 is primarily driven by an increase in performance marketing revenues which require less content & editorial
spending than other revenue streams.
Lifestyle – increase of $2,626$2,253 isor 11.1%, driven primarily by an increasegrowth in cost-efficient and high-margin publisher and performance marketing revenues which require less content & editorial spending
than other revenue streams.revenues.
Platform & Other – decrease of $3,829 reflects a reduction in underperforming partner sites and a decrease in other digital revenue due to the impact of a licensing agreement that was recognized in the year ended December 31, 2024.
Platform– increase of $4,357 is driven by an increase in digital advertising and other revenues with controlled cost.
Interest
Expense– we incurred interest expense, netexpense of $11,358 for the year ended December 31, 2025, as compared to $14,668 for the year ended December 31, 2024, as compared to $17,965 for the year ended
December 31, 2023.2024. The $3,310 decrease in interest expense of $3,297 was primarily from lower amortization of debt costs andreflects lower interest
charges onfollowing repayments of the lineSimplify Loan throughout 2025. The Simply Loan was fully repaid as of credit.December 31, 2025.
Liquidated Damages– we recorded liquidated damages of $305 for the year ended December 31, 2025, as compared to $306 for the year ended December 31, 2024.
What changed in the latest 10-Q
Risk Factors
New heading “Our use and incorporation of a broad range of artificial intelligence technologies in our services and operations present risks, uncertainties, and challenges that could adversely affect our business, financial condition, and results of operations.”
Largest changes
“Our ability to attract and retain publisher partners, expert contributors, audience, and customers depends on our capacity to develop and support innovative products and services, including through developing or deploying emerging technologies such as artificial intelligence. Some of our products, services, publishing tools and processes leverage AI, including both machine learning and Generative and Agentic AI, and we continue to make investments in initiatives focused on the further development and deployment of these technologies. …”see in full comparison
“Our use and incorporation of a broad range of artificial intelligence technologies in our services and operations present risks, uncertainties, and challenges that could adversely affect our business, financial condition, and results of operations.”see in full comparison
“These technologies are subject to an evolving and fragmented legal and regulatory landscape. The absence of a unified regulatory framework, and the risk of divergent or conflicting regulations across jurisdictions applicable to our business, could increase the complexity and costs of compliance for us and our partners. New or changing legal requirements may limit or restrict our use of AI, impose burdensome obligations, or require us to modify or discontinue certain offerings. …”see in full comparison
There are numerous factors that affect our business and operating results, many of which are beyond our control.see in full comparisonThereThehavefollowingbeenrisknofactorsmaterialsupplementchangesand,into the extent inconsistent, supersede, the risk factors described in Part I, “Item IA. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 16, 2026 (the “2025 Form 10-K”). The risk factors included herein as well as the risk factors described in the 2025 Form 10-K should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC in connection with evaluating us, our business and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not known to us at present, or that we currently deem immaterial, may affect us. The occurrence of any of these known or unknown risks could have a material adverse impact on our business, financial condition and results of operations.
Full comparison: every changed paragraph (4)
There are numerous factors that affect our business and operating results, many of which are beyond our control. ThereThe havefollowing beenrisk nofactors materialsupplement changesand, into the extent inconsistent, supersede, the risk factors described in Part I, “Item IA. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 16, 2026 (the “2025 Form 10-K”). The risk factors included herein as well as the risk factors described in the 2025 Form 10-K should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC in connection with evaluating us, our business and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not known to us at present, or that we currently deem immaterial, may affect us. The occurrence of any of these known or unknown risks could have a material adverse impact on our business, financial condition and results of operations.
Our use and incorporation of a broad range of artificial intelligence technologies in our services and operations present risks, uncertainties, and challenges that could adversely affect our business, financial condition, and results of operations.
Our ability to attract and retain publisher partners, expert contributors, audience, and customers depends on our capacity to develop and support innovative products and services, including through developing or deploying emerging technologies such as artificial intelligence. Some of our products, services, publishing tools and processes leverage AI, including both machine learning and Generative and Agentic AI, and we continue to make investments in initiatives focused on the further development and deployment of these technologies. However, there is no assurance that our use or development of AI will enhance our offerings or services or their marketability, improve operating results, or deliver anticipated benefits, and our initiatives involving AI may be unsuccessful. While implementation of these technologies offers the potential for innovation and competitive differentiation, it also poses significant risks and uncertainties, especially given its early stage of commercial adoption. The use of AI in our initiatives and offerings or services, or in our internal business operations, may give rise to risks related to accuracy, bias, discrimination, intellectual property infringement, misappropriation or leakage of proprietary, confidential and personal information, defamation, data privacy, and cybersecurity. Furthermore, the use of AI in the creation of content could have an adverse impact on both traffic and revenue. Any error, defect, or vulnerability in our AI-powered business processes could undermine the quality of our offerings and services, adversely impact our partners’ businesses, subject us or our partners to regulatory scrutiny, fines or litigation and cause reputational harm.
These technologies are subject to an evolving and fragmented legal and regulatory landscape. The absence of a unified regulatory framework, and the risk of divergent or conflicting regulations across jurisdictions applicable to our business, could increase the complexity and costs of compliance for us and our partners. New or changing legal requirements may limit or restrict our use of AI, impose burdensome obligations, or require us to modify or discontinue certain offerings. Any of these factors, alone or in combination, could adversely affect our business, reputation, or results of operations.
Management's Discussion & Analysis (MD&A)
New heading “Six Months Ended June 30, 2026 and 2025”
New heading “Operating Expenses”
New heading “Selling and Marketing”
New heading “General and Administrative”
New heading “Segment Revenue”
New heading “Segment Gross Profit”
Removed heading “Cash and Working Capital Facility”
Largest changes
“Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our condensed consolidated financial statements do not include any adjustments that might be necessary if it is unable to continue as a going concern. …”see in full comparison
We report our financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain items that are noncash in nature or not related to our core business operations. We calculate Adjusted EBITDA as net income (loss) as adjusted forsee in full comparisonlossincome from discontinued operations,with additional adjustments for (i)interest expense (net),(ii)income taxes,(iii)and depreciation andamortization,amortization.(iv)We further adjust for stock-basedcompensation,compensation(v)andchangeotherinspecialvaluationitemsofthatcontingentdoconsideration,not(vi)reflect our ongoing core operational performance, including impairment costs, third-party vendor or professional settlement fees, liquidated damages,(vii) loss on impairment of assets, (viii) loss on sale of assets; (ix) employee retention credit, (x) employee restructuring payments;and(xi)governmentprofessionaltaxandincentivevendor fees.credits. Our non-GAAP measure may not be comparable to similarly titled measures used by other companies, have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP measure as superior to, or a substitute for, the equivalent measure calculated and presented in accordance with GAAP. Some of the limitations are that our non-GAAP measure:
“Based on our current liquidity position, including cash on hand, expected operating cash flows, current operating plans and forecasts, and projected compliance with debt covenants, management believes that we have sufficient liquidity to meet our obligations as they come due for at least the next twelve months.”see in full comparison
“Digital revenue declined year over year primarily as search and referral traffic pressures reduced advertising impressions and high-intent commerce activity. Digital advertising revenue decreased $28,812 due to lower audience traffic and traffic referral patterns, while performance marketing revenue decreased $5,122 due to lower commerce-oriented traffic and changes in affiliate rates. Digital subscription revenue decreased $1,529 as the Company continued to reposition portions of its portfolio toward ad-supported monetization models. …”see in full comparison
“The $18,356 decrease in digital advertising revenue was primarily attributable to lower audience traffic, including the impact of search algorithm changes that reduced referral traffic, together with a modest decline in monetization yield between periods. Performance marketing revenue decreased by $2,842 primarily due to lower traffic and changes in affiliate rates. Publisher revenue declined by $2,117 as traffic levels across certain distribution partners decreased. …”see in full comparison
Full comparison: every changed paragraph (82)
The following discussion and analysis of our financial condition and results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in the Annual Report on Form 10-K filed with the SEC on March 16, 2026. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Forward-Looking Statements.”
For the three and six months ended MarchJune 31,30, 2026, our RPM was $18.54$23.96 and $21.12 compared to $22.21$25.12 and $23.85 for the same periodperiods in 2025. ThisThe decreasedeclines were primarily reflectsdriven by broader advertising yield softness across the impactdigital ofmedia company-initiated technical experiments intended to drive audience growth that, in some cases, reduced monetizationlandscape and softnessunfavorable intraffic themix broadershift digitalaway advertisingfrom market.higher yielding properties. For the three and six months ended MarchJune 31,30, 2026, monthly average page views were 206,228,655187,715,312 and 196,971,983 compared to 327,510,084423,358,110 and 375,434,097 for the same periodperiods in 2025. ThisThese decreasecontractions reflectswere aprimarily reductionattributable into organic traffic resulting from shifts in referral patterns following third-partycore search engine algorithm updates madein duringlate 2025.2025 that altered external referral patterns. Though these changes had an adverse impact toon firstour quarterfirst-half of 2026 results, the results of our optimization testing during the aforementionedfirst technicalquarter experimentationof 2026 are expected to stabilize audience and maximize yield over the remainder of the year. To further mitigate the impact of these items,algorithm updates, management is actively executing targeted yield-enhancement initiativesinitiatives, while optimizingrefining site architecturearchitecture, elevating high-authority core content, and premium content, including accelerating AIAI-driven integrationtraffic formonetization yield optimization.tools. These ongoing strategic efforts focused on technical infrastructure and audience engagementenhancements are intended to stabilize audience reach, maximize yield, and align with evolving search authorityengine bestindexing practices, strengthen domain visibility, and support long-term traffic and monetization growth.practices.
Liquidity and Going Concern
The Simplify loan, which provides for borrowings of up to $25 million, matures on December 1, 2027, and our Renew term debt matures on December 31, 2027. While we continue to report positive cash flow from operations and currently maintain a cash balance of approximately $11 million, our ability to meet ongoing liquidity needs and support future growth is dependent, in part, on our access to external financing. If we cannot generate or obtain needed funds, we might be forced to make substantial reductions in our operating and capital expenses or pursue restructuring plans, which could adversely affect our business operations and ability to execute our current business strategy. In addition, if a default occurs as a result, theour lenderslender could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness. In addition, if repayment of our indebtedness is accelerated as a result of such default, we cannot assure you that we would have sufficient assets or access to credit to repay such indebtedness.
For the three and six months ended June 30, 2026, we reported a loss from continuing operations of $176 and $2,834, respectively. Despite these losses, we generated positive cash flow from operations for the six months ended June 30, 2026, and had cash and cash equivalents of $11,170 as of June 30, 2026.
Based on our current liquidity position, including cash on hand, expected operating cash flows, current operating plans and forecasts, and projected compliance with debt covenants, management believes that we have sufficient liquidity to meet our obligations as they come due for at least the next twelve months.
Cash
Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Our condensed consolidated financial statements do not include any adjustments that might be necessary if it is unable to continue as a going concern. Management has evaluated the Company's ability to continue as a going concern and, based on our current financial condition and operating plans, believes we have sufficient liquidity to meet our obligations for at least the next twelve months from the date of this report. Therefore, management concludes that there is no substantial doubt about our ability to continue as a going concern.
For the three months ended March 31, 2026, we had a loss from continuing operations of $2,658 and as of March 31, 2026, had cash and cash equivalents on hand of $11,230 and working capital of $17,016. We reported consecutive profitable results in all quarters of 2025. Although we are reporting a net loss for the three months ended March 31, 2026, we expect to be profitable for the remainder of the year.
Cash and Working Capital Facility
As of MarchJune 31,30, 2026, our principal sources of liquidity consisted of cash and cash equivalents of $11,230$11,170 and accounts receivable, net of allowance for credit losses, of $18,149. In addition, as of March 31, 2026, we had $25,000 available for additional use under our working capital loan with Simplify. As of March 31, 2026, the outstanding balance of the Simplify working capital loan was $0.18,489. Our cash balance as of the issuance date of our accompanying condensed consolidated financial statements is $12,055.$11,338.
Debt Refinance
Effective August 7, 2026, we entered into a new debt agreement with Renew that replaced our existing Term Debt and eliminated the $25,000 Simplify Loan. See FN 20, Subsequent Event, for further details.
We have material contractual obligations that arise in the normal course of business primarily consisting of employment contracts, consulting agreements, leases, liquidated damages, debt and related interest payments. Purchase obligations consist of contracts primarily related to merchandise, equipment, and third party services, the majority of which are due in the next 12 months. See Note 5, Leases, Note 7, Liquidated Damages Payable, and Note 9, Simplify Loan and Note 10, Term Debt, in our accompanying condensed consolidated financial statements for amounts outstanding as of MarchJune 31,30, 2026, related to other material contractual obligations.
On March 18, 2024, we discontinued the Sports Illustrated media business (the “SI Business”) that was operated under the Licensing Agreement with ABG-SI, LLC (“ABG”) dated June 14, 2019 (as amended to date, the “Licensing Agreement”). This discontinuation of the SI Business (i.e., discontinued operations) followed the termination of the Licensing Agreement by ABG on January 18, 2024. Income (loss)from our discontinued operations, net of tax, was $0 and $96,227 for the three months ended June 30, 2026 and 2025, respectively. Income from our discontinued operations, net of tax, was $0 and $23$96,250 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.
On April 29, 2025, the ABG Group Legal Matters (as further described in Note 18) were resolved through a confidential settlement with outstanding liabilities being released by all sides. The remaining assets and liabilities of the SI Business were disposed of.settled.
We have financed our working capital requirements since inception through issuances of equity securities and various debt financings. Our working capital surplus as of MarchJune 31,30, 2026 and December 31, 2025 is as follows:
As of MarchJune 31,30, 2026, we had working capital of $17,016,$18,777, consisting of $32,504$32,435 in total current assets and $15,488$13,658 in total current liabilities as compared to working capital of $18,627 as of December 31, 2025. As of December 31, 2025, our working capital surplus consisted of $35,630 in total current assets and $17,003 in total current liabilities. The change in working capital is the result of the derecognition of several liabilities related to discontinued operations.
Our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 consisted of the following:
For the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities was $1,961,$2,051, consisting primarily of $23,808$44,834 of cash received from customers, partially offset by $19,405$37,871 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements,arrangements and professional services, and $2,442$4,912 of cash paid for interest. For the threesix months ended MarchJune 31,30, 2025, net cash usedprovided inby operating activities was $3,662,$13,970, consisting primarily of $30,272$21,501 of cash received from customers, offset by $23,637$1,645 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements,arrangements and professional services.services and $5,886 of cash paid for interest. Prior period amounts are impacted by the settlement of discontinued operations liabilities.
For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $1,069,$1,219, consisting of $769 related to capitalized costs for our Platform and $300$450 related to purchasepurchases of intangible assets. For the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities consisted of $1,618$3,545 for capitalized costs for our Platform.
For the threesix months ended MarchJune 31,30, 2026, there was no net cash used in financing activities. For the threesix months ended MarchJune 31,30, 2025, net cash used in financing activities was $3,504,$8,016, consisting of (i) $4$16 for tax payments relating to the withholding of shares of common stock for certain employees, and (ii) $3,500$8,000 for repayments of the Simplify Loan.
On July 31, 2025, we announced a share repurchase program under which we may repurchasehave repurchased up to 3 million shares of our common stock through July 31, 2026, from time to time through open-market transactions, privately negotiated transactions, or otherwise, including under Rule 10b5-1 trading plans, subject to market conditions, share price, and other factors. The program may be suspended, modified, or terminated at any time. The share repurchase program will be funded through operating cash flow. As of March 31, 2026, noNo shares have beenwere repurchased under this program.program prior to its expiration on July 31, 2026.
Three Months Ended MarchJune 31,30, 2026 and 2025
The following table sets forth revenue, cost of revenue, gross profit, income from operations, income (loss) from operations,continuing operations and net income (loss):
For the three months ended MarchJune 31,30, 2026, loss from continuing operations was $2,658,$176, as compared to income from continuing operations of $3,997$12,412 in the prior period. The decline in profitability was primarily attributable to ana $11,409$22,829 decrease in revenue, largely attributable to lower digital advertising revenue driven by changesreduction in both traffic and monetizationvolumes between periods. Additionally,This profitabilitydecline was impactedpartially offset by overdecreases $1of million$6,062 in elevatedcost severanceof chargesrevenues, $2,635 in operating expenses, and professional$1,049 feesbenefit whichfrom wereincome incurred in connection with specific legaltax and restructuring$495 actionsfrom takeninterest during the three months ended March 31, 2026.expense.
For the three months ended MarchJune 31,30, 2026, we generated gross profit of $7,081,$8,668, as compared to $15,669$25,435 for the three months ended MarchJune 31,30, 2025, a decrease of $8,588.$16,767. Gross margin for the three months ended MarchJune 31,30, 2026 was 34.7%,39.1%, compared to 49.3%56.5% for the three months ended MarchJune 31,30, 2025.
Total revenue fordecreased by 50.7% during the period decreased,period, primarily due to a reduction inlower digital advertising revenue. ThisThe decline was driven by changes in referral traffic patterns between periods, Company-initiated technical experiments intendedcompared to drivethe audienceprior-year growthperiod. that,In inaddition, somebroader cases,market reduced monetization, and changesdynamics in the broader digital advertising marketindustry, resultingexacerbated from theby aforementioned traffic volatility.volatility Thoughand unfavorable traffic mix shift away from higher yielding properties, negatively impacted advertising demand and monetization during the Company-initiated technical experiments had an adverse impact on first quarter revenue, the changes made as a result of this testing are expected to stabilize audience and maximize yield over the remainder of the year.period.
Cost of revenue decreased by 18%31.0%, asprimarily adriven resultby oflower reduced internalexternal cost of content enabled by our variable cost structure under the entrepreneurial publishing model. Despite this reduction, gross margin contracted reflecting the integration and growthCost of revenue reductions were partially offset by an increase in cost of goods sold related to our ShopHQ e-commerce business which operatesincreased atas lower gross margin than our advertising business due to higher cost of products sold. Additionally, the impact of fixed costrevenues associated with freelancersShopHQ and technology contributed to the gross margin change.increased.
For the three months ended MarchJune 31,30, 2026, total revenue decreased $11,409,by $22,829, or a 35.9%50.7% decrease, to $20,406$22,183 from $31,815$45,012 for the three months ended MarchJune 31,30, 2025. There was a 36.3%50.9% decrease in total digital revenue from $31,608$44,767 for the three months ended MarchJune 31,30, 2025 to $20,145$21,972 for the three months ended MarchJune 31,30, 2026.
The $18,356 decrease in digital advertising revenue was primarily attributable to lower audience traffic, including the impact of search algorithm changes that reduced referral traffic, together with a modest decline in monetization yield between periods. Performance marketing revenue decreased by $2,842 primarily due to lower traffic and changes in affiliate rates. Publisher revenue declined by $2,117 as traffic levels across certain distribution partners decreased. These decreases were partially offset by a $1,194 increase in other digital revenue, primarily attributable to an increase in revenue from the ShopHQ e-commerce platform. ShopHQ broadened our e-commerce reach by adding drop-ship e-commerce operations, and interactive social selling capabilities, while accelerating first-party data collection efforts that are expected to yield audience and customer insights and improve engagements throughout our business. To mitigate the impact of search and traffic related volatility, we continue to refine our content, yield and distribution strategies.
The $10,456 decrease in digital advertising revenue was driven by changes in referral traffic patterns between periods and a decline in overall monetization yield between quarters. The reduction in traffic resulted from algorithmic updates made during the second half of 2025 that impacted search rankings across the industry and resulted in lower traffic. The reduction in yield resulted from company-initiated technical experiments intended to drive audience growth that, in some cases, reduced monetization and changes in the broader digital advertising market resulting from the aforementioned traffic volatility.
Performance marketing revenue decreased by $2,280 reflecting the impact of the change in referral traffic patterns between periods and changes to commission structures at affiliate partners.
To mitigate the impact of search-related volatility, we continue to refine our content and distribution strategies. These efforts contributed to an increase of $1,167 in publisher revenue, attributable to the continued expansion of our publisher network. The $960 increase in other digital revenue was primarily attributable to our October 2025 acquisition of ShopHQ, which broadened our commercial reach by adding drop-ship e-commerce operations, interactive social selling capabilities, and accelerated first-party data collection efforts which are expected to yield audience and customer insights that can be used to improve yields throughout our business.
For the three months ended MarchJune 31,30, 2026, we recognized cost of revenue of $13,325$13,515 as compared to $16,146$19,577 for the three months ended MarchJune 31,30, 2025, a decrease of $2,821.$6,062. ThisThe decrease was primarily attributable to lower internal cost of content, which declined in line with reduced digital advertising revenue and reflected the flexibilityvariable nature of ourthe variableCompany’s content cost structurestructure, underas thelower entrepreneurialtraffic publishingvolumes model.drove Decreasesreductions in external cost of content and third-party content costs. Internal costs of content was lower due to continued cost discipline. The Company also realized lower technology costs resultduring fromthe structuralperiod operationalas changesreduced betweentraffic periods.and ad-serving activity lowered related variable platform costs. These savings were partially offset by higher other costcosts of revenueproducts drivensold byassociated with the ramp-up of our ShopHQ e-commerce businessbusiness, which carriesincreased higheras productrevenues relatedassociated costs.with ShopHQ increased.
For the three months ended MarchJune 31,30, 2026, we incurred selling and marketing expenses of $1,851$1,825 as compared to $2,134$1,942 for the three months ended MarchJune 31,30, 2025. The decrease of $283$117 reflects savings achieved through vendor renegotiations and ongoing cost-optimization initiatives across advertising, marketing and advertingadvertising operations tools.tools, partially offset by incremental marketing spend supporting the expansion of our ShopHQ e-commerce business launched in late 2025.
General and administrative expenses totaled $4,641$3,655 for the three months ended MarchJune 31,30, 2026 compared to $5,283$6,200 for the three months ended MarchJune 31,30, 2025, a decrease of $642.$2,545. The decrease was primarily driven by lower legal and other professional fees following the successful resolution of certainlegacy legalcorporate matters.matters, complemented by ongoing overhead cost discipline and better receivable collections resulting in lower bad debt expense.
Sports & Leisure – the decrease of $6,237$10,636 was primarily driven by lower digital advertising and publisher revenue, reflecting company-wideindustry-wide declines in organic traffic volume and monetization rates.monetization.
Finance – the decrease of $2,882$7,187 was attributable to a declinereduction in digital advertising revenue and in performance marketing revenuerevenue, reflecting theindustry-wide impact of the changedeclines in referral traffic patterns between periodsvolume and changes to commission structures at affiliate partners, a reduction in digital advertising revenue, reflecting Company-wide declines in organic traffic volume and monetization rates,partners and a reduction in digital subscription decrease in digital subscription revenue as we transition our portfolio toward more efficient, ad-supported monetization channels.
Lifestyle – the decrease of $1,370$4,152 was primarily driven by lower digital advertising revenue, reflecting Company-wideindustry-wide declines in organic traffic volume and monetization rates.volume.
Platform & Other – the decrease of $920$854 was primarily driven by a reduction in underperforming partner sites.sites, partially offset by an increase in other digital revenue attributable to the ShopHQ e-commerce business.
The $8,150$16,897 decrease in total segment gross profit across all categories was primarily driven by the aforementioned reductions in digital advertising revenue resulting from compounded traffic volume headwinds and lower monetization rates, which collectively outpaced the variable cost savings realized from our strategic transition to an entrepreneurial publishing model.model, lower internal cost of content and lower technology costs.
Interest Expense – We incurred interest expense of $2,421$2,450 for the three months ended MarchJune 31,30, 2026 compared to $3,004$2,945 for three months ended MarchJune 31,30, 2025. The $583$495 decrease in interest expense reflects lower interest charges following repayment of the Simplify Loan throughout 2025 and the $13,000 curtailment payment applied to the Company’s term debt in December 2025 pursuant to Amendment No. 4 to the Third Amended and Restated Note Purchase Agreement.
Liquidated Damages – We recorded liquidated damages of $76 for the three months ended June 30, 2026, as compared to $76 for the three months ended June 30, 2025. The liquidated damages related to (i) certain registration rights agreements that provide for damages if we do not register certain shares of the Company’s common stock within the requisite time frame; and (ii) certain securities purchase agreements that provide for damages if the we do not maintain our periodic filings with the SEC within the requisite time frame.
Six Months Ended June 30, 2026 and 2025
The following table sets forth revenue, cost of revenue, gross profit, income from operations, income (loss) from continuing operations and net income (loss):
For the six months ended June 30, 2026, loss from continuing operations was $2,834, as compared to income from continuing operations of $16,409 in the prior period. The decline in profitability was primarily attributable to a $34,238 decrease in revenue, largely attributable to lower digital advertising and performance marketing resulting from lower traffic volumes, changes in referral traffic patterns and reduced monetization between periods. This revenue decline was partially offset by the Company’s flexible cost structure and expense discipline, including decreases of $8,883 in cost of revenues, $3,557 in operating expenses, $1,477 benefit from income tax and $1,078 from interest expense.
Revenue
For the six months ended June 30, 2026, we generated gross profit of $15,749, as compared to $41,104 for the six months ended June 30, 2025, a decrease of $25,355. Gross margin for the six months ended June 30, 2026 was 37.0%, compared to 53.5% for the six months ended June 30, 2025.
Total revenue for the period decreased by 44.6%, principally reflecting decreased digital advertising revenue resulting from lower traffic volumes, altered referral trends and softer ad pricing compared to the prior-year period. Revenue in the first quarter of 2026 was also impacted by ongoing digital platform enhancements, which prioritize long-term audience expansion but created short-term revenue headwinds in select areas during the period. Though revenue increased in the second quarter of 2026, it lagged prior year performance due to the aforementioned lower traffic volumes and an unfavorable traffic mix shift away from higher yielding properties which reduced monetization in comparison to 2025.
Cost of revenue decreased by 24.9% partially offsetting lower revenues, primarily driven by lower external cost of content enabled by our variable cost structure under the entrepreneurial publishing model and as traffic volumes declined. Gross margin contracted year over year as the decline in higher-margin digital advertising revenue more than offset cost reductions and was further impacted by added cost of products sold from the ShopHQ e-commerce business.
The following table sets forth revenue from continuing operations by category:
For the six months ended June 30, 2026, total revenue decreased by $34,238, or a 44.6% decrease, to $42,589 from $76,827 for the six months ended June 30, 2025. There was a 44.9% decrease in total digital revenue from $76,375 for the six months ended June 30, 2025 to $42,117 for the six months ended June 30, 2026.
Digital revenue declined year over year primarily as search and referral traffic pressures reduced advertising impressions and high-intent commerce activity. Digital advertising revenue decreased $28,812 due to lower audience traffic and traffic referral patterns, while performance marketing revenue decreased $5,122 due to lower commerce-oriented traffic and changes in affiliate rates. Digital subscription revenue decreased $1,529 as the Company continued to reposition portions of its portfolio toward ad-supported monetization models. These declines were partially offset by a $2,175 increase in Other digital revenue, primarily from the ShopHQ e-commerce business, which broadened the Company’s revenue base by adding transaction-based e-commerce capabilities and incremental first-party customer engagement opportunities. Management continues to address traffic volatility through ongoing refinement of content, distribution and yield strategies, while also pursuing revenue diversification initiatives intended to reduce reliance on search-driven advertising revenue over time.
The following table sets forth cost of revenue by category:
For the six months ended June 30, 2026, we recognized cost of revenue of $26,840 as compared to $35,723 for the six months ended June 30, 2025, a decrease of $8,883. The decrease reflected the Company’s ability to flex portions of its cost structure in response to lower traffic and revenue levels, including reduced external cost of content and active reductions of internal cost of content. The Company also benefited from lower technology costs as reduced traffic and ad-serving volumes lowered variable platform costs. These savings were partially offset by higher cost of products sold from the ShopHQ e-commerce operations as a result of increased ShopHQ revenue.
Operating Expenses
Selling and Marketing
The following table sets forth selling and marketing expenses from continuing operations by category:
For the six months ended June 30, 2026, we incurred selling and marketing expenses of $3,676 as compared to $4,076 for the six months ended June 30, 2025. The $400 decrease was primarily attributable to continued cost discipline and optimization across advertising, marketing and advertising operations tools, partially offset by incremental marketing investments supporting the growth of the Company’s ShopHQ e-commerce business, which was launched in late 2025. Although selling and marketing costs decreased period over period, they still represent a higher percentage of revenues in the current period due to the decline in revenue levels between periods.
PAAI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding PAAI (13F)
None of the 59 investors we track reported a position in their latest 13F.